Why Roger Goodell Saying 'No' to an NFL Move to Los Angeles Next Season is a Good Thing for Fans

Since the Rams and Raiders left town almost 20 years ago this Christmas, Los Angeles has been desperately trying to put together a strategy to bring an NFL franchise (or two or three) back to one of the largest media markets in the country. 

And while there's been no progress whatsoever in developing a plan to finance and build stadium to house a team—or even get the NFL to agree to move a franchise—the city continues to court the league. 

Things looked hopeful for fans earlier this year after commissioner Roger Goodell stated he would like to see a team in Los Angeles. But any sense of optimism was deflated last week after reports surfaced that Goodell told teams interested in relocating that there would be no moves made in the 2015 season. 

But do LA fans—who have lost teams twice before for lack of support—really want another football franchise in their city? Is the NFL actually serious about an LA return, or are they just using the city as a bargaining chip to make other localities pay up for stadium upgrades. And for a city that's chronically in debt and literally breaking at the seems (water main breaks seem to be a weekly occurrence here now), is it really a smart move to spend millions on a stadium to bring back the NFL?

"Why No Smart City Would Want the NFL" looks at the effort in LA to bring back a team and posits that maybe Los Angeles is better off by not having a franchise. Produced by Alexis Garcia. Original release date was January 31, 2014 and original writeup below. 

"The NFL is good at fleecing taxpayers," says ESPN columnist Gregg Easterbrook, author of The King of Sports: Football's Impact on America. "It's about a billion dollars a year I've calculated in public subsidies to NFL owners and this is a group that consists almost entirely of billionaires and yet receiving significant public subsidies every year."

The NFL raked in over $9 billion in revenues last season and the league is pushing team owners to triple that mark over the next decade. 

With the league's overwhelming success, many cities are eager to get a piece of the action, often offering billions in public subsidies to attract (or keep) football in their localities. 

But with the NFL making record profits, is it right for cities to spend public money on these type of projects? Especially when over half of NFL team owners are ranked on the Forbes billionaire list?

No where is this illustrated more than in Los Angeles, which has been trying to lure the league back to the area ever since the Raiders and Rams left town 20 years ago. And though numerous economists have demonstrated that sports stadia don't increase local economic activity, it hasn't stopped debt-ridden cities like L.A. from approving a $1.2 billion dollar stadium deal that would be financed with nearly $350 million in taxpayer-backed bonds. 

Los Angeles City Councilman Tom LaBonge has been an advocate of bringing the NFL back to Los Angeles and voted along with the rest of his colleagues to approve the stadium deal (whether it ever gets built is remained to be seen). "There's a beauty to the game and I'd like to see the beauty in Los Angeles. I like what it does for a city when their team wins," says LaBonge. 

The irony is that even if Los Angeles did manage to build a stadium, there's no reason to think the NFL may bite. The league has remained notoriously vague on the subject, with NFL spokesman Brian McCarthy telling Reason: "We would like to return to the Los Angeles area, but only if it works for the community and the NFL. There is no timeline but we continue to monitor all stadium-related developments in the area."

Sports stadiums not only appear to be a bad deal for tax payers, but having a franchise could also hurt loyal fans by making it difficult to watch their hometown team play thanks to the expansion of sports broadcasts and the complexities of NFL blackout rules. 

"If you have a team in Los Angeles and it doesn't sell out, they can blackout the game in Los Angeles which means you often lose games…and as a fan there's no payback in that," says Daniel Durbin, Director of the University of Southern California's Institute of Sports Media and Society. 

Though local boosters like LaBonge may continue to dream of having the NFL in the city, it's becoming increasingly clear that not having a team may be the best deal for tax payers and fans alike. 

About 7 minutes.

Produced by Alexis Garcia.

Camera by Tracy Oppenheimer, Zach Weissmueller, Paul Detrick, William Neff, Sharif Matar and Todd Krainin.

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Comments

[Gadianton]

It's about a billion dollars a year I've calculated in public subsidies to NFL owners and this is a group that consists almost entirely of billionaires and yet receiving significant public subsidies every year.

And that's how you become a billionaire in a cronyist economy.

