Subsidizing pro franchises

Why does a big ass city need professional sports franchises. They were ok at one time, but now they are just overpayed brats who want to be subsidized. Not content with multi-purpose stadiums, they want their own place. THe cost of a new stadium goes for about 250-300 million $. THe actual increase in revenue on its own will be probably enough to almost cover the interest. Meanwhile these assholes are getting incredibly wealthy at the taxpayers expense (not necessarily but probably the owner as well, he does have to run a tight ship as any good businessman does). In the process, ticket prices goes up to the point where it is not family entertainment. L.A. seems to care less, and for good reason, people there have real lives. I heard that Seattle voters rejected a stadium proposal, and the state gov. still is going/has built it. Houston lately rejected a new place for the Rockets. I am open to opposing views. IMHO, screw 'em.

On the one hand, I agree with you. On the other, I think it can make sense for a city to invest in its sports franchise. Take cities like St. Louis and Jacksonville - very large metropolitan areas with lots of middle class suburbanites - but the cities themselves face dwindling populations and those that remain often do so only because they are to poor to move. What is needed are ways to get more consumer dollars spent inside the city limits. Professional sports can help accomplish this…

Supply and demand, cool, just ask any Browns fan. The new ballpark in Detroit cost $280 million to build. Team owner Mike Ilitch scrounged up about $180 million and public funding pays the rest. The city adds a surcharge for every ticket sold (about two bucks a pop). Additionaly, Comerica Bank pays $66 million over thirty years for the right to attach their moniker to the sign out front. Granted, $2.2 million per year doesn’t pay for a decent player these days, but it’s gauranteed dough.

The thing is, unless you own a prolific team like the Yankees or the Red Wings, your ass is on the line. Guaranteed contracts, long-term deals, signing bonuses and the like can put a team in the red real quick. Yeah, the TV deals are lucrative but with the money players are making these days, it doesn’t last long.

As for the cities themselves, I suppose part of it is exposure. Baseball’s Game of the week and Monday Night Football usually tout the positive side of the host city. And when you’re a city like Detroit you need all the good press you can git.

I think if a city cannot support a franchise, they should move somewhere else. I am NOT talking about Asshole Art Modell for moving the very successful Browns, I am talking about the likes of the Hartford Whalers, who are not missed by many.

When it comes to public funding of stadii, I think everything should be done via referendums, so the voters get to decide. Voters in Denver said yes for the Broncos. Voters in Minnesota said no. Let them all make the decisions, not the greedy politicians whose interest is getting their name in the paper and a luxury box all their own.

Ultimately, while a sports franchise with a new stadium will increase revenue for the municipality that it is in, this is generally a short-term phenomenon. See Toronto for proof on this.

At the same time, outside of the limelight that is the aura of pro sports, cities have always made pitches to businesses to get them to move or expand to their location - tax cuts, property, and the like - if they felt it in the best interest of the city. And if every time a mayor or governor wanted to do this they had to have a referendum, you might as well live in a ballot box.

But I think that (like a lot of cases), the rules according to more conventional businesses should not be applied to pro sports, and as such, think the fans (and non-fans in that area) should have ultimate say as to what gets built and for how much of their dough.

Yer pal,

Hyperbole from the teams and leagues aside, the actual economic value a pro team brings to a region is about equivalent to the impact one mall anchor department store, so that the true impact of the Browns leaving Cleveland in 1995 was equal to one branch of Dillard’s department store closing.

Sports teams owners are not even true capitalists. What they’ve done is to capitalize the profits and socialize the risks (ie the capital investment cost of their facilities). Given that, if pro teams are worthwhile enterprises and worthy of a city’s economic capital investment, the city should become the majority shareholder.

Let me just preface this by stating that I am not a sports fan of any kind, don’t watch it, don’t talk about it, not interested. However, I think the following is true:

A lot of people believe that sports teams have value outside of the revenue they can produce. Sports can create a common ground between people where no other really exists -certainly this is a good thing. What is not certain is whether it is worth very much - but if it is determined to have real value then I think it makes sense for the city to help foot the bill.

