Talk about a team bleeding money.
I wonder if the situation is different for arenas with respect to stadiums. Take SAP Center in San Jose. It is owned by the city of San Jose, and the primary tenants are the Sharks. But it gets a lot of other use as well. Concerts, circuses, other sports events, you name it. I don’t know if it makes money but I would be surprised if the average person doesn’t consider it a major asset for the city.
This, plus 10.
Houston has the Astrodome, built at taxpayer expense. It used to be the “eighth wonder of the world”, now it sits in ruins and we are still paying for it. We have three new playpens for the professional sports teams, all paid for by the taxpayers.
As such, I think that Houston should own the sports franchises. We had the Oilers throw a tantrum and move away from Houston because the playpen wasn’t big enough, and the Astros threatened the same thing if they didn’t get a new playpen.
It’s not that the cities build these stadiums, though. That’s not really a huge problem, despite the cost involved. It’s that the cities negotiate like complete amateurs in the process. You’d think a big-city mayor or town council would have some push - and they do. Teams do actually want to be homed in these cities, since it gives them access to a large population and civic identity, and that has substantial value. It’s not remotely implausible for cities negotiate concessions.
Trying to go full-on crazy will backfire, but just a little spine could and probably would balance things significantly in the city’s favor.
I don’t know about other cities, but this is true in Pittsburgh – sports plays a huge part in our economy. (The NHL lockout a few years ago, for example. A lot of bars and restaurants do a lot more business during games, with people coming in to watch, or get a meal before or after they attend. Combine that with hotels, parking fees, etc.) Plus the stadiums in our city are also used as concert venues, conventions, etc.
Whether or not that’s an argument for tax-funded stadiums, I don’t know, but in some cities, sports are big business.
here we have a single a baseball team the lancaster jet hawks for 15 years or so and weve had some big people start and come through here like cruz jr when they were with the red sox randy Johnson when he was in Arizona … and atm they ae league champs
and while the economic boon that it was supposed bring never quite happened the towns proud of it and its mainly looked on as "well if nothing else we get something to go to from april to sept " and I think we own the stadium
when they were deciding about the team the city council had 2 members that were so against it and tried to fight it so bitterly
but resulting the fall out made them so unpopular that they didn’t even bother to run for reelection (well ok there were other factors involved but that was the biggest reason)
I simply don’t believe this to be true. There is considerable evidence that sports teams divert money from restaurants and bars, not to them, and even if some sports bars get added business when the Penguins are playing, that’s not a “huge part” of Pittsburgh’s economy.
The Pittsburgh metropolitan area has a GDP well over one hundred billion dollars. All three of Pittsburgh’s pro sports teams are a very small part of that - their entire contribution to that number is not one percent of it.
People think of sports teams as huge businesses, and they’re bigger than most, but they’re not huge. They’re not REALLY big businesses. The Pittsburgh Steelers, according to most sources, have annual revenues of $400 million, maybe. Lots and lots of companies make more than that. My company makes that every year and you’ve never heard of it, and we are a small player in our industry. To just use one example off the top of my head, the Kroger’s supermarket chain makes $400 million **every thirty-six hours. ** There are scores of companies that have more annual revenue than all of North America’s pro sports leagues combined.
Pro sports teams seem huge and important because of the entertainment factor that gets them media coverage. In the world of business they are middle sized fish at best. Rogers Communications, the Canadian telecom company that owns the Blue Jays, makes more money every year than Major League Baseball.
What RickJay said.
Sports are big business (although not as big as they look), but they generally don’t create jobs or bring more money into a city’s economy. Their prime effect on the economy, according to almost all the studies done by actual economists, is to cause people to spend money on sports that they would otherwise spend on something else, like movie tickets or restaurant meals or nights out in bars. This substitution effect works in reverse when the team leaves; people who used to spend money on tickets and stuff like that now spend their money on something else.
The last NHL lockout was in the second half of 2012. The graph on this page shows no noticeable dip in Pittsburgh’s GDP during 2-012 and 2013. The trend, after the economic crisis of 2008 and 2009, was steadily upward, and the hockey lockout didn’t change that. The Pittsburgh figures on this page show basically the same thing.
If you’re someone who goes to bars during games, then it can easily look like sport is incredibly important to a city’s economy. And the bars and restaurants right near the stadiums often do very good business during the season. But if the sports teams go away, the people who spend their money on sports teams don’t just start storing their money under the mattress or in their 401k. They spend it on other stuff.
And even the bars that people go to during games don’t depend upon a team actually being in their city - they depend on a team having a fan base in their city. I go on a trip to PA every year, and there is a bar that apparently does a lot of business during football games judging by the decor - but the team is an hour or so away in Baltimore.
Like you, I am very skeptical of the claims that the government subsidies for sports teams are worthwhile economically. But I think your post misses the mark.
The revenue of the sports team itself is a small part of the supposed economic benefits that they bring, so focusing on how small that is adds little to the discussion.
The deal with sports teams is that they raise the profile of the host city and make it a more attractive place to visit or hold your convention or relocate your main office and so on. There’s no doubt that this is true to some extent, and whenever you see boosters promoting some city or other they make prominent mention of whatever sports teams happen to be located there.
That said, this doesn’t mean that it’s worth the cost of subsidizing it.
[In fact, I’m personally very skeptical of subsidized economic development altogether. As I see it, if a city develops economically, what happens is that a lot of people move there to share the wealth and jobs etc. and on a per capita basis people - and in particular, the current residents - are not necessarily better off. So if you give subsidies (whether huge tax breaks or direct subsidies) to someone willing to relocate their factory/headquarters/sports team, the added economic benefit is shared among all sorts of newcomers, and the tax burden falls higher on everyone, and the owners of these businesses make out like bandits.
