Nebuli, I think that in order for national advertising money to have unique local benefits, we have to assume that people outside of the local area will buy products advertised from within the local area. Mark S. Rosentraub’s 1997 book “Major League Losers” pretty clearly shows that sports teams do not add to the local economy (other studies support him on this; only anecdotal evidence supports the claim of sports pumping money in). Among other things, he points out that athletes tend to NOT live in their team’s town and spend their money elsewhere.
At any rate, if the team doesn’t bring in extra money, we should look at the ads. First, most ads are for national products, not local. Second, I don’t know that advertising helps the overall economy. If an ad helps me to decide to buy a Ford instead of a Chevy, it help Ford and hurts Chevy–but I was still probably going to buy a car. Thus, I don’t see how the local economy is helped by national ads for national products. Since a lion’s share of sports money is through TV/radio, that’s just redistribution. Finally, if advertisers spent less money on ads during sports (ads that they pay a lot for because of the inflation of the sports markets as well as because of the market of consumers watching), then they could conceivably charge less for their products. THAT could be an economic benefit, then, to eliminating sports.
Sorry Bucky, I guess I’m not explaining my self too well. My point had nothing to do with advertising local products. Maybe I should try to put some hypothetical numbers on this to illustrate.
Lets say the advertisers pay a network $1.25 billion dollars total to buy air time on the games. This is money the advertising companies have made from sales throughout the entire country- cities, big towns, small towns, boondocks, East, West, North, South, etc.
Now the network has bought broadcast rights to a sport for $1 billion, so it keeps $250 million of the advertisers’ money and sends the remaining $1 billion on to the league.
Lets say the league takes 10% for operating expenses, leaving $900 million to be divided up among the franchises. If there are 30 franchises in the league, then each will get $30 million. That is $30 million which was collected from consumers outside the franchise city and sent through several steps to the team owners.
Now the team owners are going to spend some of it in the city- I don’t know if it’s 10%, 50%, 75% or what. I was just saying that it should be looked at(and pldennison has looked at one of the items I mentioned- rent payments- and concluded that in the case of Cleveland it is negligable. That is the kind of info I was hoping would be examined).
Some of the ways that a portion of that hypothetical $30 million will be spent locally include:
office staff…this will include jobs for local people as secretaries, clerks, publicity agents…it will also include executives brought in from outside who will buy houses, shop locally, pay local taxes, etc.
promotional activities… such as buying ads on local radio and in local papers to promote the team
players’ salaries…they will spend some of their money locally…if they don’t buy a home to live year 'round there, they will still need a place to stay during the season so it will boost rental and/or hotel revenue; if they do buy a home it boosts spending for the real estate business; in addition the players will be spending on other things while they are in town, usually on the upscale end of the market…entertainment, resturants, cars, electronics, clothing, etc.
rent…until PLD mentioned it, I didn’t take into account that many of the sweetheart deals include rent…in cases where they don’t and the team has to pay for office space that also is a way that part of the $30 million would get added to the local economy.
I apologize for being so longwinded, especially on a point I do not believe is a crucial factor in the debate. I had only brought it up because I didn’t think it should be ignored entirely. And I want to emphasis that the numbers I used above were only to illustrate how the system operated. I have no idea what the actual numbers should be.
Okay, I get the ad dollars argument now. The problem is that it doens’t matter. Spending money on sports does not create wealth. The money that goes to sports, if the sports don’t exist, just goes someplace else, usually in closely related fields. If I can’t see the Twins (yech), I might go to a play, or bowling, or rent a boat, or something else. The money that I give to those buisness also creates jobs, and it tends to create more of them. If I don’t have some of my money going to higher taxes to pay for stadia, then I can spend more of it on these other pursuits.
Furthermore, modern stadia often contain diners, hotels, shops, etc., and retain all of the moeny from these ventures, thus preventing others from creating businesses around them. They increase crime in their immediate vicinities and as was mentioned, often do not end up paying rent.
As I’ve mentioned, there is a lot of data supporting the argument that subsidizing major pro sports does not have economic benefit to a community. There are only anecdotal arguments (without real support) for the contrary view.
All right, let’s get a petition going to submit to the antitrust division of the Justice Department to have them split up the pro sports leagues and make them compete against one another, excepting that they can agree to cooperate to schedule a championship game or series. If AT&T and Microsoft can be split up under antitrust, shouldn’t the NFL be split up as well?
If there were two competing, equal balanced rival leagues, cities would have some leverage about who they leased their taxpayer built stadiums to and the leagues would be forced to expand to cities without teams in order to beat their competitors. It seems to me that if there are enough players for 110+ Division 1 college football teams then there are enough players for 40-45 pro football teams.
OK, got a lot of stuff here-read and flame to yer heart’s content:
I live in Seattle. I voted (as did the majority) against the new stadium, Safeco Field. Same year, the team is running low on cash, and now we’re trading Mr. Ego, Ken Griffey, Jr., who is presumably one of the show horses that made a new stadium a feasible idea. I’m seeing a big, red brick tomb within 10 years. Maybe we could use it for tractor pulls or something. Oh, yeah, did I mention Safeco Field was something like 100 million+ over budget? Guess who gets to eat that?
Football has profit sharing. So, if team x makes a gazillion dollars and team y does not, team y gets a taste anyway. That’s why I despise NFL owners. They move their teams, even tho they have little or no chance of negative income. Greed and avarice.
Hockey is getting the shaft in Canada, if anyone has been keeping up. They make money in Canadian dollars ($1.65C to $1.00US, IIRC), but have to pay their players in US funds. Plus, they don’t usually get monster kickbacks and blackmail money like US teams. I know that the new Staples Center in LA had a lot of public contribution and tax breaks, whereas the new Canadian arenas didn’t. The long and the short of it is, because of the Canadian economy, we might be hijacking their own game out from under them. Since the US isn’t going to shut down the domestic arena pork-barrel anytime soon, I hope that the Canadian government does decide to help out their teams. Could you imagine all of our baseball teams moving to Mexico?
Personally, the football owners can kiss my white Irish ass. They are going to make obscene dough wherever they are, and will keep moving/backmailing until they think they have scored the best deal. I could care less about basketball. I doubt there will ever be a really big deal about it, because they usually play basketball in an existing building, and they enjoy lucrative merchandising and TV contracts. Baseball? Personally, I go to the old stadium in Tacoma and watch the AAA team play for $7 a ticket. Screw the Mariners. However, I think hockey needs help, because they have some of the highest costs for equipment and stadiums, but low TV revenue and ticket sales (the average hockey arena seats about 16,000, while Turner Field seats almost 50,000 for baseball).
I’d like to point out that Art Modell, who told the people of Cleveland that it was the city’s fault that he was losing money, because they took the Indians’ rent away from him by building Jacobs Field and made him pay for all the repairs to Cleveland Stadium, is now selling the Ravens (49% now, the remainder by 2004) because he can’t afford them anymore. Seems that despite his sweetheart deal with Baltimore, new stadium and all, his debt to expected earnings ratio became uncomfortably high, some of his creditors called in their notes, and the NFL bought some of his debt. Turns out the guy was just a piss-poor money manager after all. Poetic justice, says I.
“It’s my considered opinion you’re all a bunch of sissies!”–Paul’s Grandfather