The book “Major League Losers” (sorry, forgot the author’s name) pretty clearly shows that there is little to no economic benefit to public subsidzation of professional sports. n fact, some communites lose mega-bucks on the deal, while helping to increasde the problems of economic disparity in sports. For the most part, money not spent on sports gets spent on other recreational pursuits (bowling, movies, bars, gold, etc.) Public financing simply moves money from smaller players to bigger ones; in essence, it means that Bucky’s Bar and Billiards gets to help support its competition.

Intangible benefits? Increased crime around stadia, increased traffic jams, opportunity costs…and of course, a crappy team doesn’t do a lot to build community spirit or lift a city’s image (besides, with so many professional sports teams, how much does the occasional shot of a town on MNF help?).


Satan wrote:

Actually, the majority of the voters get to decide, not the voters as a whole. Thus, if 50,001 out of 100,000 decide to levy a tax for the new stadium, there will be 49,999 forced to pay against their will. And they must pay despite whether they are opposed in principle, can afford it, or care for sports at all.

We are lucky for our judicial review system, which is the sole plug in the dam holding back the majority mob. And even it doesn’t always work.

“It is lucky for rulers that men do not think.” — Adolf Hitler

I have gone on record here many times as saying governments have no business subsidizing professional sports. I say this for practical AND ideological reasons. Ideological, because I’m a firm believer in free enterprise, and don’t like the idea of governments sticking their noses (and our tax dollars) into areas that don’t concern them. And practical because, 99% of the time, the ordinary citizens of a city enjoy no real economic benefits from the presence of a baseball or football team.

Oh, a city like Arlington Texas probably profits from having the Rangers around, because the Rangers attract tourists from all over the state- tourists who would NEVER go to Arlington otherwise. But do you REALLY think the absence of the Rams had hurt the Los Angeles economy??? The money that people spend on tickets for sporting events is “expendable” income- that is, money people were planning to blow on something purely for entertainment. If there’s no football team in L.A., what does a former Rams fan do with the money he WOULD have spent on Rams tickets? Flush the ticket money down the toilet? Burn it? NO! He finds some other way to spend it- he may take his kids to the zoo, or the movies, or the arcade, or the amusement park. Point is, he’ll spend the money SOMEWHERE in L.A. In short, the overall economic health of the city isn’t hurt one bit by the absence of a football team!

Now, I’ll admit- I don’t BLAME sports franchise owners for demanding subsidies or threatening to move their teams. I mean, if I owned the Buffalo Bills, and I saw that MOST of my competitors were playing in brand new stadiums, paid for by the taxpayers, and that these new stadiums had hundreds of luxury boxes that brought in tens of millions of dollars in revenues (revenues, by the way, that those competitors don’t have to share), I’d be CRAZY not to want the same thing! If my competitors are all being subsidized, how long can I stay competitive if I’M not being subsidized?

Now, it seems to me the current situation combines the worst features of both capitalism and communism. In the sports business, the citizens put up all the money and take all the risks, while the franchise owner makes all the prophets (if any).

It seems to me the best (or, rather, least bad) solution is this: if cities are in for a penny, they might as well be in for a pound. A new state of the art stadium costs about 300 million bucks. Most sports franchises aren’t worth anywhere near that much. SO, next time an owner says, “Build me a new stadium for $300 million,” the mayor would be wise to say, “No. But I’ll give you $150 million for the team itself.” The owner would probably take it, and the mayor could keep the team right where it is. He’d save the taxpayers a lot of money, and prevent all kinds of future headaches.

Prophets??? Sigh… profits! (Dang!)

I agree with you main point, that if a city is going to subsidize a staduim it might as well just buy the team, but I disagree with your side point about not blaming the team owners for blackmailing the cities into building new ballparks. To me, that’s like saying with regard to prostitution that only the john is at fault and not the call girl, or the pimp, or the mob enforcer.

