Are Pro Sports Franchises a Public Good? | 6.11.2016
It's a random fall Sunday with nothing on your social calendar other than avoiding the dread of the coming work week. You and your friend text a few emojis to commiserate the lack of events around town on this gloomy Sunday. Given the lack of activities and the impending rainstorm, you default to watch the big game, eat some brats, drink some beers, and reminisce about John Madden.
You could be described as a lukewarm fan, despite the recent success of the Omaha Omicrons, who have won 3 of the last 4 pigskin championships. Your interest in their rivalry game with the Little Rock Lizards is a half-notch above mild, but you know that your friend has been a lifelong Omicron fanatic, and he sports all of the jerseys, table coasters, and frozen mugs to match. You sit down to watch the game, and begin your slow march through a pack of brats and the newest Lincoln Lager varietal (don't ask why I picked Nebraska for this hypothetical). You enjoy the rest of the game, and even jump out of your seat when the Omicrons defeat the Lizards on a ridiculous last second fake-punt double reverse throwback to the eligible tackle. After the ensuing chest-bump and beer spill, you exit and make your way home to get ready for the week, your mood slightly better than it was 3 hours earlier.
During your walk home, you notice a flyer urging citizens to vote against using public dollars to fund the Omicrons proposed new stadium. You had heard about the new stadium, and despite the relative newness of the current Omicron Palace (you remember throwing up after you ate too much funnel cake in 5th grade), you hadn't thought much of the proposed stadium until now. The flyer emphasizes the nearly $200 million that taxpayers would have to put toward the stadium, and how these public funds would either raise tax dollars or impact other publicly funded initiatives. You whistle at the magnitude of this sum of money, and continue on your way home.
The rest of your walk was uneventful, other than nearly tripping over the curb, as your mind wandered back to the flyer. Although your daytime job was in accounting, your real passion was music and art, and a week hardly ever passed without you visiting the local Arts Center. You always enjoyed seeing school-children in attendance or others learning, and you were glad that the city had decided to help subsidize the cost of attendance and other exhibits. Your wife was a doctor, but she enjoyed finding time to help tend to the city's community garden, which was located inside one of the larger parks. You knew that while both the Arts Center and park both received private donations, the park especially benefited from tax dollars - there was hardly a day or weekend that went by when the park wasn't hosting an event or festival which were free to attend.
Thinking more about the $200 million the Omicrons wanted the public to spend to support their new stadium, you began to wonder what other initiatives that amount of money could support. How many teachers could we pay? How many miles of sidewalk or playgrounds could we build? How many jobs training programs could we implement? How many new parks could we build and maintain and how many new bus routes could start? Maybe we could finally increase our city staff's wages to reduce turnover and improve efficiency. You thought back to the game watching sauage-fest and recalled that despite the crazy ending everyone was talking about, your mood and emotional state were remarkably similar to what they were prior to kick-off. However, to be fair had to admit that your friend's weekend was actually transformed by the last second victory.
You began to float the $200 million stadium, the emotional rollercoaster the Omicrons' games seemed to always create, and the joy that you and your wife received from other publicly funded initiatives in your head, and the following questions began to percolate from your receding hairline:
- Were you simply an art loving elitist who wanted to suck the joy and happiness from every blue collar person out there?
- Was a $200 million public investment in a football stadium, and the subsequent guarantee that your town would retain its sports team (and thus entertainment and a default 16 calendar events) worthwhile?
- Would this investment be justified if it were a more reasonable magnitude, as in, something closer to the value of the parks department's annual budget?
- Is a local sports team more intrinsically valuable than a local symphony, opera or theatre troup?
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This post isn't to debate whether it is economically effective for public entities to spend tax dollars funding stadiums. From a pure profit and loss analysis, the evidence is
so one-
sided against that it's not worth discussing. Sports teams are better at swindling public tax dollars to support them than they are fielding, receiving, dunking, or skating. And lately, sports teams are less and less satisfied with their current home, choosing to leave when the stadiums are hardly old enough to vote (Braves after ~20 years, Rangers after 22 years, Hawks renovating after <20 years, Mavericks already planning their next venue after 15 years).
Sports franchises are becoming increasingly more bold, threatening to leave not only if they don't receive public funding for their stadium, but if they don't receive public funding for
state of the art facilities (even going so far to define state of the art as in the top 25% of all facilities!). In the excitement of tall cranes, shiny steel and massive jumbotrons, we often forget that the teams that we love to cheer are private businesses, allegedly part of the capitalist framework in which most other businesses operate.
This brings us to a philosophical question at the heart of the issue: do we consider our pro sports teams a public good? My open-ended thought of the evening I tried to capture in this hypothetical but all-too-real story is how much do we value having a sports team in our town? Are sports teams not only a local attraction but also an indicator of significance, in the same way that local Fortune 500 companies or being an airline's hub puts us "on the map?" Is it worth spending millions of dollars a year to be able to say "we have a team!?"
