Monday, October 17, 2005

If We Don't Build It, Will They Finally Leave?

By Mitchell

As you know, I've written over and over about the obligation of each of us to act as a role model. I've particularly targeted professional athletes and other celebrities in these discussions. So of course I wasn't surprised by the antics this week of our "professional" football team, the Vikings. (Of course Governor Pawlenty is wrong when he says that "We understand that athletes aren't necessarily role models." The fact is that we don't have a choice - we're all role models, whether we like it or not. The only question is whether or not we're going to live up to our obligation.)

Now, one of the unintended consequences of this fiasco is that it may have killed any support there was in the state legislature for new stadium construction. I wrote earlier this month about the pressure on the legislature to approve funding for new stadiums for the Vikings, the Twins, and the University of Minnesota. As late as last week there was still doubt that a special legislative session would be called to address funding for at least one of the stadiums; in the wake of the Vikings' problems, all three of them may be dead. Any support that continues to exist would probably focus on the University stadium, since the U is the one institution that doesn't frequently threaten to move out of the state.

Well, aside from being a testimonial on why it is important to be a role model, what does this tell us? It's about a lot more than sports; we're really talking about subsidizing any kind of private industry, which means we're invariably dragged once again into the world of Corporate America.

There's no doubt that a lot of people like the Vikings and Twins, and would be sorry to see them go. It's kind of a moot point for me; sports fan though I may be, like many people I can't afford to see many games in person in the first place, so I'll get my sports fix watching TV. (Besides, I'm not a fan of either the Vikings or the Twins anyway; go White Sox!)

But let's look at these two teams. The Twins are owned by a miser who seems interested only in lining his pockets and accumulating as much possible wealth as he can (even though he can't take it with him), surronded by a front office of sycophantic incompentents and a general manager (Terry Ryan) who isn't fit to coordinate the activities of a Little League team. While I'm willing to give the new owner of the Vikings a honeymoon, he's presiding over a coach (Mike Tice) who was nabbed for scalping tickets and players who seem to be auditioning for a role in the next remake of The Longest Yard. In any event, we're dealing with multimillionaire owners who could easily finance construction of new stadiums without making a dent in their net worth. And that's what we're really talking about: Corporate Welfare, the taxpayer being forced to pay to guarantee that rich men make profits.

So often you hear two specific things when a team asks the taxpayers to foot the bill for a new playground: one, the owner needs it to guarantee profitability; and two, construction of the stadium will be good for the local economy.

First things first: as bad as the Supreme Court has been lately, I don't think they've yet discovered a constitutional guarantee of profitablity. In theory, business is pretty simple - if you run it well, you succeed. If you don't, you fail. But if profit is a direct correlation to the success of the business, then by asking an outside agency (in this case, the taxpayer) to intervene to guarantee profitability, the owner removings any incentive to ensure a competenly-run organization. Talk about toxic business practices! (Of course, pro sports is run on a completely different economic model in the first place: most times, the consumer can vote with their checkbook as to whether or not a product meets their needs. In sports, when this happens the owner can pick up and move his team to greener pastures. Try doing that with a toothpaste that doesn't sell - it's not as if you can find another market to introduce it.)

Second is the myth of tying stadium construction to economic growth. Team owners and their media flacks like to point this out. Look at how much money you'll have coming into the downtown area! they say. Look at the jobs you'll create! Look at the spending you'll have in the restaurants and bars! It's like having a license to print money! Forgetting the obvious (that if a new stadium is a slam-dunk promise of prosperity an owner would be stupid not to build the stadium himself, redevelop the entire surrounding area, and keep all the profits), is this really true? A growing body of economists say no.

Professor Robert Baade of Lake Forest College in Illinois was asked to analyze the situation in Seattle after construction of new stadiums for the Seahawks and Mariners. His conclusion:

Contrary to many of the arguments made to support public subsidies for the stadiums, Baade found that local business suffers greatly in the wake of the new super-structures that often sit empty for many days at a time.


Baade's study confirms what many local merchants and residents of the [neighborhood]have been saying all along while nearly $1 billion in new stadium construction has landed in the neighborhood: sporting events in the area "frustrated rather than contributed to many business activities in Pioneer Square."


Ethnic restaurants, art galleries, professional services, legal services and most retail outlets reported a decline in business of up to 25 percent, due mostly to lack of parking on game days. Merchants reported that just as much business activity is generated by First Thursday gallery walks as on game days for either the Mariners or the Seahawks.

And it's not limited to this particular example. The Cato Institute conducted a forum in 2001 on this issue. One of the authors, economist Brad Humphreys, had this to say:

There are non-monetary benefits associated with professional sports. Economists refer to these as "consumption benefits:" The image of a "world class city," civic pride, good feelings, some local thing that residents can identify with, etc. These things have some value to the residents of a city. If a municipal area values these things highly enough, then they should go ahead and subsidize a stadium and franchise. But it doesn't make sense to subsidize professional sports on the grounds that it will improve the economic well-being of the residents of the area.