As far as I can see the sports leagues are orchestrating the hold-up of the cities, and the city politicians are going along with it. As Exhibit A I point to my hometown (Cleveland) Mayor Michael White, who now considers it a great feather in his cap that he spent $300 million of tax money on the new Browns stadium. Like Astorian says, for $300 million Mayor White could have easily bought the Browns from Art Modell back in 1995.

The cities have got to get together and say, ok, if we’re going to build your stadiums for you, then we’re going to be first in line to tap into your TV money revenue stream. No need letting that money go to the owners or the players, when it should go first to reimburse the taxpayers for building what is essentially just a glorified TV studio.

I’m not a big fan of subsidizing team owners, but fairness requires pointing out that a pro franchise can bring in an additional money stream besides the expenditures mentioned in the quote.

The money which team owners get from national TV comes from advertizers; the advertizers get the money from the people who purchase their products. So by having a pro franchise, a city can rake in money to its own economy which had been collected from consumers nationwide.

Don’t know if it comes near compensating for the costs of the stadiums and other perks, but it should be entered into the equation.

Assuming that, absent the TV contracts, the networks would choose to air static during the times the games would be on, and those ads would never air otherwise; but we all know that isn’t the case. Those products are going to be advertised and purchased, football or no football.

BTW, Lib, are you suggesting that all voting in this country be done on an all-or-nothing basis? That you have to get 100% in favor, or nothing passes? That seems to me to effectively negate the right to vote at all.

pldennison wrote:

Of course, but that has nothing to do with my point. I didn’t say it will make the pie any bigger, I was commenting on how the pie gets divided- which specific cities will get a portion of that advertising money. Does 1/30 of the league’s TV revenue stay funnelled into our Fair Metropolis, or do we we risk losing it to those conniving thieves in Gotham City who are offerring the owner a new stadium?

My own personal WAG is that in most cases it would probably be more cost effective to let them go- but I think that in an actual case a real analysis, rather than a WAG, would be called for.

In the case of Arlington, it actually does make a lot of money from shopping, 6 Flags, etc. UC-Berkely studies during the 94 basbeball strike indicate no net economic benefit from baseball–the money just get spent on other things. Data from Miami comparing January spending during Super Bowl and no-Super Bowl years confirms this.

Nebuli, I have to admit to being confused by your argument. The teams get the money from the networks, who get their money from the advertisers. How does this benefit the local economy?

Bucky, you asked

What I was getting at was that the franchise will be in effect drawing money from the entire nation, and spending a large share of it locally. For example

  • the office staff
  • promotions
  • rent
  • the players will live in the area during the season; many will buy homes in the area; most will lead a free-spending, extremely high-salaried lifestyle.

Now the point had been made earlier that a team’s local spending doesn’t add to the total local economy, since the money would have gone to something else if the team wasn’t there. That is correct for ticket revenues,and local media revenues as well, but not for network TV revenue. If the franchise leaves the area, that portion of the money goes with it.

Patrick - I’m with you all the way.

One thing worth adding: there’s no free market in ML sports franchises. This is what allows leagues and owners to play the new-stadium-or-we-move game.

Not so sure about that last one. Here in Cleveland, Al Lerner gets the use of our $314 million stadium rent-free (and property tax free); and both the Gunds and Dick Jacobs (Gund Arena and Jacobs Field) have “charged” so many things against their rents that they’ve paid only a pittance, or in the case of the Gunds, had the audacity to send a bill for negative rent to the Gateway Corp. that owns the facilities.

The rich always find a way to get over.

“It’s my considered opinion you’re all a bunch of sissies!”–Paul’s Grandfather

Phil wrote:

Why must every detail of our lives be controlled by other people? Should I be allowed to vote on whether you have to go to church?

All I am saying is that if someone wants a stadium, let her finance and build it herself, with whatever voluntary cooperation she can muster from other people. It she fails, that is part of the risk.

“It is lucky for rulers that men do not think.” — Adolf Hitler