Yves here. From what I can tell, the picture is far worse than this article suggests. Building sports stadiums drains municipal budgets with no down-the-road economic bennies. They need to be recognized as boondoggles for well-connected construction companies and sports franchise owners. And for the argument, “The team would leave if we didn’t buy them a new stadium…” let them. Just think through how much a sports team produces in the way of income, tax receipts, and jobs given how intermittent games are versus the costs (roads, space the venue occupies, including parking, police supervision). Even at colleges where a top football team is supposedly a big draw for donations, the programs are in fact a very large net budget drain.
By Dan Crawford. Originally published at Angry Bear
Dan here…I don’t usually pass along a study that has a company attached to the article itself, but thought this one might be of interest for readers.
On government handouts sports, stadiums or schools is the political side of the issue.
Stadiums or Schools: An Analysis of Public Expenditures
What we found is that ten states have allocated public funds to fund new professional sports stadiums since 2008. This does not include state expenditures on collegiate or high-school sports facilities. While there are certainly debates we should have over, for example, how much a state spends on high school instruction versus a high school football stadium, because school (i.e. college and high-school) sports facilities are technically part of a school and have some (the size of which is, of course, debatable) educational benefit, we left them out. We therefore focused on public revenue used to finance professional sports stadiums for privately owned teams.
The ten states have allocated nearly six billion dollars for these facilities since 2008. What’s troubling is that six of those states–Florida, Georgia, Michigan, New York, Texas and Wisconsin–have, over the same period, cut their education budgets. Those six states have allocated over $4 billion to help finance privately owned sports stadiums while at the same time cutting their state education budgets. Most alarming, three of those states–Georgia, Texas and Wisconsin–rank in the top 12 among states that have cut education budgets since 2008.
…
Ultimately, the issue of using taxpayer dollars to fund privately owned sports stadiums raises larger ethical questions about public expenditures. These questions become particularly important when situated within the recent history of cuts to education budgets and rising college tuition costs in most states. Moreover, in an era of incessant government austerity, shouldn’t we be putting specific fiscal constraints on the lease agreements between professional sports teams and state governments? This seems especially prudent given the fact that virtually every analysis of the long term economic effects of stadiums find no evidence that cities receive anywhere near an attractive return on their investment. Cities, in fact, lose money on these investments. Most recently, a study done by the Federal Reserve Bank of St. Louis found that “86 percent of economists agreed that ‘local and state governments in the U.S. should eliminate subsidies to professional sports franchises.’”
Considering the antitrust exemption enjoyed by sports teams and the often billionaire net worths of their owners, maybe it is time to consider laws that require owners commit a sizeable majority percentage of funding for stadiums in their lease agreements before the public has to commit any funds, or prohibits state support altogether. Moreover, if we are going to continue to divert public monies to sports stadiums, maybe it is time for sports teams to commit more real economic development to their local communities. For instance, what if all team-branded apparel had to be manufactured in the city where the sports team is based; this way, not only will the additional jobs and attendant tax revenue help make up for the loss of public funds being committed to the stadiums, but also fans will actually know that their investment in fandom can truly benefit their community. If the Raiders are going to charge you $99.99 for an Oakland Raiders Derek Carr jersey, then the least they could do is ensure that a decent chunk of that money is staying in the Town, at least for the time being.
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This is dead on. It was shameful what happened in Milwaukee – $250 million in public money to fund a new stadium for billionaire hedge fund owners, some from the state but most from the city and county, which of course have other screaming needs that are unmet. I would like to blame it all on Walker but the fact is the D mayor and county exec, and much of the local citizenry to be honest, were just as complicit.
Economists are hilarious. 86% of economists might say this is awful but every one of these boondoggles comes with paid-for economic studies “demonstrating” the payoff to citizens from these “investments.”
I agree with you and the article
“Economists are hilarious. 86% of economists might say this is awful but every one of these boondoggles comes with paid-for economic studies “demonstrating” the payoff to citizens from these “investments.”
You know how it works. If there is money to be paid to prove something, it will be apparently proved.
http://urbanmilwaukee.com/2014/12/18/murphys-law-foundation-helps-herb-kohl-get-20-million-windfall/
Nice tax benefit for Democratic Sen Kohl as well. Truly bipartisan shame in these deals.
It’s my understanding that public subsidies for stadiums are normally pretty popular with the public, as long as the team and its owner have a reasonably good image. People don’t mind enriching the owners with public money if they appear to be giving back something to the community in the form of a popular team. There have been exceptions where the team owners were such jerks that the public turned against them.
