THE BUSINESS AND POLITICS OF SPORTS
Public spending for sports arenas and stadiums has been for the most part a failed policy for a quarter of a century. Academics and analysts will eventually be doing the research many years from now about the trend which accelerated to incredible levels of building and spending after the 1986 changes in the United States federal tax code and their conclusions may go something like this.
Who thought of this incredible spending as an economic engine and why did taxpayers go along with the notion that spending billions in this particular urban renewal venture would create jobs and revitalize a city or county?
The failure evidence includes Hamilton County, Ohio where the local government built a Cincinnati Reds ballpark and a Cincinnati Bengals football stadium which turned out to be a complete economic boondoggle for an area where apparently the local population likes smaller government and smaller government spending.
The county officials looking for the solution felt that selling off a county hospital would be a good idea to pay down the debt. In Sacramento, city leaders are presently giving thought to selling the city's parking space collections to a private vendor and using the proceeds from the sale to build an arena for the National Basketball Association's Kings Franchise. No word on how elected officials will deal with the loss of parking space revenues which go into the city's general fund to pay for things like fire and police services.
The 1986 tax code reform included a great provision for sports owners which turned out terribly for taxpayers. A sports owner signing a lease with a municipality that would put up money for a facility could capture as much as 92 cents for his or her pockets of every dollar generated in the building. The municipality would get as little as eight cents per dollar to pay down the enormous debt load on a building that costs hundreds of millions of dollars. Apparently the owners of the Cincinnati teams got a sweetheart lease that fell under the federal tax code. Great for the Reds/Bengals ownership groups, rotten for Hamilton County taxpayers.
Some areas did see a bit of development. In Baltimore a baseball stadium and a football field came after much of the components for the Inner Harbor were in place. But for the most part, cities built facilities that didn't deliver the economic benefits promised. An example is Cleveland where opening a casino is the latest gambit to revitalize the downtown.
The New York Mets franchise is the poster child for everything that could go wrong with the notion that a stadium is an economic hub that can revitalize an area. Sometime in the late 1990s or early 2000s, Mets owners Fred Wilpon, Saul Katz and Jeff Wilpon decided Shea Stadium was a less than ideal venue for the team. They were not able to wrangle municipal funding from New York City Mayor Rudolph Giuliani or Governor George Pataki but eventually they cut a deal with Mayor Michael Bloomberg and state officials to "privately" build a new ballpark in the Shea Stadium parking lot in Flushing. The Wilpons and Katz did get money for other things like "infrastructure" at the site and probably a slew of tax breaks and tax incentives.