Saturday, November 6, 2010

Bamboozeled by sports franchises

There was a fascinating thread recently on H-Urban in response to a question about the true costs of professional sports franchises. This is a topic I've long wondered about. Over the years I've heard some critiques about hidden or externalized costs of sports facilities & stadia. I've also witnessed—usually from afar and with only part of my attention—sports team owners playing one city against others every few years when local subsidy agreements are nearing an end, or when they perceive that it's time to build a new stadium. Some examples of this include when team owner Art Model moved the NFL's Browns from Cleveland to Baltimore (where they became the Ravens) in 1995, and when chairperson Clay Bennett moved the NBA's Supersonics from Seattle to Oklahoma (where they became the Thunder) in 2008.

Professional sports are really big business in this country (as are certain college sports, claims to the contrary notwithstanding), and team owners generally treat their franchises as revenue-generating businesses. Owners threaten to relocate their businesses when they don't wring from municipal governments the public subsidy agreements they feel are their due; "free market" adherents would claim this is as it should be.

Many fans of professional sports, however, invest in teams the kind of emotional attachment that in some ways can only be described as religious.

The problem arises as a result of the difference between the pragmatic, capitalist perspective of the sports franchise owner and the emotional, religious perspective of many sports fans. As the discussion and sources below allude, the economic returns on sports team investments tend not to meet initial projections, which means that taxpayers pay much more in subsidies than they originally bargained for. Owners generate their original business plans and subsidy packages with threats—variously implied or expressed, as needed—to municipal government and city residents that they will move the franchise if their proposal is not approved. City residents—the voters—then face the decision without full knowledge of the amount they're about to subsidize millionaire (sometimes billionaire) sports franchise owners; many of these citizens also carry with them their emotional, religious attachment to the team & the team's history, potentially clouding rational judgment.

This is where the bamboozling comes in: owners take advantage of sports fans by obscuring economics behind a shroud of emotional manipulation.

Key parts of H-Net discussion & sources below.


Judith Grant Long's work includes the following:
    "Full Count: The Real Cost of Public Funding for Major League Sports Facilities." Journal of Sports Economics. May 2005.
    "A History of Public Funding for Major League Sports Facilities, 1890 to 2001." Center for Urban Policy Research, E.J. Bloustein School of Planning and Public Policy, Working Paper Series* 2004.

She also has an upcoming book, called _Full Count: The Real Cost of Public Funding for Major League Sports Facilities_ that appears to be based on her dissertation (Harvard, 2002) which bears the same title. Here is the abstract[1]:
    "The real cost of public subsidies for sports facilities is significantly higher than popularly reported, and, as a result, governments and taxpayers underestimate the magnitude of their financial commitment. Specifically, land, infrastructure, the ongoing public costs associated with the operation of the facility, and foregone property taxes are routinely ignored . . . the real cost of public subsidies is underreported by an average of $51m per facility, representing a 40% increase in the total public subsidy. Whereas industry sources report an average public subsidy of $125m per facility based on a total development cost of $222m, I estimate that the real total public subsidy is $175m. Across all 99 facilities, I estimate the total value of the underreported public subsidy to be $5 billion dollars. The impact of adding these unreported costs is to increase the average public share of total development costs from 56% to 79% . . ."
[1] This from Brian Goldstein, PhD Candidate, Architecture, Landscape Architecture, and Urban Planning, Harvard University


Relevant books on this debate grew in the early 1990s, as cities began a building boom for professional sports franchises. One of the better books from the early years of the boom was Charles Euchner's _Playing the Field: Why Sports Teams Move and Cities Fight to Keep Them_ (Johns Hopkins University Press, 1993), which characterized teams as opportunists playing off the fears of local politicians.

Euchner writes "Cities in decline, desperate for some visible sign of economic and social rejuvenation, are especially prone to manipulation." (4) After profiling the negotiations that saw several National Football League (NFL) franchises move and got the White Sox a new park in Chicago, he concludes that not only are the new buildings not economic engines for their regions but "the pursuit of gypsy franchises distracts city leaders from the more important job of building a viable political and economic base." (183-84)

Since Euchner's book was published, notable work on the topic has been done by economist Andrew Zimbalist and two writers, the late Doug Pappas and Neil deMause, who have published essays for the _Baseball Prospectus_ book and website (searchable by author's name for subscribers at ). Much of this work expresses skepticism that new stadia generate revenues for the cities that fund them.[2]

[2] This section from Carl A. Zimring, Ph.D, Assistant Professor of Social Science and Sustainability Studies, Evelyn T. Stone College of Professional Studies, Roosevelt University


Andrew Zimbalist and Roger G. Noll, _Sports, Jobs and Taxes_ (Brookings, 1997) is a comprehensive policy analysis focused on both the finances and economics of municipal subsidies for stadium building. While it is a bit old now, it is focused on the very same issues that remain relevant today. [See 1997 article by Zimbalist and Noll summarizing their work.]

