It's a Small World, After All

Every free agent and draft season in each professional sport brings with it not only ludicrous payments to morons who happen to have some level of strength and coordination, but also bitching from fanatics in mid- and small-markets that they can't possibly compete with New York City, Boston, Chicago, LA, and possibly a few flyover country cities. It's nearly always elided that professional franchises get a substantial part of their revenue from league coffers and have their facilities paid for (in large part or in toto) by the taxpayers. Such a tough life.

But this kvetching begs the question: why should there be mid- and small-market teams in the first place? We know full well that shitkicker migration to cities hasn't abated, nor will it ever; progress is made in nice, dense, noisy places not where the only sound is grass growing and cows mooing. The "invasion" of illegals have no interest in settling in the burning Texas wasteland; they want the opportunity of Big Cities. Not because they're essentially Blue, but because they offer opportunity; same reason any Red Stater who isn't sub-GED bolts for a Big City. I mean, how dumb do you have to be to want to live under Abbott/DeMented/Sanders/et al? Prior to the end of WWII, all of these leagues expanded and contracted almost like clockwork. Teams came and went. Professional football for its first decades was a non-urban pastime (the Big Cities, unless you say Chicago, weren't represented).

On August 20, 1920, at a Hupmobile dealership in Canton, Ohio, the league was formalized, originally as the American Professional Football Conference, initially consisting only of the Ohio League teams, although some of the teams declined participation.
...
Only four of the founding teams finished the 1920 schedule and the undefeated Akron Pros claimed the first championship.
[the wiki]

The first teams:

Another meeting was held on September 17, 1920 with representatives from teams from four states: Akron, Canton, Cleveland, and Dayton from Ohio; the Hammond Pros and Muncie Flyers from Indiana; the Rochester Jeffersons from New York; and the Rock Island Independents, Decatur Staleys, and Racine (Chicago) Cardinals from Illinois.
[the wiki]

With baseball, rather different. Baseball, once a 'major' league was established in the late 19th century, was a Big City thing.

In fact, there were dozens of leagues, large and small, at this time. What made the National League "major" was its dominant position in the major cities, particularly New York City, the edgy, emotional nerve center of baseball. The large cities offered baseball teams national media distribution systems and fan bases that could generate revenues enabling teams to hire the best players in the country.
[the wiki, my emphasis]

So, we eventually get both relocation (thanks, in the beginning, to the 707) and expansion across professional sports, and with them the creation of the mid-market team; Big Cities already filled. As ever more franchises were created in these non-Big Cities, viability becomes an issue. Why, oh why, are their baseball teams in Florida? (Not to mention... Hockey!) And so on. The motivation, clearly, is the growing population. Viewed as a player per citizen calculation, more teams do make sense. More young men eager to make money without much brains, and more people to fill seats. The problem, of course, is that expansion teams ended up in cities with marginal population sizes to support 30 or 40 or 50 thousand seat stadiums. Yes, the USofA population has more than doubled since the end of WWII, but not in shitkicker land.

Number of Major League teams, 1950 - 16
Roster size for said, 1950 - 25 (mostly)
Number of Major League ballplayers, 1950 - 400
USofA population, 1950 - 151,325,798
ratio - 378,314.495 (that's USofA humans per ballplayer)

Number of Major League teams, 2020 - 30
Roster size for said, 2020 - 30 (mostly)
Number of Major League ballplayers, 2020 - 900
USofA population, 2020 - 329,500,000
ratio - 366,111.111 (ditto)

Urban/rural split 1950 - 64% / 36%
Urban/rural split 2020 - 80% / 20%%

There was a day when NYC (counting all the boroughs) had 3 teams. That's how you keep up with population growth.

What does all that mean Mr. Natural? They ain't be no dilution of talent. Just the opposite, and even more so when you consider the number of Black and off-shore players competing for those jobs in those years; hint, the competition was even tougher in 2020.

Luckily (I've been searching for some time, and finally hit paydirt) there is some data on revenue sources over time, in baseball.

In 1962 the MLB average for local media income was $640,000 ranging from a low of $300,000 (Washington) to a high of $1.2 million (New York Yankees). In 2001, the average team garnered $19 million from local radio and television contracts, but the gap between the bottom and top had widened to an incredible $51.5 million. The Montreal Expos received $536,000 for their local broadcast rights while the New York Yankees received more than $52 million for theirs. Revenue sharing has resulted in a redistribution of some of these funds from the wealthiest to the poorest teams, but the impact of this on the competitive balance problem remains to be seen.

Socialism in atheletics!!! Sacre bleu!! Oh, wait... welfare for the billionaires is the way of the world. So, is it possible for a small-market team to make money without any seats in the seats? May be.

In Major League Baseball, 48% of local revenues are subject to revenue sharing and are distributed equally among all 30 teams, with each team receiving 3.3% of the total sum generated. As a result, in 2018, each team received $118 million from this pot. Teams also receive a share of national revenues, which were estimated to be $91 million per team, also in 2018.

So, it would seem so. $209 million for nothing, and your chicks are free. Also, new franchises pay a fee to the teams. Here's the last round.

After whittling down the field to four finalists (Northern Virginia, Orlando, Phoenix and Tampa), MLB announced Phoenix and Tampa as the two expansion franchises on March 9, 1995. Announced to begin play for the 1998 season, each ownership group paid a $130 million expansion fee to enter the league. The ownership groups paid $32 million in July 1995, $25 million in July 1996, $40 million in July 1997 and $33 million in November 1997. In addition, the two expansion teams gave away their rights to $5 million from baseball's central fund for each of the five years following expansion (1998 - 2002).

What's up? A long CBS piece, worth reading.

Almost anywhere baseball expands in the coming years will rank in the bottom half to bottom third of TV markets. Therein is part of the argument against expansion. Why should owners make room at the table, reducing their share of the profits and the talent, to add more small-market teams? The answer might be as simple as the instant gratification offered by an exorbitant expansion fee.
[my emphasis]

An insight not often found in general journalism, much less the sporting variety.

Economists refer to the "substitution effect" in these cases. It's similar to opportunity cost. If a family of four is spending money at the ballpark, it won't be spending money at the movies. Stadiums aren't value creators so much as they are value re-distributors, from other local businesses to themselves, often without the best-compensated employees pumping those dollars back into the economy. One study even found a local economy improved after a team left the area.
[my emphasis]

And, by the bye, Food Stamps is another case of substitution effect: every buck a Welfare Queen doesn't spend at the local Mega Mart is a buck she can spend on lottery tickets or cellphones or baseball tickets or whatever else. I suppose, even an iPhone. You're welcome, Tim.

The same is true of casinos. And every entertainment venue; one can only be a net revenue generator if it brings in $$$ from outside its economic territory; specifically the tax authority (mostly a state) that subsidizes it. The first, and most blatant, example is Atlantic City (there's a good reason Batshit J. Moron couldn't make it there, or anywhere) and possibly worse, The Nutmeg State. Yet Damn Gummints keep betting on long shots. Spend money on better education? Well, only if there's no Woke Shit. (They don't in Nevada, of course!]