[Overt]

I toured the 49ers stadium (which is in Silicon Valley, not SF btw) a couple weeks back. My gawd what a beautiful piece of work. No regular working shmoe can afford tickets, but the place is truly top of the line. On the 50 yard line, they have a walk out patio from a full service, free (to certain exclusive ticket holders) gourmet restaurant. On the roof, they have what can only be described as an oasis of booze- a giant lounge/bar covered in lush greenery, TV's, and wrapped in glass railings that don't obstruct your view of the field down below. Having been at the newish Mile High stadium just a few weeks earlier, it was eye opening. In today's dollars, Mile High would have cost less than half the $1.3B price for Levi's Stadium.

Which is all to say, the people of the Bay Area can be very proud of the monument they've erected for the exclusive use of 70,000 of their richest betters. Good for them, I guess.

[Overt]

It is noteworthy that even though you read those numbers- $400 Million for Mile High and $1.3 Billion for Levis Stadium- that isn't the cost that was born by the public. Usually around 75% of the stadium cost is floated as a loan by large banks, with a small amount kicked in by the NFL ($100 Mill for Mile High and $200 Mill for Levis) and the rest made up through retail taxes and/or bond initiatives. The loan is then paid off by the operator of the stadium with ticket/event proceeds.

That said, it isn't always clear whether the stadium operators can pay the full loan, and I wouldn't be shocked to find that a lot of city governments give "One time Payments" each year to keep the stadium operator (which is generally a corporation owned by the city) solvent. Additionally, it is extremely sad to see that, as a proportion of the total stadium cost, the NFL is spending less as time goes on.

[Sevo]

As a San Franciscan, I was quite pleased that we SF didn't get stuck with the bill, but then the SF city gov't made up for it by subsidizing Larry Ellison's rubber-ducky show.

[Jordan]

Last time Reason wrote an article about cronyist green energy subsidies, Commie Kid showed up here and lectured us about how those subsidies are a drop in the bucket and Reason should be going after the bigger targets.

I predict he won't show up in this thread to make the same argument.

[Sudden]

I don't want a team in L.A.

The NFL is fixed.

[Spencer]

Look, I know what you're saying... but the COWBOYS ARE NFC EAST CHAMPS!

I know... that stadium is an abomination built on tax payer ignorance... but THEY MIGHT EVEN GET A BYE IN THE FIRST ROUND!

Yes, I understand eminent domain was on the table as they ran low income people out of town to keep them away from the new jewel of Arlington... BUT TONY ROMO IS PROBABLY GOING TO BE NFL MVP!

This post is not sarcastic. I am, irrationally, a fan and I'm excited. I know. It's horrible. I'm an Astros fan too, so I think I do my penance there... UNTIL 2017 WHEN THE 'STROS WIN THE WORLD SERIES!

[Spencer]

Today my name is Threadkiller!

[creech]

Which are the real Cowboys: the ones clobbered at home by the Eagles or the ones who clobbered the Eagles in Philly?

[CE]

Doesn't Romo have to the MVP of his team first?

[PRX]

I don't know. Los Angeles Redskins of Anaheim has a nice ring to it.

[Doghouse Riley Jr.]

Breaking at the seams, not seems. "Breaking at the seems" would work well for a Philip K. Dickian world where everything the protagonist sees just... isn't quite right, leading him to discover his whole experience is actually a fully immersive reality cooked up as market research, something like that.

[Florida Man]

You mean the Truman show?

[antisocial-ist]

Is the NFL really any more cronytastic than the other major sports, or do their stadia just cost more?

Semi OT. I have a love-hate relationship with the league. I love football and they certainly have the best athletes playing it. But damn do they do it in a boring and hamfisted way.

[Sudden]

And it's fixed

[Rhywun]

Enh, so is every European soccer league but I still watch. Unless it's one of the "critical darling" teams.

[CE]

NBA games aren't fixed. The refs determine the point spread on the fly.

[Timon 19]

I think they probably ARE more cronytastic for the simple fact that their taxpayer-funded palaces are only used 10 times a year at best.

It's telling that the rest of the year they have to beg soccer teams to play at them. Stadium owners are lucky that the US is such a fantastic market for soccer from a bunch of nationalities (including Americans themselves). Mexico alone makes a killing in the US playing in NFL stadiums.

[Overt]

The really fancy stadiums get used a lot more than 10 times a year. Even Mile High gets a game between the Buffs and Rams each year. But in addition to that, there are big name concerts- usually one or two a year- plus other activities. And yeah, stadiums will get other pro teams to play there to further sell tickets.