(As for the economists, if 86% of them are against something, …)
To wit, economists don’t get that the reason these subsidies are politically feasible has nothing to do with economic thinking one way or the other. Apparently the economists are fooled by the bogus economic studies that inevitably accompany stadium proposals, but these are just fig leaves that serve no other purpose than to enrich consultants.
And the quoted article is strange; why should stadium subsidies be weighed against education rather than any number of other public needs, or for that matter tax cuts? Certainly the public benefits from stadiums are much simpler to understand and potentially broader than those emanating from subsidies for schools, when many people do not have children in school but might still enjoy following a local team.
So then, more publicly subsidized stadiums, arenas, teams, and fewer schools? For potentially broader public benefits that are simple to understand?
I’m sorry but the whole “we must have tax cuts” meme has gotten a little old. I drive every day over the tax cuts given over the last few decades and it is wrecking my steering and tires.
About 20 years ago a book was published titled, “Field of Schemes: How the Great Stadium Swindle Turns Public Money into Private Profit”. The book argues that -no big surprise here- public officials sellout to the super-rich professional team owners at the expense of taxpayers. I was living in Pittsburgh when this book was published. My hometown of Detroit -a truly economically collapsing city- nonetheless was in the mid-1990s funding new stadiums. Back to Pittsburgh: in a plebiscite, which was held at the end of the 1990s, the public voted by a 60% margin not to fund new stadiums for baseball and football. So what happened next? The editor of the local paper, the Post-Gazette, in his weekly column wrote several essays deriding and demeaning citizens -as economic illiterates- who opposed public funding of these stadiums, and the paper’s editorial policy followed suit. Our “public servants” at the state level got together with our “progressive” mayor and found a non-referendum way to fund the stadiums by passing legislation just before Christmas at some ungodly hour of the night. I note your handle, squire, fits your view of this matter, especially your contention that if owners don’t “appear” to be jerks and “appear” to be giving “something” back to the community, then by all means they deserve public funds for their stadiums.
Detroit is undergoing a similar process right now with partial public funding of the Little Caesars Arena which is being built for the Detroit Red Wings and Detroit Pistons.
A couple of local activists took offense and filed a lawsuit in part because they claimed “….state law prohibits spending school property tax revenues on the projects as planned because the schools millage voters approved in 2012 was to be used exclusively for Detroit Public Schools’ operating expenses.”
Their lawsuit won’t get anywhere fast since one of the activists served time for embezzling almost $200,000 from a neighboring school district, and the other is being accused of being a publicity hound because she’s running for office. One could be forgiven for suspecting that they’re controlled opposition.
http://www.freep.com/story/news/local/michigan/detroit/2017/06/01/lawsuit-seeks-voter-approval-little-caesars-arena-public-funding/362816001/
http://www.crainsdetroit.com/article/20170628/NEWS/170629869/dda-attorney-argues-plaintiff-davis-lawsuit-should-be-tossed
It’s my understanding that ‘news’ articles touting the public’s love of tax-funded stadiums rarely come with citations, links to reports, or other data. I’ve seen the same endless assertions about our gullible desire for more circuses squire, I just find them implausible.
More than anything else, the public is not paying attention when these little payolas are brought up for consideration. Referenda are the least common way for funds to be okayed for allotment. Legislatures tend to keep this sort of bribery in hand. Public comments periods are limited, poorly advertised and – as we all damned well know – pointless exercises mainly.
I would debate that public subsidies for stadiums are popular. They tend to lose anytime they’re put on the ballot, which is why the NFL has started threatening anyone who wants a team that they can’t put the stadium up for public vote.
The politics are real. Local teams are vital to a lot of people’s senses of place and culture and community and history.
Only way I can think to make both the politics and economics work is to make sports franchises community owned co-ops, which I guess makes me an agent of communist Putinland or something like that.
Who needs owners? They are like health insurance companies are to health care.
Maybe more true in past tense. Do you have a sense of place and culture and community and history if you move for career reasons as often as possible? When I lived in Houston I knew nearly nobody who was a lifetime resident of Houston. I am sure there are many people in Atlanta who know nearly no lifetime residents of Atlanta.
In Oakland here I don’t know one single person who thinks the government should have outbid those stupid Las Vegas leaders who are giving a billion to Mark Davis for the Raiders stadium and whatnot.
Speaking of the Raiders and Oakland,CA sports teams..
From:http://www.mercurynews.com/2016/01/08/oakland-has-millions-of-reasons-not-to-fund-new-raiders-stadium/
“Take Oakland, for example. When the city and Alameda County leaders balked at the Raiders’ demands for luxury suites in 1980, the team eventually bolted for Los Angeles, only to return 13 years later when local officials greenlighted nearly $200 million in stadium bonds that residents will be still be paying off for the next decade.”
