Stadium Scam

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Date: Autumn 1998
From: The Wilson Quarterly(Vol. 22, Issue 4)
Publisher: Woodrow Wilson International Center for Scholars
Document Type: Article
Length: 700 words

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Abstract: 

Authors David Morris and Daniel Kraker in their article 'Rooting the Home team' and author Mark F. Bernstein in his article 'Sports Stadium Boondoggle' have observed an increasing trend in a practice by professional sports team owners of demanding new stadiums for their clubs. When these team owners' demands are unmet, they move their franchises to another city. The authors back their observations with statistical evidence which shows that taxpayers shoulder most of the costs for these facilities.

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"Roofing the Home Team" by David Morris and Daniel Kraker, in The American Prospect (Sept.-Oct. 1998), P.O. Box 383080, Cambridge, Mass. 02238; "Sports Stadium Boondoggle" by Mark F. Bernstein, in The Public Interest (Summer 1998), 1112 16th St. N.W., Ste. 530, Washington, D.C. 20036.

Folks in Denver were jubilant last January when the Broncos won the Super Bowl. Only months later, however, they were handed a blunt message from the team's owners: Cough up $250 million for a new stadium - or else. The or else was that the Broncos might move to another city.

This sort of extortion by professional sports teams has become increasingly common, note Morris and Kraker, both of the Institute for Local Self-Reliance, and Bernstein, a Philadelphia writer. In the last half-dozen years, pro football and hockey teams have pulled out of Cleveland, Los Angeles, Hartford, and four other American and Canadian cities. "During the same period," say Morris and Kraker, "an additional 20 cities paid the extortion that team owners demanded, building a new facility or remodeling an existing one." Some 40 other pro sports teams are planning or lobbying for new facilities - and demanding city subsidies. The tab for these 40 stadiums and arenas may reach $7 billion, with taxpayers footing most of it. According to USA Today, an estimated $4 of every $5 in stadium construction now comes from public sources.

Cities began underwriting stadiums in the 1950s, Bernstein observes, though the teams paid substantial rent and split parking and concession revenues with the city. In the 1970s, after Congress eliminated a lucrative tax loop hole, and players (first in baseball, then in other sports) won the right to be free agents, driving up their salaries, team owners went after revenue more aggressively. New, bigger, better facilities were appealing because money from luxury boxes (which rent for as much as $250,000 a year in Boston's Fleet Center), ads, parking, and concessions - unlike revenue from tickets and TV broadcasts of the games - generally does not have to be shared with the league.

Teams have leverage over cities because professional sports leagues are cartels, which "make money by ensuring that supply - in this case the number of teams - is less than demand," Bernstein notes.

What can be done? Baseball writer Bill James and others contend that Congress should break up the cartels. If that were done, predicts Bernstein, the number of teams would increase, player salaries and ticket prices would drop, and teams would no longer have such powerful leverage over their host cities. But, he adds, something vital would be lost: "the stability and tradition fans cherish. A truly competitive sports world would be as chaotic as the computer and entertainment markets." The quality of play might be affected, too, as the number of players multiplied. Bernstein thinks some sort of change may be in order, but nothing so radical.

Morris and Kraker have a different idea: community ownership of teams, a la the Green Bay Packers. (They also favor revenue sharing among teams, to make them all "equal," as now required in the National Football League, and would oblige leagues to grant expansion franchises to cities abandoned by their teams.) "Professional teams have become an integral part of our community fabric and our emotional and civic lives," they maintain. "This may justify stadium subsidies in certain communities, but common sense dictates that when an owner demands a subsidy two to three times the value of the team itself, fans would be much better off purchasing the team themselves" (assuming the owner will sell it).

Maybe so. But the Packers "are not a model likely to be copied soon," Bernstein notes. "All the major professional leagues [now] prohibit public ownership."

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