As I noted above, Taxpayers generally only pay around 15 - 20% of a stadium's cost with the NFL Team paying around 10%. The remainder is a loan floated to the entity created to build and operate the stadium, and they pay it off with the proceeds from ticket sales and concessions.

[Jordan]

Only 15-20%. Well, 1% is too much, but that's a shitload.

[Overt]

I agree that it is still not a great deal for the taxpayers. But when you compare it to the cost of museums and libraries that are almost completely supported by ongoing payments from the city, it is at least helpful that the stadiums do quite a bit more to support themselves with revenues generated from people actually visiting.

Of course, there are additional costs bourn by the city. Police, traffic, etc. I'm not sure how much of that is paid for by the stadium authority out of their operating budget. I'm sure it differs by city.

My understanding is that the Staples Center in Los Angeles was completely privately funded, and due to its unique team tenancy (Two "pro" NBA teams, and the Kings) it is pretty successful financially. Of course, the City did give them a bunch of tax breaks, eminent domain, and other "soft" subsidies, but it is much more palatable to me. The point there is that it IS possible to make event centers that are net positive. The problem is so many cities are willing to bid up and make payments for the "Prestige" of having a team, that no one really tries to get private entities to pay for the whole thing anymore.

[Timon 19]

I'm sure there are plenty of exceptions out there, but they are pretty few in the NFL, I'd imagine.

MLS has seen quite a mix, but there has been a lot more privately-paid for stadiums in proportion to other sports.

[Spencer]

"But when you compare it to the cost of museums and libraries that are almost completely supported by ongoing payments from the city, it is at least helpful that the stadiums do quite a bit more to support themselves with revenues generated from people actually visiting."

Well, there's a pretty major difference here. Libraries and Museums are open to EVERYONE while NFL games are not.

You also probably don't have to pay to park in the library- and the library isn't a publicly funded building that then has the keys turned over to a private company without any profit sharing... etc.

[Timon 19]

^THIS.

[Some call me Tim?]

That's because the library can't hope to make a profit, and the parking is free because there is a surplus of spots due to low patronage.

Everyone *can* attend it, they simply choose not to, and they make this choice early and often.

[Spencer]

Well, the library i run doesn't have empty parking spaces because we're cranking out the value.

I would love to advocate that the library be an optional tax for residents to pay- i know i would get more money. the 60% of our city that has used my library in the last year would pony up more than what I get now.

[CE]

What, free Internet?

[Overt]

Well, there's a pretty major difference here. Libraries and Museums are open to EVERYONE while NFL games are not.

You also probably don't have to pay to park in the library-

NFL Games are open to anyone who wants to buy tickets, and most Museums you have to buy tickets to enter- and they can be REALLY pricey when you have special exhibits coming through. Denver's major "Cultural Center" where they have the art Museum and public library requires you to pay for the parking.

and the library isn't a publicly funded building that then has the keys turned over to a private company without any profit sharing... etc.

I'm not sure what you mean by this. Pretty much every stadium is run by a publicly owned operator, setup by the funding city. That entity owns the stadium and carries the loan against that property. They don't just hand the keys over to private entities, the private companies- NFL Teams, Concert Bookers, other private events- rent the space and give a portion of the ticket sales to the operating entity.

[bassjoe]

"But when you compare it to the cost of museums and libraries that are almost completely supported by ongoing payments from the city, it is at least helpful that the stadiums do quite a bit more to support themselves with revenues generated from people actually visiting."

Eh, it is easy to see a public good in subsidizing easy and cheap access to libraries and museums that I don't think even most regular Reason readers would argue with. What exactly is the public good in having imposing sports venues built where the average family cannot actually attend the games more than once a year?

[Some call me Tim?]

Ummm I think you have a misunderstanding of the concept of a "public good."

In economics, a public good is a good that is both non-excludable and non-rivalrous in that individuals cannot be effectively excluded from use and where use by one individual does not reduce availability to others.

Museums and libraries are certainly not public goods under this definition.

[CE]

...it is easy to see a public good in subsidizing easy and cheap access to libraries and museums that I don't think even most regular Reason readers would argue with...

Are you new here or something?

[Timon 19]

Yeah, I don't get this "only" 15-20% stuff.

Leaving out the loan doesn't mean we don't end up with part of the bill as well. What about stadiums that overran massively (Cleveland leaps to mind) by 2 times its original bid?

