How Using Taxpayer Money for Stadiums Became Bad Politics - From Inc.
Here's how the conversation used to go between the owner of a professional sports team to the Mayor and Governor:
Owner: Look guys, I need you to step up. Our stadium is twenty years old. It doesn't have the amenities our fans want. It's outdated. Antiquated. Makes our city look bad. And we don't want that.
Mayor: So you want us to pay for new luxury boxes?
Owner: I want you to help finance the modernization of the home of a beloved civic treasure.
Governor: So we invest taxpayer money in the stadium and then the people get part of the team's profits?
Owner (laughs): This is America. We believe in capitalism. This team has been in my family for generations. We can't share its equity.
Mayor: So we use taxpayer money that can go to roads, schools, police to pay for luxury boxes and other upgrades that you own?
Owner: Well, you don't have to. If we're not a priority, there are dozens of cities begging us to move there. Begging. We can just do that. I'm sure our fans - your voters - won't care. They won't take it out on you when you run for re-election.
Governor looks anxiously at Mayor, shrugs: I guess you're right. Here's the check. We'll just sign it. You can fill the rest in yourself.
What drives politicians
The fear of angering voters drove politicians for decades to spend taxpayer money on upgrades and new stadiums for privately owned sports teams. Economists argued the whole time that publicly financed stadiums are a terrible investment - when people spend money at ballparks, it's just a revenue neutral transfer from other forms of entertainment (movies, restaurants, comedy clubs, etc....).
But no one cares what economists think. Politicians were convinced that saying no to their local sports teams would cost them their jobs, so they capitulated - time after time. No amount of fiscal discipline or personal responsibility could outweigh their desperation to stay in office.
But things have begun to change - not because people are finally listening to the economists but because the politics have changed.
Look at Oakland
The Raiders have historically pitted cities against each other to pay for their stadiums (Oakland vs Los Angeles, then Los Angeles vs Oakland). The politicians always caved, so why not try again? Mark Davis, the team's owner, demanded a new, publicly financed stadium.
Oakland's Mayor, Libby Schaaf, tried a reasonable path to keep the team and protect the taxpayers. But of all of Oakland's problems - the lack of affordable housing, underfunded schools, homelessness - a nice football stadium was the least of them. And most people who come to Raiders games are from the suburbs anyway (meaning they're not Oakland voters). Davis played chicken, assuming the city would buckle as always.
But things had changed. Local voters were concerned about issues like growing income inequality, not the pride associated with hosting a football team. Capitulating to Davis would have cost Schaaf votes. Davis tried playing Las Vegas and Sheldon Adelson off of her. She called his bluff. Now the team is moving to Vegas, a market ill-equipped to fill a stadium, garner decent tv ratings or support a team (especially compared to the very populous Bay Area). And when Schaaf runs for re-election next year, odds are high the voters will reward her for protecting their interests.
Mayor Kasim Reed in Atlanta is another example
Turner Field, home to the Braves, needed renovations. The team wanted $250 million in taxpayer money to update the ballpark. Neighboring Cobb County was offering $450 million to pay most of the costs of a new stadium. For Reed, the $250 million the team wanted meant that much less for roads, bridges and parks.
His voters care about not being stuck in traffic. They care about living near playgrounds their kids can enjoy. They could care less about luxury boxes and suites at Turner Field. So Reed did the substantively and politically smart thing - and said no. The Braves are now 12 miles away and Atlanta's residents are happy about it.
Sure, there will always be a city or county desperate enough for validation that they'll throw public money at a team. But how many teams really want to play in Jacksonville? How many teams can afford to abandon their fan base and start over? And what happens once the cities being used as bait already have teams?
Voters are clearly tired of seeing insiders get rich on their dime. That's why Sanders came so close in the primary. It's why Trump won. The only reason politicians ever forced through publicly financed bonds for teams was because they feared the political consequences of not doing so.
Now the worm has turned, as Schaaf and Reed both proved. The politics of giving scarce taxpayer resources to multi-billion dollar franchises has changed inexorably.
And that takes all the leverage away from the teams and the leagues - and gives it to the mayors. Sports may never be the same. And we'll all be better off for it.