Look to the NFL for taypayer funded stadiums, sweet tax deals

Gregg Easterbrook provides a reminder of the amount of public money funneled to NFL owners in recent decades:

Judith Grant Long, a Harvard University professor of urban planning, calculates that league-wide, 70 percent of the capital cost of NFL stadiums has been provided by taxpayers, not NFL owners. Many cities, counties, and states also pay the stadiums’ ongoing costs, by providing power, sewer services, other infrastructure, and stadium improvements. When ongoing costs are added, Long’s research finds, the Buffalo Bills, Cincinnati Bengals, Cleveland Browns, Houston Texans, Indianapolis Colts, Jacksonville Jaguars, Kansas City Chiefs, New Orleans Saints, San Diego Chargers, St. Louis Rams, Tampa Bay Buccaneers, and Tennessee Titans have turned a profit on stadium subsidies alone—receiving more money from the public than they needed to build their facilities. Long’s estimates show that just three NFL franchises—the New England Patriots, New York Giants, and New York Jets—have paid three-quarters or more of their stadium capital costs.

Many NFL teams have also cut sweetheart deals to avoid taxes. The futuristic new field where the Dallas Cowboys play, with its 80,000 seats, go-go dancers on upper decks, and built-in nightclubs, has been appraised at nearly $1 billion. At the basic property-tax rate of Arlington, Texas, where the stadium is located, Cowboys owner Jerry Jones would owe at least $6 million a year in property taxes. Instead he receives no property-tax bill, so Tarrant County taxes the property of average people more than it otherwise would…

The insertion of professional football leagues into the definition of not-for-profit organizations was a transparent sellout of public interest. This decision has saved the NFL uncounted millions in tax obligations, which means that ordinary people must pay higher taxes, public spending must decline, or the national debt must increase to make up for the shortfall. Nonprofit status applies to the NFL’s headquarters, which administers the league and its all-important television contracts. Individual teams are for-profit and presumably pay income taxes—though because all except the Green Bay Packers are privately held and do not disclose their finances, it’s impossible to be sure.

It is more difficult to justify such public spending when it is laid out like this. But, the money spent is complicated by two factors:

1. Americans like football. What if they wanted to provide taxpayer dollars for football? The assumption Easterbrook and others make who point out the public money spent on football is that people who read the stories will get outraged and demand change. But, football is the most popular sport and the money problems aren’t just present in the NFL – look at how college football continues to be a financial juggernaut even as it struggles with issues of amateurism. If the money isn’t spent on football, would the public be confident that money would be spent effectively elsewhere?

2. Individual cities, states, and other bodies of government are put in tough spots when teams threaten to leave unless they get a good stadium deal. Even with studies that show the economic benefits tend to be primarily in the direction of the team owners and not the taxpayers, losing the team might be even worse. Who wants to be the politician who let the team go? On one hand, spending tax money on sports might be unpopular but so would be politicians who let a source of civic pride walk away.

Just thinking out loud, it seems like the main way politicians and local governments could fight back is to all band together and refuse to spend public money this way. In a time of tough economic competition between communities for jobs and prestige, all it takes is one city to be the escape hatch for teams. Look at how NFL teams in recent years have used Los Angeles as a bargaining chip. Even though no one has moved there, they can all say plans are in the works in Los Angeles unless you give us a better deal. At the same time, politicians across the board could examine cities without major football teams and how they “survive” the lack of a team. How does Portland make it? What about Los Angeles? San Antonio? Las Vegas? In other words, having a football team is not a necessity and there are other ways to spend the money that might go towards sports teams. Individually, cities have a hard time standing up to teams but collectively they might have the ability.

Marlins’ publicly-funded stadium not the exception among Major League Baseball teams

There is a lot of conversation today about the trade/fire sale undertaken by the Miami Marlins and how this relates to the team’s opening of a new stadium for the 2012 season that was largely funded by public money.Yet, this is a larger trend: 20 of the last 21 baseball stadiums built have been partly funded by public money.

And like nobody else, he hoarded massive checks from MLB while passing along the bill for the stadium to the taxpayers.

The Marlins can claim the money comes from tourism-tax dollars. Truth is, Miami-Dade County moved general-use monies from property taxes to free up the tourist cash. This is the dirtiest secret of Selig’s two decades as commissioner: The “golden era” of which he so often brags came off the taxpayer’s teat.

Of the 21 stadiums built since Camden Yards started the boom in 1992, the San Francisco Giants’ AT&T Park is the only one privately funded. Baseball’s business plan depended on new stadiums with sweetheart deals filling the coffers of ownership groups lucky enough to leverage politicians or voters into signing off on them. Cities signed deal after dreadful deal, few worse than the Marlins’, who paid for less than 20 percent of the stadium, received a $35 million interest-free loan to help and used $2.5 million more of public money to fund seizures.

Despite Loria and Samson’s protestations otherwise, this was always the endgame of their stadium gambit. Selig saw the Marlins’ audited finances every year. He knew they were lying. He went along with it anyway. That’s how he does business. He protects his friends. It’s why Fred Wilpon still owns the Mets. It’s why Frank McCourt doesn’t own the Dodgers.

As I’ve written about before (see here and here), studies show the construction of sports stadiums tends to benefit team owners and not the public. Teams are often able to hold a city hostage because no political leader wants to be the one who lets the favorite team go. Yet, the economic data would suggest it wouldn’t really hurt a city to do just that.

This leads me to a thought: what city would be most willing to let a team leave town for another locale? Even if pro sports teams don’t necessarily bring in money, they are also status symbols to show a city is “major league.” What will be the next team to go? One way to think about this is to look at cities that lack major teams. We could look at Los Angeles and the NFL; even though the metropolitan area has two baseball teams, two basketball teams, and two hockey teams, the city has not had a NFL team since 1994. Despite all the conversation about teams possible moving there (the Vikings were one of the recent teams though they got a publicly-funded stadium in a close vote last year), no one has moved yet. Seattle and the NBA is another interesting case; the city lost the Supersonics, now the Oklahoma City Thunder, after the 2007-2008 season and there have been recent conversations about a new stadium and team.

My guess is that the Marlins won’t be leaving Miami anytime soon though it would be appropriate if the city did renounce them. What an odd franchise overall: they were an expansion team that started play in 1993 presumably to take advantage of the growing city (the 8th largest metropolitan area in the United States) and its Latin American population (in recent years, 27-28% of baseball players were Latino), they have won two World Series titles (1997 and 2003, the year of Bartman), and held multiple fire sales.

A common tale regarding taxpayer funded stadiums

Jeff Passan summarizes how the Florida Marlins misled the public about their profits in order to secure more taxpayer funding for a new baseball stadium to open in 2012.

There is a good amount of academic research that shows that large-scale sports stadiums rarely help the local economy in the way the owners suggest they will. Often, local taxpayers are stuck paying the bill while private owners profit.

Of course, do you want to be the mayor/public official that lets the beloved local team get away?