If it was up to me, all these special tax breaks/subsidies would be illegal, whether for sports teams or for any other business.]
Sports stadiums are a case study in how special interests can control a government. If a team leaves then their fans will be livid at the politicians. However, if they stay the non-fans will be mildly annoyed by the small increase in taxes. Since livid voters are more motivated then midly annoyed voters politicians are afraid to lose the teams. Thus we have billionaire owners getting multi millions in subsidies as cities are desperate for money to do governmental things.
It is not just sports stadiums but things like the import export bank, and farm subsidies which cost taxpayers billions.
Very much this. They HAVE to foot the bill because a politician that lets a beloved sports team leave will get crucified, but if the public foots the bill, people get annoyed, but generally won’t oust the incumbents over it, especially since it’s likely been that way for some time. And the teams have most of the bargaining power because they KNOW what those politicians have at risk. This is also why teams can even demand new stadiums even if the current one is just fine.
Hell, look at the local team here, the Redskins, pretty much have Maryland, DC, and Virginia all fighting over who gets to have the new stadium, and while their current one is one of the older stadiums in the league, it really is just fine. And unlike a lot of other teams that have to threaten to leave the area which can alienate fans, the Redskins can get at least 3 separate bids to stay in the same area and keep the same fan base. And, quite frankly, even as a Redskins fan, I don’t want them here in Virginia, I don’t want to pay for it, and since it’s most likely to be in Loudoun county, it would make an already terrible traffic problem a complete nightmare, particularly when for Monday and Thursday night games.
So, yeah, everyone thinks in theory they don’t like making millionaires and billionaires even richer off of tax dollars, this is just one of the most blatant cases of special interests playing both sides against each other. There’s tons more where the costs are less obvious.
I will say that one of the few possible exceptions is actual in our area. The Nationals stadium has probably been a good investment despite the fact that the DC government could have struck a much better deal. Given that the waterfront was basically a wasteland for so many years, the stadium did a lot to spur growth. The Capitol Riverfront land value went from around $5 per square foot a to around $825 per square foot.
I think if there are any guidelines for a city stupid enough to fund a stadium, they should be:
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Never subsidize football. Football almost never makes sense because the stadiums are too big, and the teams don’t play often enough (~10 times per year) or during otherwise downtimes. There are also few other uses as they are typically too big for most concerts/conventions, and unusable in bad weather since most are not full domes.
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Never bet on a team that has a history of being noncompetitive. People don’t go to see bad teams, so you are just giving money to owners.
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Never give away prime land.
But the studies that argue against the economic impact of sports teams don’t just look at the revenue of the team itself; they look at the economy as a whole, and take account of broader effects like the one that you are discussing here. I’ve read books, articles, and many online reports on the economic impact of sports teams and stadiums, and i don’t recall any of them supporting the argument that you’re making here about “raising the profile” and all that stuff.
You are certainly correct that “whenever you see boosters promoting some city or other they make prominent mention of whatever sports teams happen to be located there,” but the precise point of the actual economic studies is to separate the claims of the self-interested boosters from the actual reality of stadium and sports economics.
You say that there is “no doubt” that sports teams make a city more attractive to visitors, conventions, corporate offices, etc. Can you point to any studies that demonstrate this undoubted influence and, more importantly, that argue a net economic benefit to the city in question?
Take the arguments made in this article:
But was the stadium necessary OR sufficient to spur the growth? There are lots of other cities that successfully redeveloped areas without having to build a sports stadium. There are also cities where the area around a stadium remains a bad neighborhood (e.g. Atlanta).
My problem with the public arena thing is that owners sell it to the city as a matter of growth and revitalization.
“Pay for my arena, and my games will help open restaurants, stores, and increase land value!”
Problem is, those things are not interconnected, you don’t have an arena one day and then a reliable tax revenue the next.
What I think should happen is that if the owner insists on public funding of an arena, then the payment will simply be a temporary loan. If the public puts up $300 million for an arena for instance, then the team should pay it back from their revenue for the next X number of years. But that will never happen it seems like
You seem to be implying that I’ve said there’s a “net economic benefit to the city in question” when in fact I’ve said the exact opposite.
I’ll buy that the land is better used after the stadium was built than before. In fact, I would argue that’s usually going to be the case - if we went through two dozen baseball stadiums we’d probably find that most of them were built on land that was ill-used. SkyDome was built over a railyard no one wanted to see in an area of downtown that, aside from the CN Tower, was pretty gross. Of course, we’d expect this to happen. If you’re looking for a place to put a big stadium, you’re not usually going to tear down something nice if, next door, there’s a vacant, unused lot. IT’s cheaper to put it where you don’t have anything worthwhile.
But now we get into questions of marginal utility. If the government was going to spend a hillion billion dollars putting something in Lot 101 to raise the value, use and overall attractiveness of the area, is a baseball stadium the best use? Why not a museum? Condo buildings? An amusement park? There’s a dozen or more attractions, any one of which might be cheaper or more productive than a baseball stadium.
The issue is coming up again in Oklahoma City:
The Oklahoma City Thunder, purchased by a group of local businessmen for $325 million, is now valued at more than $3 billion, according to the most recent estimate by Forbes…
“These guys have made almost $2.7 billion, and they’re going to tell us they can’t afford a $1 billion arena?” said Nick Singer, a local realtor and organizer of the opposition group “Buy Your Own Arena.”
I agree with the opposition group.
I must have missed this thread back in the past. Otherwise I would say what I usually do. When it comes to public funding of sports arenas, the slogan to use is “Not One Penny.”