Outrageous! Play Ball -- Or Else!

By Michael Crowley

Microsoft co-founder Paul Allen is one of the world's richest men, said to be worth $20 billion. A few years ago, he agreed to buy the Seattle Seahawks football team, on one condition: that local taxpayers pony up millions to help build a new stadium. Plenty of people didn't take to the idea of giving a billionaire a handout. So Allen decided to twist some arms. He reportedly spent $1.7 million to persuade the legislature to schedule a special election on the issue. Then he spent another $3 million on an advertising campaign that hinted the beloved team might leave town if it didn't get the new stadium. Result: Voters agreed to a $300 million stadium subsidy, and Allen pitched in $130 million of his own money. Over seven years, the value of his investment in the team climbed from about $200 million to more than $700 million.

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That's a pretty sweet deal -- and one that's typical of this form of corporate welfare. Cities and states are spending huge amounts of taxpayer money -- as much as $2 billion per year overall, according to Field of Schemes co-author Neil deMause -- on new ballparks for pro teams. Some of the cities that have shelled out $100 million or more for their pro teams in recent years include San Diego, Cincinnati, Detroit, Phoenix, Philadelphia, Houston and Pittsburgh. Washington, D.C., is throwing in some $400 million to build a stadium for its new baseball team, the Nationals. And taxpayers will foot the $900 million bill for a stadium complex, including a convention center, for the NFL's Indianapolis Colts.

The sales pitch from wealthy owners is galling, and not just because these are the last guys who need a handout. "The problem with [stadium] subsidies is they are falsely sold," says Andrew Zimbalist, a professor at Smith College who specializes in the economics of sports.

Some owners argue that a stadium simply can't be built without a large chunk of public money. Not true. Just look at baseball's San Francisco Giants. Rather than have the taxpayer foot the bill for their new $315 million ballpark, the team borrowed about half the money and raised most of the rest through creative initiatives like selling naming rights to the park, corporate sponsorships, and "licenses" for prime season-ticket seats.

Then there's the claim that building a new stadium will give a city an economic jolt. Almost no economist buys that one. "I have yet to find a single economist who thinks there's any substantial impact from sports facilities," deMause says. In fact, a 1997 study by Andrew Zimbalist and Stanford's Roger Noll found that "no recent facility appears to have earned anything approaching a reasonable return on investment."

Part of the reason, according to economists like Allen Sanderson of the University of Chicago, is that sports teams pull in local fans who would be spending their cash somewhere else in town anyway. Instead of attracting new money, stadium events just move money around that was already headed for the city coffers.

Forget about a job bonanza too. The jobs created by a new stadium are not especially good ones. A few thousand ticket-takers, hot dog salesmen and maintenance workers hardly make for an economic boom.

And even if teams play to a full house, and the fans splurge on stadium food and merchandise, and the game gets televised to a wide audience, it's the owners who rake it in. Cities get nothing from TV deals, and merely collect sales tax on all those other purchases.

As Sanderson told a reporter in 2002: "If you want to inject money into the local economy, it would be better to drop it from a helicopter than invest in a new ballpark."

It's even harder to swallow the subsidy pitch when you're being shaken down at the ticket office already. From 1994 to 2004, average baseball ticket prices were up nearly 50 percent in inflation-adjusted dollars, while football tickets jumped 39 percent and basketball tickets 29 percent. (Anyone who's paid $5 for a hot dog knows it's not just ticket prices that are in the stratosphere.)

The final insult is when owners make a killing by selling newly upgraded teams. A classic example: the Texas Rangers. In the early '90s, the baseball team got a new ballpark -- for $191 million. Two-thirds of that came from the city of Arlington. But the hoped-for retail and business development in the vicinity never materialized, and the area has seen little economic benefit. It was a nifty deal for the team's owners, however, who later sold for a huge profit.

Some cities, though, have summoned the nerve to resist the shakedown artists. Over the past decade, deals that have kept most of the financing private have built stadiums for the Miami Dolphins and the Denver Nuggets. A few cities have offered land, or road upgrades, but that's a smart financial bargain.

So let's start playing fair. It's not like fans are freeloading if they show up at a stadium they didn't pay for. Millions of us are opening our wallets wide for overpriced tickets, sodas and T-shirts. We just resent paying off the mega-rich in order to get a seat at the game.

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