This suggests Oakland will be paying for the stadium bonds until 2026.
Thus Oakland/Alameda county will still be paying for stadium bonds for a team that will be relocated in Las Vegas in 2019/2020
The rather flexibly named “Golden State” Warriors basketball team is leaving Oakland for a new arena in San Francisco, so Oakland is losing “their” basketball team.
Note, previously the team was the Philadelphia Warriors and the San Francisco Warriors.
The more general “Golden State” location term should lower the cost of re-branding efforts, at least for moves inside CA.
At the end of the free recent NBA Championship parade/celebration in Oakland the two primary owners of the Warriors promised to pick up Oakland’s cost for the event.
It seemed only fair as the Warriors will be moving to San Francisco soon.
Aside from the Green Bay Packers (USA football), I believe all USA sports franchises are owned by wealthy individuals quite familiar with extracting favors from municipal governments
It was good to see Oakland not cave to the Raiders and San Francisco not to the 49ers.
But both teams found other municipalities who would give them good deals.
I hear that the Green Bay Packers are all secret KGB agents.
Packers fans would probably say the same about the Chicago Bears! :-)
Yes our beloved Packers are community-owned and thus we are not subject to the blackmail relocation threat. While the Packers have also gotten public money to upgrade their stadium, there is absolutely no doubt that a private owner would have declared Lambeau obsolete years ago. But I doubt they would even have demanded a new stadium. They would have just absconded to the sunbelt. With the league’s blessing.
Of course, the NFL now has rules against community ownership, with the Packers grandfathered as the only exception.
Where are the socialists when you need them? I am shocked, or not, that no mayor or governor has ever asked for equity in the franchise, or some other upside, in return for the public’s money.
“Of course, the NFL now has rules against community ownership, with the Packers grandfathered as the only exception.”
Naturally they do. The NON-PROFIT corporations that these national sports leagues are, can just make up their own laws to dictate what elected governments are permitted to do. The perfect graft.
For-profits haven’t F-ed us over enough. The non-profit sector, led by professional sports associations and hospitals like the Mayo and Cleveland Clinics, for god’s sake, will show those profit-seeking corporations how duped they have been all along.
USA! USA! USA!
The Green Bay Packers Board of Directors is the owner of record for the Green Bay Packers. The corporation has 360,000 shareholders.
We live in a world of deceit. Do not expect this to change anytime soon.
$99.99 for a jersey emblazoned with the Oakland(Las Vegas) Raiders logo and name made in China for $0.99! These sports fans are so stupid. They need to get a life
Interestingly, the three oldest baseball parks are owned by the teams, while the Braves just got the citizens of Cobb County to replace Turner Field after only 20 years.
Then there’s the giant Mercedes Benz stadium being built for the Falcons right next to the Georgia Dome it will replace. I’m old enough to remember when both the Falcons and Braves played in a single modest stadium that was converted to football when necessary. Perhaps not coincidentally ticket prices for baseball games were far more reasonable then.
The elites seem to be doing bread and circuses wrong since at least during Roman times it was the wealthy who paid for the games to keep the proles distracted. By shifting their costs off onto the public–some of whom probably have no interest in sports–the sports team owners are prime examples of grifter nation….privatize the profits, socialize the costs.
I was an advocate of non-professional sports that are safely managed and are locked into local schools, to use and develop the talent in the region. This would make any expenditure for sports a real source of local pride by supporting local talent. Craig’s comment would be problematic response to such thinking. Since the Olympics have gone to the professional pools, amateur sports has died, thus killing off that idea.
However, why wouldn’t this work for professional sports as well? My only reservation would be that “rich” regions (Texas, California, Florida) would invest more money and thus develop talent that would have obvious advantages. And, then there is cheating, talent theft, “moving” players who might be enticed by better careers (Little League Baseball had its scandal of over-age players and ones moved to team locations).
The upshot is that until the cultural and economic system of sports is upended, there is no safe way to reform such a nexus of corruption and greed. Since this ties into the world at large, we have met the enemy, but are sometimes afraid to name it.
If one is willing to settle for a lower standard of play, some minor league baseball teams are trying hard to have community involvement and provide a good show, usually with some humor..
