I am involved in a debate with two of my friends. One is very excited about the possibility of a MLB team relocating to your town. She says it will give the community a huge economic boost and create many more jobs. My other friend claims that your town would be better off attracting a Super Wal-Mart as that will have more of a positive economic impact than a professional sports team. How can I explain the situation to my friends?
We're going to analyze your problem from a financial perspective, which will allow us to see the economic effects of each decision. We are going to assume for simplicity that the means to accommodate either are already in place, and that major land renovations don't have to take place for either, which allows us to focus on the actual issue.
MLB Team: here we have an industry that is seasonal, which is our first main issue. Baseball operates only for a certain number of months per year, so we have to figure that during the months where the stadium isn't full of happy fans, the stadium is sitting and doing nothing, except creating expenses, like property taxes, mortgage payments, any utilities that have to be kept on, paying people to maintain the stadium while it's sitting, and other expenses that are related to the regular upkeep and care of the stadium, even though it's only in use for part of the year. We can't abandon the stadium for the remainder of the year, or it will wear faster, which will cost more money when it's time to make repairs. Although we're only using the stadium for a few months, the ...
The solution provides a detailed discussion explaining if it would be better to have a MLB team or a Super Wal-Mart relocate to your town.