Robert A. Baade has written numerous articles on the subject, also from a broadly economic perspective. John Hannigan's book _Fantasy City_ (Routledge, 1998) also includes some discussion of these matters.[3]

[3] This section from Cameron Logan, Research Fellow, Faculty of Architecture, Building and Planning, University of Melbourne


You might also take a look at Mark Rosentraub's two books, _Major League Losers: The Real Cost of Sports and Who's Paying for It _ (Basic Books, 1996), and the more recent _Major League Winners: Using Sports and Cultural Centers as Tools for Economic Development_ (Routledge, 2009).[4]

[4] This section from Eugenie L Birch FAICP, Lawrence C. Nussdorf Professor, Chair, Graduate Group, Co- Director, Penn IUR, University of Pennsylvania


A good starting place is Roger Noll and Andrew Zimbalist, _Sports, Jobs, and Taxes: The Economic Impact of Sports Teams and Stadiums_ (Brookings Institution, 1997).

Also look for articles and books by Charles Santo, Mark Rosentraub, and Heywood Sanders (who mostly writes about convention centers, but the issues are similar).

Public subsidies for stadiums seldom pencil out directly in economic terms, and sports teams are not significant economic generators (they mostly shift recreation spending from other activities). However, there is an intangible factor of helping a city identify as "big league" in comparison to other places -- a factor that might be important for Hamilton -- and the impacts of sports facility investment on specific urban districts. Rosentraub argues both sides of the issue in _Major League Losers_ (1996) and _Major League Winners_ (2009).[5]

[5] This section from Carl Abbott, Portland State University, Professor of Urban Studies and Planning


Richard Florida has written on stadiums in his _Rise of the Creative Class: And How Its Transforming Work and Leisure_ (Basic Books, 2002) and elsewhere.[6] Back in 1998, I wrote an op-ed for the _Pittsburgh Post-Gazette_ on public funding of new stadiums versus retaining historic properties as urban tourist attractions. I posted the copy from the op-ed to the H-Local list back in August 1998.[7]

[6] Note from the H-Urban list editor: "Richard Florida sees professional sports stadiums as liabilities for cities trying to attract the 'creative class.' He writes in _Rise of the Creative Class_: 'The physical attractions that most cities focus on building -- sports stadiums, freeways, urban malls and tourism -- are irrelevant, insufficient, or actually unattractive to many Creative Class people (218).' Conversely, he argues that a strategy to attract the "creative class 'entails remaining open to diversity and actively working to cultivate it, and investing in the lifestyle amenities that people really want and use often, as opposed to using financial incentives to attract companies, build professional sports stadiums or develop retail complexes (293).'"

[7] This section from David S. Rotenstein, Ph.D.


I too remember hearing an author discuss this a few years back. It must have been one of these three:
    o Kevin J. Delaney, _Public Dollars, Private Stadiums: The Battle over Building Sports Stadiums_ (Rutgers U. Press, 2003) [9].
[8] The H-Urban editor added this note from the publisher: "Stadium Games begins with the events leading to the arrival of the Twins and Vikings to the state in 1961 and traces subsequent controversies about professional sports in the region up to the present. Weiner discusses the factors that make Minnesota the poster child for the nation's stadium debates--the recent departure of the North Stars hockey team, the near departure of the Timberwolves, the strong opposition of taxpayers, and the apparent greed of team owners. In an account full of stories, scandals, and colorful personalities, Weiner reveals the behind-the-scenes deals and inside scoop on what went wrong in the unsuccessful 1997 campaign for a new ballpark, divulging how public relations experts failed and how government leaders conspired to fake out Minnesota's citizenry."

[9] The H-Urban editor added this note from the conclusion: "The processes by which local growth coalitions and their proxies secured public dollars for stadiums raise important questions about our democratic institutions . . . when it comes to using public dollars for private stadiums, there isn't much democracy going on in U.S. cities . . . The recent trend of publicly subsidized sports stadiums may exacerbate the already exorbitant and unjustifiable social inequalities in the United States, especially in its cities . . ." (183).

[10] The H-Urban editor added this note from the publisher's website: "_Field of Schemes_ is a play-by-play account of how the drive for new sports stadiums and arenas drains $2 billion a year from public treasuries for the sake of private profit. While the millionaires who own sports franchises have seen the value of their assets soar under this scheme, taxpayers, urban residents, and sports fans have all come out losers, forced to pay both higher taxes and higher ticket prices for seats that, thanks to the layers of luxury seating that typify new stadiums, usually offer a worse view of the action . . ."

[11] This section from Prof. Christopher Klemek, Ph.D., Department of History, George Washington University.


Let me also suggest Wilber C. Rich, _The Economics and Politics of Sports Facilities_ (Westport, CT: Quorum, 2000) and a volume that looks back at the early 20th century, Steven A. Riess, _Touching Base: Professional Baseball and American Culture in the Progressive Era_, rev., 2nd ed.(Urbana: Univ. of Illinois Press, 1999).

[12] This section from Steven Riess, Dept of History, Bernard Brommel Research Professor, Northeastern Illinois University


Before the stadium discussion ends, I would like to put a plug in for an article I wrote about defeats of the baseball stadium growth coalition and its eventual victory in Minnesota:
    Richard Keiser, "Ya Don't Have to Get Snippy About It: Sports Stadium Politics in Minnesota," in _Perspectives on Minnesota Government and Politics_, 5th edition, 2003.[13]
[13] This section from Richard Keiser, Professor and Chair of Political Science, Carleton College


No comments:

Post a Comment