This isn't to say that I want to eradicate all pro sports leagues and franchises. While the fanaticism of certain sports (North American football) is specific to this country, the insanity for soccer and other sports around the global indicates that Americans are not alone in our passion for sport. Atlanta's Arlington's (TX) are not alone in appearing compelled to ensure they keep their sports teams in town (sorry Thrashers fans), even if it means shelling out huge subsidies, tax breaks, and wheel-barrows of cash. No mayor or city council person wants to have had the local fan-favorite team leave on their watch.
League defining teams like the L.A. Lakers, New York Yankees, Boston Celtics, and Dallas Cowboys are entrenched in their respective regions and leagues, and are as synonymous as Hollywood, pizza rats, cannolis, and big hair, to their respective cities. However, these regions would likely be able to afford at least a few of their local sports teams with no public subsidy due to their population and reputation. However, I would imagine that many smaller markets would not be able to generate the same level of support for a team, as much to do lack of available season ticket holders as any other factor.
Is it wrong for smaller regions to spend hundreds of millions of dollars on sports teams to "legitimize" their city? Would Sacramento be a better place to live if they hadn't invested in the Kings or Salt Lake City the Jazz? (also, you left New Orleans 4 decades ago, time for a name change) Would the average Joe or Jane embrace their region spending $500 million over 30 years on a new symphony hall and theatre...knowing that these places would charge $200 a ticket and $9 for beer?
I have no problem with jurisdictions spending public tax dollars on recreational goods like parks, school athletic facilities, trails, and similar facilities. I also have no problem with jurisdiction spending public dollars to support educational institutions such as museums, art centers, symphonies, and theatres. I can sympathize with those who don't agree with this support, although part of my reasoning for supporting these causes is that they are typically not profit driven nor owned by billionaires.
Yet, when billionaires, many of whom treat owning sports teams as a hobby or investment, request public funds and threaten to leave if they don't receive them, I have a problem. When public tax dollars are used on a massive scale to support a for-profit enterprise, even when the team and sport provide hard-to-quantify ancillary benefits such a "legitimacy," default social activities, and an excuse to wear ill-fitting mesh apparel, I have a problem.
Massive public support isn't limited to big cities. A tiny Mississippi town
spent tens of millions to lure a minor league Braves franchise. According to Bloomberg, this resulted in the town's credit rating being lowered, and increased taxes, in effect the fiscal double play.
Interestingly, these subsidies are as prevalent as ever, despite the increasing reach of television and technology. The number of sports and streaming packages is as plentiful as ever, meaning that if you are a die-hard
St. Louis Rams fan, you can still watch your team...even if they reside in L.A. As transient as many people in our current global economy, I think it's then fair at some level to ask, "who cares...? if your team leaves town for greener pastures. You can still watch them, and save the money for a festival, local college team, or wherever else you want to spend your hard earned cash.
If we wanted to restrict public funding to pro sports franchises, I'm sure there are multiple options, although most would likely require some level of government intervention. One idea that might provide flexibility but temper funding would be to cap stadium funding at the level of some other budget item or percent of a budget item. Below are a few examples:
- Stadium funding (and tax subsidies for the team) cannot exceed X% of the city's total annual school budget
- Stadium funding cannot exceed X% of total arts funding
- Stadium funding cannot exceed X% of jobs training programs
While this is most definitely government intervention, I am am hopeful that many sensible individuals could see the benefits of these strings to stadium and pro sports franchise funding. It would be nearly impossible for the federal government to pass such a law, but without federal intervention, teams would consistently move to states with fewer regulations (side note: If only a few states held out, it would be funny to see the entire NBA in 6 states. I can see it now...5 city councils in Montana and South Dakota vote to give $200 million for new arenas. Bison get in free), creating a nation-wide pro-sport franchise game of prisoner's dilemma.
There is no silver bullet to this issue, but there is likely a bundle of solutions that would help to address the public support of private sports enterprises. Consider talking to your respective city council members and mayors, and not giving a dime to your local sports franchise - you've already given your tax dollars!
PF: Shawn Kemp | KG – Supremely athletic power forwards with
a mean streak, both could dunk with the power of a center and the finesse and
creativity of a shooting guard. KG is the better player, but as Kemp’s #1 dunkshows, it’s hard to beat Kemp’s almost comical insanity. As with Kobe & MJ,
these two would have to battle each night to determine who starts. KG &
Shawn would compete in a trash talk battle a la Nick Cannon’sWild n’ Out (sorry parents, this 
Rasheed Wallace – Talk about entertainment value! From the
Malice at the Palace to his litany of other technical fouls, this guy is the
best “goon” basketball has seen. His volatile nature detracted from his play, but Mr. Wallace could most definitely ball. 
Woody Harrelson – Woody brings his “White Men Can’t Jump”
role from the silver screen to the hardwood and becomes a mesh of everyone’s
favorite hometown walk-on and B-list celebrity. Bonus: Woody stays in character
just to incite drama with ‘Sheed and A.I. 