For example, the San Rafael CA Pacifics baseball team has this game scheduled today:
“Alternative Facts Night”
“On Saturday, the Pacifics will host the Pittsburg Diamonds at 5:05 P.M. for Alternative Facts Night, the hugest event ever. Although 5 million tickets have already been sold, there are still some available! Vladimir Putin will run a mascot race unopposed, and the first 250 fans in attendance will receive Kyrie Irving Globes, which are perfect for hanging on the wall in your office. One lucky fan will receive a CIA Listening Device (also known as a microwave) as well.”
Yup, and we have them here on the East coast. However, minor league teams get much of their funding from the majors and private donors, whose ties are to… someone or something else. “It” who shall remain unnamed.
BTW, the Putin race sounds like a sure bet – let’s get Zero Hedge to play the bank.
Sports are kid’s games; get over it. Education is for the individual’s game of developing their unique talent. Civics is a co-operative game, free individuals need to be playing their non-cooperative games with their own internal scoring. Leave the sports to children, grown-ups need to be finding their own games to play. We get what we pay for, the benefits are what you make them.
I’m not disagreeing with your comment; just kind of expanding the idea of “Sports are kid’s games….” My main gripe about how sports are kid’s games is how far afield so many young sports players in schools all over the country belong to “area leagues” that require sometimes huge travel distances and time……I have grandchildren that do this all the time….games played 100 to 200+ miles away!! What’s wrong with this picture?? And, the cost!! The answer I received from one set of parents is that these “area” games are most always perused by the “professional” people looking for talent…….Is that what we are raising our young for???? Professional paid sports and the military????
As far as the private stadium building augmented by public monies….how stupid can Americans get????
If every city with a major professional sports team were to refuse to provide special tax incentives and other gifts for the sports team, then a team’s threat to move elsewhere would be completely hollow. They could move from city A to city B or to city C, but if neither city B or city C provided special benefits, there would be no point in doing so. Any state or city government that is experiencing financial difficulties has no right to provide gifts to the billionaire who own sports teams. And most states and cities are having financial problems.
Panem et circenses, but without the bread. I know it’s usually bad to blame the victims, but sports fans are the real enablers of this sorry situation. People need to stop providing voluntary direct or indirect support for the oligarchs.
Spot on…and not nearly as bad a portrait as reality. George W. Bush borrowed the money to buy into the Rangers, then persuaded the citizens of Arlington TX to fund a stadium for the (money-losing) team. David Cay Johnston reports that 75% of W’s net worth came from that deal. (It’s hard to figure a return on investment when there’s no investment, just money borrowed on the security of the Bush name.)
Meanwhile, Sacramento approved a quarter-billion-dollar loan to subsidize the stadium for the NBA Kings. The City owns the stadium, so no tax revenue, and a white elephant if the Kings ever decide to leave. The plutocrats who bought the Kings claimed to have paid too much, but Forbes now estimates (post-stadium) that the team is worth double what they paid for it. The City has no stake in the Kings, so no veto over future threats to leave, extorting even further studies a la Al Davis (whose Oakland Raiders have extorted money from Oakland, Anaheim, and now Las Vegas).
Bonus question: Who underwrote the stadium subsidy? Answer: Goldman Sachs.
Of course any request for funds for affordable housing, or homeless services (actually a money saver) are met with poor mouth slow walking, but that stadium subsidy was handled with breathtaking speed, altering state environmental laws to allow its construction without delay, etc.
David Cay Johnston notes that British professional sports don’t have that anti-trust exemption pro sports have in the U.S. So 13 soccer teams play in London, and none of them are extorting stadiums.
“Bonus question: Who underwrote the stadium subsidy? Answer: Goldman Sachs”
These guys from Goldman Sachs are many parties’ hosts
The idea of stadiums over schools is not new, my parents were from Indiana, where High School Basketball is the very big thing. A town in the southern part of the state Loogootee build a basketball stadium that was big enough to hold the entire towns population in the 1950s and was known around the state for this. today the gym has a capacity of 4500 in a town of 2700 :http://nadawgsports.com/id348.htm. The entire counties population is only 10,000. The high school has 317 or so students but has a very long record of winning. This does show that in some small towns high school sports are very IMPORTANT! Of course the same thing is true of many small towns in Tx and High School Football.
So it is not just pro sports.
Yves…I agree it is worse than the article presents. AB contributor Kenneth Thomas writes on public/private subsidies and finds few that are mostly not giveaways.
Yves – In reference to your comment that even at big sports schools the football programs are money losers, on net: Would you say this applies to the very top tier schools such as Alabama, Auburn, Texas, USC, Notre Dame, etc?
Thanks.
Neil deMause has been following this for years in print and on his great web site:
http://www.fieldofschemes.com
His book of the same name is a classic.