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Posted
September 8, 2010

Professional Sports: Taxpayer Parasites

Sports leagues bilk the public for glitzy new stadiums – and the bills just keep on coming.

In the early 1980s, Ralph Nader launched a new advocacy group called FANS, Fight to Advance the Nation’s Sports, which aspired to address many of the social ills associated with professional sports. While some of his ideas were arguably misguided, such as trying to ban junk food sales at the ballpark, others were incredibly prescient. One idea was to stop taxpayer subsidies to the mega-stadiums that were being built for big-league baseball and football teams.

Essentially, wealthy team owners, who over lunch at their elite clubs would rail against socialistic intrusions on corporate America, invariably demanded that city governments subsidize the construction of lavish new sports palaces for their teams. Why? Because of all the civic pride and economic gain that they would allegedly stimulate.

And if the city didn’t pony up? Well, team owners frequently threatened to move the teams elsewhere, leaving the citizenry without a football or baseball franchise. Owners fostered an ethic of “stadium envy” so that even cities with a flourishing, happy fan base felt compelling to build new stadiums, lest another city would arise and steal the team away.

Since most mayors and city council members are pretty cozy with business interests in the first place, the arguments for taxpayer-subsidized sports palaces fell on receptive ears. “It’s all in the public interest!” Remember, this was a time when pro sports was exploding, in the 1970s and 1980s, and arguments could be made that the economic ripple effects would be extensive and the stadium would at least break even.

For decades cities floated bonds to build gleaming new stadiums and pay the debt service out of taxes. As if to add insult to injury, the city would then sell the “naming rights” to corporations, effectively letting a corporation that had paid a small fraction of the stadium’s total costs appropriate the name for itself. The real benefactor, the taxpayers, were forgotten — except as the people to whom to send the bill. It is all a perfect case study of how the market and state collude to defraud the commoners.

A nasty postscript often emerged when the corporation for whom the stadium was named was exposed as a corporate criminal or went bankrupt. More than one stadium, such as Enron Field, has had to hurriedly re-name themselves under such circumstances. Needless to say, such incidents did little for for fan loyalty or city pride. (Ah, but everyone keeps forgetting — this is a business!)

We now learn, in a front-page story in The New York Times, “As Teams Abandon Stadiums, The Public Is Left With the Bill.” This is the inevitable denouement of decades of reckless subsidies to sports teams underwritten by the taxpayers.

In New Jersey, the old Giants Stadium was demolished years ago, but state taxpayers must still pay off $110 million in debt, or $13 for every New Jersey resident. The Meadowlands outside of New York City received generous subsidies from New Jersey taxpayers – $300 million in state bonds, reduced taxes on racetrack gambling, and more. The facility was demolished this year, but taxpayers still owe money on it. (The exact sum is hard to determine because of re-financing of the debt and state contributions.)

This is not an isolated case. Around the country, sports stadiums have been demolished or have no teams playing there – yet bills for the construction debt keep on coming. (This dynamic may be a preview of de-commissioning nuclear power plants in coming years.)

Debt is only the most visible costs assumed by taxpayers. The uncounted costs are legion. They include, writes the Times, “subsidies for land and infrastructure; ongoing public costs associated with operations, capital improvements and municipal services; and foregone property taxes.” (See the forthcoming book, Full Count: The Real Cost of Public Funding for Major League Sports Facilities, by Judith Grant Long, a Harvard professor or urban planning.)

As competition from other sports venues intensified or as teams moved away, stadiums have often been left empty — and taxpayers were left holding the bag, with little or no revenue being generated. The headline for a sidebar chart accompanying the Times’ story says it all: “The N.F.L. Plays, the Public Pays.”

The sidebar reads: “As the N.F.L. prepares to kick off its 2010 season, nearly all of the league’s 31 football stadiums are financed with public money. On average, more than half the reported building costs of all active stadiums has been paid for with tax dollars – for a collective total of 48 billion – and in several instances, taxpayers have footed the entire bill.”

And whatever happened to Nader’s FANS group? It was heckled and hooted out of existence by ignorant sportswriters, self-interested team owners and even many fans who thought that Nader was going too far. They acted as if he had violated some sacred cultural space by trying to apply basic standards of financial and civic accountability to the escapism of sports. In a sense, Nader was naïve in thinking that he could apply rational policy arguments to a cultural activity that evokes mystical feelings of tribal identity, civic pride and competitive excellence: the perfect smokescreen for predatory corporate owners looking for handouts.

There were other reasons that FANS did not catch on (it ultimately folded after a few years), but its analysis of municipal subsidies of sports stadiums was impeccable and prophetic. Now, decades later, the Times checks in with an excellent post mortem of that giddy era in which cities threw money at wealthy team owners with little regard for taxpayers. I frequently return to the counter-example of the Green Bay Packers, a community-owned enterprise that – because of that ownership structure – has avoided most of the financial follies and corporate predations that have afflicted other cities around the country.

But the N.F.L. knows a good thing when it has it: it has grandfathered out such community-owned financial structures for N.F.L. teams. Only self-reliant, “free enterprise” franchises — i.e., private investors — are deemed suitable to own and manage the imperial sport of America! How darkly ironic that we get what we pay for.