As Humphreys points out, it's a myth that having a pro sports team brings more money into an area: "spending on professional sports is not new spending; it’s just a reallocation of local spending on other entertainment like going to a movie or out to dinner."

Want more? There's Roger G. Noll and Andrew Zimbalist's book Sports, Jobs, and Taxes: The Economic Impact of Sports Teams and Stadiums , which reaches these conclusions:

[F]irst, sports teams and facilities are not a source of local economic growth and employment; second, the magnitude of the net subsidy exceeds the financial benefit of a new stadium to a team; and, third, the most plausible reasons that cities are willing to subsidize sports teams are the intense popularity of sports among a substantial proportion of voters and businesses and the leverage that teams enjoy from the monopoly position of professional sports leagues.

With this kind of evidence piling up, some teams shift tactics (hey, these guys didn't get to be rich by being stupid, or by underestimating the stupidity of much of the public). In Kevin Delaney and Rick Eckstein's Public Dollars, Private Stadiums: The Battle over Building Sports Stadiums, the authors make the point that:

In the face of studies demonstrating that new sports facilities don't live up to their promise of big money, proponents are using a new tactic to win public subsidies - touting intantible "social" rewards, such as prestige and community cohesion...[these are] empty promises as well, demonstrating that new stadiums may exacerbate, rather than erase, many social problems.

Indianapolis faces a similar situation to Minneapolis, in that the Colts are demanding money for a new stadium. Samuel R. Staley, Senior Fellow at the Reason Foundation in Los Angeles, took a look at the Colts' claims:

Academic researchers have reached near consensus that these publicly financed projects are little more than economic white elephants.

The reasons are pretty clear. Take the projected employment impacts. The city suggests that the two projects will generate 9,100 new jobs region-wide. More than half are temporary construction jobs and would likely have been created elsewhere in the metropolitan area. About 4,200 are considered "permanent," but these numbers assumed the Colts would leave if the new stadium weren't built and include an estimate of 2,700 new jobs if the convention center's expansion is completely successful.

Yet, these rosy economic effects are miniscule in the bigger picture. The Indianapolis region employs 903,000 people. The "new" permanent jobs represent less than 1/2 of 1 percent of the economic base. Most of these jobs will be low-wage, part-time jobs keyed to specific events.

I could go on, but why bother. And to those of you who wonder why I'm spending this much time on a sports issue, my answer would be that this isn't really about sports. It's about Corporate Welfare and the burden being put on the taxpayer, which makes it more of a political, indeed a moral, issue.

So far Minneapolis seems to be one of the few areas in the country to put up a fight over building new stadiums for their rich owners. This almost cost us the Twins, as the owner, Smilin' Carl Pohlad (alias Silas Marner) tried to have the team contracted. That failed miserably when the Twins unexpectedly became contenders. The need for a new stadium, at least in the eyes of many, became evident. And yet the stadium has not been built. Even though the effort to contract the team has disappeared, there's still the possibility that the team might move. And yet the stadium has not been built. The Vikings have been casting doe eyes at other cities for years, notably San Antonio (home of former owner Red McCombs) and Los Angeles. And yet the stadium has not been built. It could be that Minnesota, one of the bluest states in America, is right in at least one aspect - it's time to say no to wealthy businessmen.

Part of this could be that our lawmakers have their sights set on other things to do with our tax money: programs for educational and other subsidies, for example, are always popular (and they're "for the children!"). It's caused more than one normally level-headed Minnesotan to throw his hands up in disgust and exclaim, "They're going to spend my money anyway. They might as well spend it on a stadium!"

But I'm not sure this is going to be the case any longer. The Vikings have done incalculable damage to the new stadium movement, at a time when it could least be afforded. (Not to mention that they're having a bad season, which is perhaps the worst time to pull such a stunt.) The Twins have teased their fans the last several years into thinking they have a winning team, but this act too is wearing thin, as we begin to suspect management is more interested in making money and talking a big game than really doing anything. (That team's chemistry, punctured by their share of prima donnas, hasn't been too good lately, either.) Sid Hartman may think that without pro sports the Twin Cities would be nothing more than a cold Omaha, but Omaha's looking better and better to a lot of people.

This controversy has dated back to at least the 70s, and the Metrodome (possibly the worst stadium in professional sports) was pushed through by a coalition of business and political leaders over the objections of many in the state. Back then, opponents had a saying: Go Vikings, and take the Twins with you.

Today we might better look to the famous words of Oliver Cromwell. There are two sayings of his I have in mind; maybe one for each team. To the first Parliament he said, "Weeds and nettles, briars and thorns, have been thriven under your shadow, disentitlement and division, discontentment and dissatisfaction, together with real dangers to the whole." (Maybe the "real dangers" part applies to the Vikings, or at least to anyone sailing with them.) And to them both we can quote his speech dissovling the Rump Parliament:

You have been sat too long here for any good you have been doing. Depart, I say, and let us have done with you. In the name of God, go!

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