[Overt]

Actually, it DOES mean we don't end up with the bill if the stadium operator goes out of business. The operator is like a private corporation and if it goes out of business because it cannot support itself, the costs of that bankruptcy remain in that corporation. This happens all the time even in privately funded organizations. GE doesn't own the power plants that it builds and runs- instead they form a separate company that they own, and then take profits out of it while limiting risk to that operating concern only.

I'm not saying that stadiums are a good idea necessarily. The point I was making was that the bulk of stadium costs are in a loan secured against the stadium itself. Taxpayers kick in anywhere from 15% - 20% of the cost- though lately the trend has been to get private sponsors to kick in a small percentage of that (Levis paid like $100 Million to name the new stadium in Santa Clara). This is important because people who say no business would ever be able to spend 1.3 billion to get a stadium are as uninformed as you seem to be above. Those businesses could easily cover that additional 100 - 300 million to build the thing. They just don't because Cities have traditionally wanted to build it themselves with the prestige it brings them.

[Overt]

Regarding Cost Overruns it depends on the structure of the agreement.

AT&T Stadium (Jerryworld) was originally slated to cost around $650 million, of which Arlington kicked in ~$300 million. The stadium actually costed about double that, and Jerry Jones was responsible for all the over-runs.

AT&T Stadium is a little different in that it is owned by Arlington and Operated by private companies who pay rent to Arlington to use it. The Cowboys are the official operators and a Jerry Jones owned business is the concession operator.

[CE]

The best athletes play basketball.

[Stormy Dragon]

There will never be a team in LA, so that the NFL can keep using the threat of moving franchises there to blackmail cities into paying for stadiums with tax dollars.

[KDN]

Ding ding ding. Seattle is also never getting the Sonics back; David Stern learned this lesson well.

The NHL, being run by a moron, will not learn this lesson and will expand into Quebec at the next opportunity.

[Some call me Tim?]

Except that David Stern doesn't run the league anymore.

[CE]

Hey, something to be thankful for.

[BilboTeabaggins]

How often do taxpayers end up on the hook for these bonds? I've never read one these issues, are they backed by a lien on the stadium?

Also, LA is the worse sports city in the country. Move a team to Canada or have an NFL Stadium Casino in Vegas with bets in real time on the games.

[Timon 19]

Lots of people say Atlanta and/or Miami are as bad or worse.

[Overt]

For an example of how costs for stadiums work out, the $1.3Billion Levi's Stadium was built using around $200 Million from the 49ers, $850 Loan to the stadium authority that built and operates it, and then the remainder paid with bonds and hotel taxes.

[PRX]

Reunion Arena in Dallas was torn down before it was paid for*, but in reality the city had done a number of cash out refinances on it. And now, you can't rent a car in Dallas without Mark Cuban getting a cut.

I had a couple of clients bought out by Jerry Jones for AT&T Stadium. In both cases they said he paid about a 20% premium over market.

[Dr. Fronkensteen]

The L.A. Bears would work out with California's state animal. Of course the Bears aren't an NFL team. More CFL

[CE]

+1 Restored Republic of California, FLM

[sonofsaf]

Roger Goodell wants this free online book banned from the internet. It's not what you think.

theimmaculaterejection.com

[ChrisO]

But do LA fans?who have lost teams twice before for lack of support?really want another football franchise in their city?

False. LA supported the Rams and Raider just fine. They just weren't willing to publicly fund new stadia for them.

The Rams support fell off a bit in the last years, but that's because they did the idiotic thing of moving to Anaheim. I've read conspiracy-minded folks say that Rams owner Georgia Frontiere intended to move them to her native St. Louis the moment she inherited the team from her late husband. She put nothing into the team during the '80s, but they were both good and successful during her husband's tenure.

[CE]

Avoiding LA makes no sense at all for the NFL. They could raise a small fortune just by auctioning off 2 expansion teams. And there has been progress toward planning a new stadium -- 2 competing plans, actually. A smarter plan would be one stadium for 2 teams to share on alternate weeks.

[userve32]

Slippem up man I like that.

http://www.AnonWayz.tk

[AD-RtR/OS!]

If the NFL wants to put a team in LA, and is unwilling to play their games in the currently available stadii, they are welcome to build their own, with their own money.
And that's why they don't have a team here - they want to sponge off the taxpayers again.