by Bruce Dunlavy
(My blog home page and index of other posts may be found here.)
The Boston Red Sox. The Chicago Bears. The Montreal Canadiens. The Milwaukee Bucks.
Somewhere, your city’s team is either succeeding and making the whole city proud, or failing and making the whole city miserable. The important thing, though, is that they are there. Because if you have a major league sports franchise, you are a “major league city.”
The things cities (and States) will do to acquire or keep a professional sports franchise are astonishing and expensive. But it is much easier to persuade the voters to support such expenses than to persuade them that road repair or water line upgrades are necessary expenses. People who complain that they are “taxed to the breaking point” by a school levy that adds less than $100 to their annual tax bill will eagerly cough up a lot more than that if it means they get to acquire or keep a pro sports team in town.
The State of Wisconsin just passed a new budget that includes $250 million ($400 million when interest is included) to cover half the cost of a basketball arena for Milwaukee’s team, the Bucks. Governor (and presidential candidate) Scott Walker is expected to sign it before summer ends.
This expense is to be offset by cutting $250 million from the State university system. At least they are being honest about their priorities: sports before education.
Marlins Stadium image credit: stadiafile.com
The ancient Romans used to delve into the nitty-gritty of actions by asking the question, “Cui bono?” (“For whose benefit?”) In these cases, the beneficiaries are not the people you think they are. The beneficiaries are not Joe Lunchbucket and Sally Housecoat, thankful for the opportunity to enjoy an afternoon watching their beloved team fight it out with an invading group from some city three States away.
“Their” team? Hardly. The team does not belong to them (with one exception, noted below). It belongs to a member or members of a group of millionaires and billionaires who do not need the tax dollars provided by Joe and Sally, but are by no means loath to pocket them when offered.
There is plenty of loyalty from the fans to their local major league team, but not much loyalty back when it comes to teams themselves. The team owners regularly practice a form of corporate extortion in which they threaten to move the team elsewhere if the city and often the State (meaning the taxpayers) do not pony up the money for a new sports venue. The populace either capitulates and pays off the team owners’ demands or, in rare cases, refuses.
Then begins the delicate-yet-awkward Kabuki dance whereby the team seeks new suitors in other cities who will provide what they want. Sometimes those cities try to get a head start in this courtship by building a new stadium or arena in hopes of luring a disaffected team from another city. If the team moves, the abandoned town usually responds by building the venue it denied before in hopes of bringing in a new team from another city that has refused its team’s demands. In nearly every case, a city that loses its team eventually gets a new one, either by league expansion or by enticing an existing franchise to move.
The National Football League has shrewdly strengthened the hands of its member owners by maintaining an inviting vacancy that teams can threaten to move into. The nation’s second-largest metropolis, Los Angeles, has not had an NFL franchise in town since 1994. Thus for 21 years the league members have had a plausible place to go when they threaten to leave their city. [Update: Two teams have now moved into the LA vacuum, leaving two more cities with egg on their civic faces.]
Usually, the funding for the new facility comes at the expense of other, more pressing, community needs, and it can be discovered even where there is supposedly no money to be found. The City of Detroit has declared bankruptcy. Its streets and other public services are in terrible disrepair. It has cut the existing pensions of city retirees and was nearly forced to sell off the contents of its renowned art museum. Economically, it is a disaster. Yet in the last 15 years it has opened two publicly-financed professional sports venues, and earlier this year began construction of another, a $650-million-dollar arena for the local hockey team, the Detroit Red Wings. Of that total cost, $250 million will be funded by tax increases.
In addition to the arena itself, the Red Wings ownership will receive multiple additional monetary benefits from the new arena. As is typical of these sports-venue deals, while the taxpayers provide much of the funding, the team owners get most or all of the direct income from the facility.
The city is supposed to benefit from the added economic boost created by the construction of the sports facility and the economic growth around it. (The same argument is used to justify the building of gambling casinos, but that is a story for another blog post.) But study after study has shown that new sports stadiums do not accrue measurable economic benefits for their cities.
The sweetheart deal the Red Wings’ owner gets is a big improvement over the deal that split the revenues of the previous publicly-financed hockey venue, Joe Louis Arena. When the new hockey rink opens in 2016, no longer will the Red Wings have to fork over to the city the current ten percent of ticket proceeds and food/beverage concessions, seven percent of suite sales, five percent of souvenir sales, and other revenue from parking. In the most recent season, these payments garnered the city of Detroit over seven million dollars. Now the team ownership will get it all. The Red Wings will also receive all the money from arena naming rights, usually a multi-million-dollar payment.
Nor is this an anomaly. Team owners invariably get the revenue from sporting events at these public facilities, and they usually get a chunk of the income from any non-sports events (concerts, rodeos, etc.) held there. What will Red Wings’ ownership pay in return for all this? Nothing – they get to use the arena rent-free, paying the citizens who own it nothing for its use.
How did the professional sports teams manage to gain this advantage over the public? How did they position themselves to be able to demand this legalized bribery and misuse of the public’s money and the public’s trust?
Answer: They did it by persuading the public to identify with the team and not the people who own it.
The smartest thing the owners of professional sports teams ever did – and I don’t know whether they did it by accident or intent – was to take on the names of the cities (and later the States or regions) in which they are located. This gives the public a sense that the teams are somehow community property, like parks or streets, when in fact they are private businesses owned by extraordinarily rich people.
Who owns the Red Wings (and baseball’s Detroit Tigers)? A holding company founded by Mr. and Mrs. Mike Ilitch, billionaires who made their fortune as proprietors of the Little Caesar’s Pizza chain. [Update: Mike Ilitch died February 10, 2017; his widow Marian now owns the teams and is listed by Forbes magazine as one of the seven richest women in the world.] Are they responsible citizens? At the time the new hockey arena plans were announced, the Ilitches’ holding company owed the City of Detroit at least one and one-half million dollars in back taxes on their lease of the current publicly-owned hockey venue, Joe Louis Arena.
Yet these tax delinquents were bribed with even more public money to persuade them to keep their money-making machine in the bankrupt city.
I wonder what the taxpayers’ response would be if professional sports teams were compelled to use the names of their owners instead of their locations. After all, the team is not really the Detroit Red Wings. It’s the Little Caesar’s Pizza Red Wings. It’s not the Atlanta Braves; it’s the Liberty Media Braves. The Kraft Paper Patriots? The Molson Brewing Canadiens? What about the Jeffrey H. Loria & Co. Marlins? (Click here for a disgusting review of the bribes given to Loria to keep that team in Miami. Notice also that in late July Loria started unloading players – and their salaries – effectively giving up on winning anything this year. He does that a lot.) [Update: Loria has since pulled the same stunt he’s pulled before – sucking all the money out of the team and into his pockets and then selling it for a lot more than he paid for it.]
Would taxpayers be so willing to shower money on the team owners if they had to declare their ownership? The only team that would still have its current name is the Green Bay Packers, which is truly publicly owned – and you can be certain that the pro sports leagues will never allow that to happen again! There’s far too much money being made by gouging the taxpayers. Why allow them to get any of that money if they willingly let the team owners have it all?