The Stadium Boondoggle


LOS ANGELES–Despite all the talk of downsizing and "entrepreneurial government" buzzing around city halls and state capitals these days, there's one group of welfare recipients that elected officials can't seem to say no to: the owners of sports franchises.

In his recent book, Major League Losers, economist Mark S. Rosentraub recounted the largess. As of last June, about two dozen governments had provided, or proposed to provide, at least $100 million each in subsidies to professional sports teams.

Meanwhile, $250 million sports-welfare packages were on the table in Baltimore, Cincinnati, Cleveland, St. Louis and Nashville. And we can now add these cities to the list:

  • New York, where baseball's Yankees want upward of $1 billion in subsidies to stay on that side of the Hudson River.
  • San Francisco, where a $100 million bond initiative to finance a new stadium for the 49ers football team recently squeaked by.
  • Minneapolis, where the Minnesota Twins are threatening a move to Mexico City unless the locals cough up $400 million for a retractable-roof baseball facility.
  • And Seattle, where the votes are still being counted in a referendum that would give Microsoft co-founder Paul Allen $300 million to build a stadium for the Seahawks football team.

These subsidized sports palaces are a bad deal for taxpayers and serve to line the pockets of multimillionaire owners and players while stroking the egos of the politicians who back them.

Any team that stands to make tons of money in a new sports arena is financially sound enough to build its own stadium.

And team owners who are too inept to profitably operate a professional sports franchise shouldn't expect taxpayers to subsidize their failures.

As Mr. Rosentraub notes in "Major League Losers," taxpayers rarely get their money back when they finance a franchise owner's dream house.

Since sports is but one form of entertainment, the money that families spend on game tickets, concessions and parking is money that won't be spent on the movies, theme parks or other recreational activities.

And any neighborhood ""economic development" associated with building an arena is ephemeral at best. Mr. Rosentraub points out that the restaurants and bars surrounding Yankee Stadium are all but boarded up on the 280 days a year the team isn't playing a home game.

Yet state and local officials are all too willing to throw money at sports owners to keep them in place or to tempt out-of-town franchises to move.

Cincinnati taxpayers will pick up at least $220 million of the $270 million tab for Paul Brown Stadium, and that doesn't include the taxpayer costs of buying land for the arena and its adjacent $10 million practice facility.

Cleveland passed a $175 million "sin tax" initiative to fund a new football stadium after Art Modell moved the Browns to Baltimore, where they're now called the Ravens.

And three counties in the North Carolina piedmont—Forsyth, Guilford and Alamance—are duking it out to build a $200 million baseball facility for a major league franchise that doesn't yet exist.

This is a low-risk game for politicians to play. They are considered heroes when they get or keep a pro sports team, but–as long as they "give 110 percent"–they rarely become goats if the home team gets away.

But teams can't honestly cry "poverty." In the National Football League's 1994 and 1995 seasons, the Dallas Cowboys generated more than $75 million in revenues from luxury seating alone in aging Texas Stadium.

The Cleveland Cavaliers of the National Basketball Association received $17 million in luxury-seating revenues in the 1995-96 season, their first in Gund Arena. And baseball's Atlanta Braves may get as much as $100 million from ticket, concession and parking sales at Turner Field this season.

To be sure, not every franchise may be successful at the box office. But that's more a reflection of team management than market size or age of a sports facility.

If teams in such second-tier cities as Dallas, Cleveland and Atlanta can raise hefty amounts of cash from ticket, parking and concession sales, then why subsidize any of them a penny?

The answer is a sure bet: because politicians become even more spineless when the local team threatens to leave, and because owners know they can always find a sucker somewhere else.