Field of Schemes: public subsidies for major sports

Finally, America jolts awake over public subsidies for major sports, shaken by notorious Citigroup, the bank receiving $45 billion in government bailout. Before nearly collapsing of toxic assets, Citigroup signed a $400 million naming-rights deal for the Mets’ new baseball stadium on Long Island.

Thus the public pays for naming rights of “Citi Field.” Citizen anger is righteous, refreshing, but belated. America has allowed major sports to raid public coffers for decades.

Politicians, business leaders, media and voters have endorsed ridiculous funding, billions of dollars for stadiums, arenas and more facets of sport entertainment. Even when researchers repeatedly demonstrated sport entertainment to be a loser for public investment, a go-along America didn’t care.

We should now, under strain of recession economy, our nation’s worst since the Depression Era. Huge debt remains on public capital and tax breaks granted sports, and today the costs come terribly toxic for metros and states facing budget crisis.

Cash-poor governments must tap general funds to pay for stadiums and arenas, including for old construction on facilities now defunct or razed. Seattle, for example, demolished the Kingdome in 2000 while owing a reported $100 million on the stadium, making way for a new one. Some municipalities pay revenue shortfalls to pro franchises and other management who negotiated recession-proof terms, profits guaranteed them by the public.

Simultaneously, it’s a bloodletting as cities cut basic services like police and fire protection, water and sewer, roads and bridges, and trash pickup.

Kansas City can relate, painfully, after having dropped a taxpayer fortune on major sports and especially this decade, when its overall debt doubled in a two-year period to top $2 billion. Now the city slashes budget to close an $85 million deficit for 2009, cutting services ranging from police to public transit and KC’s signature water fountains. The budget shortfall traces in part to tax breaks and unforeseen millions toward debt and service over lousy public investment in sports and associate entertainment, most recently a losing downtown retail district to complement a new arena, both beset by vacancy.

Kansas City’s fiscal fix over sports isn’t surprising, given regional willingness to overextend as a small market.

One study found the metro consumer base could support just one pro franchise, and that would be the NFL Chiefs. The Royals of Major League Baseball couldn’t exist for Kansas City without public aid while teams from both the NBA and NHL fled in the past. Kansas City and St. Louis, crazed over sports, each hold the ignominious distinction of losing franchises in three of four major leagues.

Nevertheless, KC leaders and voters have built, operated, and lavishly renovated stadiums for football and baseball since the 1970s, along with financing two competing arenas and associate toys such as bars, restaurants and shops that are hopeless for steady business in the urban core. Capital commitment by the metro this decade, including Jackson County, tallies a billion bucks. A few years ago, voters narrowly missed approving $200 million for a retractable stadium roof that engineers couldn’t guarantee to work properly, all for possibly landing a Super Bowl.

The downtown Sprint Center opened in 2007 and hasn’t attracted an NBA or NHL tenant, which likely would compound hurt on taxpayers, anyway. The neighborhood sorely needs secure surface parking and stronger police presence. Nearby, perfectly usable Kemper Arena drains the city for annual upkeep while most big events of the market, about 25 or so per year, go to Sprint Center. Meanwhile, Kemper’s outstanding debt on 1990s renovations and parking exceeds $20 million, or roughly the forsaken arena’s original cost.

Reasons for the KC metro’s predicament are screwy and the politics entangled, obviously. Blame falls among state legislators, city and county officials, business leaders, news media, voters, and even dissenting taxpayers too timid against prevailing fanaticism. What’s clear, when sport officials and boosters made demands or issued idle threats, like claiming the Chiefs could leave for better NFL market, too many people went along.

In every locale touting “major league” status–or vague, unsubstantiated city image–trouble always begins with threats from a pro franchise to relocate unless granted corporate welfare, typically in the form of palatial facilities, maintenance, and more perks.

Private industry learned the trick long ago, leveraging cities against each other for sweetheart deals, locating factories in exchange for tax breaks, land, infrastructure and construction. During recent decades pro sports have commonly held cities hostage for subsidies, with the NFL and MLB as masters of the manipulation, wresting billions in stadium construction from the vast majority of host cities.

“Who can blame them?” Arthur J. Rolnick, federal analyst, told Congress in 2007. “As long as governments are willing to hand over our limited public resources, these teams would be foolish not to accept them.”

Rolnick was among government and independent experts who urged lawmakers to end “economic war” between cities for sport franchises. A congressional subcommittee concluded, “America’s infrastructure is crumbling while state and local officials approve taxpayer-financed professional sports stadiums.”

Maybe America’s starting to get it, the folly of subsidizing stadiums, but too many people still sleep at the wheel. Officials in Miami and Dade County have agreed to largely finance a new baseball stadium with public funds, and in New York the Yankees open their new stadium courtesy of $1.2 billion in tax-exempt bonds.

Taxpayers continue to lose. “If you want to inject money into the local economy,” economist Allen Sanderson has said, “it would be better to drop it from a helicopter than invest in a new ballpark.”

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