THE POLITICS OF SPORTS BUSINESS
With all of the talk around New Jersey about tax cuts, no one has discussed the state's handout of hundreds of millions of dollars for infrastructure for the New York Giants and New York Jets stadium in East Rutherford. There are also other benefits that were given to the two franchises including a break on property taxes and other tax break incentives such as payment in lieu of taxes on the site.
But don't blame the Mara and Tisch families or Woody Johnson, the guys who have funded the actual construction of the stadium, for working the system. Politicians since 1950 starting in Milwaukee have been reaching into the public's pockets to fund sports facilities.
In 1950, Milwaukee politicians decided that the city needed a Major League Baseball team so that the city could feel like a "Big League City." So they built County Stadium to replace Borchert Field (which kind of looked like the Polo Grounds in Manhattan), and went searching for a team in 1953. The financially starved Green Bay Packers played a game at old and run down Borchert Field in 1933 (the Packers next Milwaukee home was the Wisconsin State Fair Grounds starting in 1934) which was the home of the minor league American Association Milwaukee Brewers. The Milwaukee politicians had a few Packers football games every year but that wasn't enough for them.
On March 13, 1953, Lou Perini moved his Boston Braves franchise to Milwaukee. Milwaukee officials were so desperate to fill the stadium that they gave Perini a contract which required him to pay $1,000 in rent and gave him all the concessions in the place. The Perini move got Brooklyn Dodgers owner Walter O'Malley's attention. All of a sudden Milwaukee was a lucrative baseball town with Perini cashing in as more than 1.8 million people saw the Braves in Milwaukee in 1953 which was 1.5 million more people than saw the Braves in Boston in 1952.
O'Malley's Brooklyn Dodgers franchise was the most valuable team in the National League but he was afraid that the Dodgers would not be able to financially compete with the Braves. O'Malley would move his Dodgers to Los Angeles in September 1957 in a deal that would eventually have people around baseball asking: What is baseball's answer to the Denver mint?
Politicians have been tripping all over themselves since 1944 to win over sports owners and get a franchise. Oakland failed in an attempt to build a football stadium in 1944 in a referendum. Two decades later Oakland and Alameda County politicians got a stadium referendum passed to give the American Football League's Raiders a home. In 1967, Oakland convinced Charlie Finley to move his Kansas City A's into the stadium.
You can go virtually to every state in the union, including Alaska and Hawaii and find public dollars invested in sports. But who are the dumbest politicians in the country when it comes to sports spending? That is an easy question to answer.
Had the Phoenix city council been smart, which they were not, they would have approved a multi-purpose arena back in the late 1980s that would have accommodated the NBA's Phoenix Suns and an NHL team. Instead lawmakers approved a $90 million expenditure that was designed to appease Suns owner Jerry Colangelo. The arena was built in such a way that the building was only good for basketball and not hockey or Arena Football or indoor soccer and that severely limited the potential revenues that could be generated in the place. Making sure they further satisfied Colangelo, the terms of the lease between the city and the NBA team required that the franchise pay the bulk of lease payments in years 36-40 of the 40-year lease agreement. The real rent is supposed to kick in around 2028 but given the lifespan of facilities (the Miami Arena was viable for about 11 years, the Charlotte Coliseum for about 13), it is doubtful that the team will even be playing in the arena in 2028 or 2029.
The arena opened in 1992. In 2003, the city kicked in another $17 million to modernize the place when a second Valley of the Sun indoor athletic facility opened in Glendale, which is west of downtown Phoenix.
After taking care of Colangelo, Phoenix planners decided that a new downtown could be built with the arena and a baseball park as anchors so Phoenix politicians went about the task of getting a referendum in front of the public asking for support to build a ballpark for a Major League baseball team.
Over in Tempe, Phoenix/Arizona Cardinals owner Bill Bidwill, who came to the Valley of the Sun with his St. Louis Cardinals football team in 1988, wasn't too happy with his stadium in Tempe. Bidwill started to shop around looking for an Arizona community that wanted his team and was willing to build a stadium that the public would fund and put most of the stadium revenues in Bidwill's pocket. It took 12 years for Bidwill to find the right partner — Glendale — as votes in 2000 said yes to putting up $300 million of the estimated $465 million dollars needed to build a stadium. The money would come from a rise in the hotel/motel tax and car rentals (that is a mechanism designed to placate the locals, out of towners will pay, you won't, however most of the money on the car rental side comes from locals who rent cars more than visitors), Bidwill would recoup the $165 million through stadium naming rights and through a loophole in the 1986 Federal Tax Act which limits the money a municipality can take from stadium generator revenues to eight cents on a dollar.
Mesa said no to Bidwill in 1999.
Colangelo spearheaded the baseball stadium drive. He wanted a Major League Baseball team and went back to Phoenix-area politicians to make his pitch. They listened again.
In 1994, the Maricopa County Board of Supervisors (despite huge budget deficits and cutbacks in the funding of services) said yes to Colangelo and gave the go ahead for a quarter-cent increase in the county sales tax to pay for a part of the stadium's cost. There was a string attached, the approval had to come by March 31, 1995 which meant Major League Baseball had to either relocate a team to Phoenix (unlikely as there was nowhere to play in Phoenix) or expand. MLB awarded Phoenix and St. Petersburg teams beginning in 1998 when the Phoenix stadium would be completed.
The Maricopa sales tax hike was a problem. Maricopa County residents were not allowed to vote on the issue of funding a baseball stadium with general sales tax revenue. In August 1997, Maricopa County Supervisor Mary Rose Wilcox was shot by Larry Naman after leaving a county board meeting. The shooter testified in court that Wilcox's support for the tax justified the attack. In May 1998, Naman was found guilty of attempted first-degree murder.
Colangelo had his stadium whether Maricopa County residents liked it or not. Colangelo's stadium was supposed to have cost $279 million but the ballpark actually price tag was over $350 million and Colangelo's group had to make up the difference. Colangelo's group paid $130 million for the expansion team, there was the cost overruns and a high payroll and throw in the fact that Major League Baseball didn't give Arizona and Tampa Bay full revenue sharing between 1998 and 2002, and that nearly caused the team to declare bankruptcy by 2004.
While Colangelo was looking for a baseball team, he also wanted a National Hockey League team to take up dates in the city's new arena. In 1994, Colangelo told this reporter that Phoenix was a perfect spot for the NHL. The NHL needed to fill the Mountain Time zone for TV purposes and Phoenix and Denver were in the mix for NHL franchises.