Chapter Seven Loot,…

                          Chapter Seven 



                     Loot, Loot, Loot
                   for the Home Team

  The pride and the presence of a professional football team is far more
  important than 30 libraries.

                -- Art Modell, owner of the Cleveland Browns
                  (later the Baltimore Ravens) football team1




Americans have a love affair with professional sports, and, as with
other types of romance, we like to spend money on the relationship.
Total outlays on big-league sports--tickets, advertising, broadcast
rights, and so on--are well in excess of $100 billion a year.2
   Yet not only private funds are involved. In cities across the coun-
try, taxpayer dollars have been used to help finance the construction
of expensive new stadiums. Compilations prepared by the National
Sports Law Institute of Marquette University Law School show that
public funding has, in fact, become the norm. The Institute's profiles
of the stadiums or arenas used by the 92 teams in the three major
sports (football, baseball, and basketball) indicate that 83 of them--
or more than 90 percent--were built to some degree with public
money. Among those, the public paid a majority of the cost in 63
cases, including 32 instances in which taxpayers footed the entire
bill.3 The grand total of public money used in building the 83 sub-
sidized stadiums has been roughly $10 billion.4
   Politicians of all stripes are taken in by the assumption that the
presence of a professional sports team is a leading contributor to the
vitality of cities and thus presumably a generator of new jobs. So
strong is this notion that public officials are willing to give team

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owners subsidies that go far beyond what other private-sector busi-
nesses can hope for. Companies are generally satisfied with tax
breaks, low-cost financing, or some infrastructure improvements
around their property. Team owners expect taxpayers to pay most--
or all--of the cost of new stadiums, which these days cost several
hundred million dollars apiece.


The Brooklyn Threat

How is it that scarce public resources came to be used to finance
construction of new facilities for what are typically quite profitable
local monopolies? The origins of the practice can be found in the
1950s. Until then, team owners paid for their own stadiums, with the
exception of a few--such as the Los Angeles Coliseum and Chi-
cago's Soldier Field--that were built with public funds as part of
efforts to lure the Olympic Games. In 1953, in the first team relo-
cation in major league baseball in half a century, the Boston Braves
moved to Milwaukee, where a new stadium had been built for the
team with public money.5
   The Braves' move paved the way to an era of footloose franchises,
but a more significant event came a few years later, in 1957, when
Walter O'Malley, owner of the Brooklyn Dodgers, announced plans
to move the baseball team to the West Coast. After having failed to
strike a deal with public officials in New York for a new stadium to
replace the cramped Ebbets Field, O'Malley decamped to Los
Angeles, where he was greeted with open arms (and free land and in-
frastructure improvements).6
   It's been said that Brooklyn never recovered--psychologically or
economically--from the departure of the Dodgers. This image of a
community crippled by the departure of a sports franchise has been
put to good use by team owners around the country, who bully pub-
lic officials with threats to move out of town. Whereas O'Malley
himself was vilified for absconding with the Dodgers, these days
local politicians worry that they will be held responsible for losing a

158   THE GREAT AMERICAN JOBS SCAM
popular team by failing to meet the owner's financial demands. In
Field of Schemes, a compelling critique of stadium subsidies, Joanna
Cagan and Neil deMause write: "It's difficult to find a major U.S.
city that hasn't been cajoled, threatened or blackmailed into build-
ing a new sports palace." 7
   The dynamics of owner manipulation are perhaps best illustrated
by a sequence of events that began in 1984, when Baltimore Colts
owner Robert Irsay packed up the team and moved to Indianapolis,
where a domed football stadium had been built with public money
even before there was a tenant to use it.8 Irsay, who had previously
pressured Baltimore to spend $25 million on improvements to
Memorial Stadium, turned his back on the city and signed a lucra-
tive low-rent deal with Indianapolis.
   Shaken by the loss of the Colts, officials in Maryland decided to
give the Baltimore Orioles baseball team, which had shared Me-
morial Stadium with the Colts, just about anything it wanted. This
turned out to be a $235 million new stadium devoted exclusively to
baseball that opened in 1992. Yet the city fathers still yearned to fill
the void that had been left by the Colts. They accomplished this by
making a deal with Art Modell, owner of the Cleveland Browns,
who agreed to come to Baltimore in exchange for a promise to build
the team (which became known as the Ravens) a spanking new sta-
dium adjacent to the Camden Yards baseball field. Modell became
notorious for saying--in the quote that opens this chapter--that
government should make retention of a sports team a greater prior-
ity than providing public access to books.
   Cleveland, whose voters had been pressured in 1990 to approve a
"sin tax" on alcoholic beverages and tobacco products to finance a
new baseball stadium for the Indians, later won an expansion fran-
chise for a new football team (which took the Browns name)--and,
of course, the city agreed to pay some $240 million toward the cost
of a stadium for its new gridiron heroes.
   And so it goes. Time and again, cities have succumbed to implicit
or explicit threats by team owners. In some cases public officials are

                                    Loot, Loot, Loot for the Home Team   159
the ones manipulating public opinion. In his 2000 book Stadium
Games, Minneapolis Star Tribune reporter Jay Weiner quoted pub-
lic officials as admitting that they had fabricated a threat by the
Minnesota Twins to move to North Carolina, in an effort to get state
legislators to vote on a publicly funded stadium for the team.9
   These days, politicians are inclined to take it for granted that pub-
lic money will play a central role in new stadium projects and that
this will somehow result in additional jobs. Washington, DC, mayor
Anthony Williams, for example, did not hesitate to offer up a sta-
dium funded mostly with public dollars as part of the 2004 deal with
major league baseball to relocate the struggling Montreal Expos to
the nation's capital. Some members of the DC council balked at the
obligations being taken on by the city in the project, whose esti-
mated costs ranged up to nearly $600 million, but in the end they,
too, ended up approving a plan that would use tax revenues to pay
for a large portion of the costs.10


Faith-Based Stadium Economics

Public officials' fear that they will be held responsible for losing a
team is not the only motivation for stadium deals. Subsidies to sports
franchises are also justified in terms of job creation. As with other
forms of government-assisted investment, proponents of publicly
funded stadiums have tried to make the case that these sports palaces
are job generators.
   This is a difficult case to make. A professional sports team does
not operate on a continuous, year-round basis. Each sport is limited
to its season, and half the games are played out of town. The most
egregious example is football, with games played only once a week
for five months. A stadium devoted exclusively to professional foot-
ball will be in use for the game only about ten days a year.
   Then there's the question of the quality of the jobs created. Aside
from the small number of athletes with astronomical salaries, the
jobs directly associated with stadiums tend to be part-time, inter-

160   THE GREAT AMERICAN JOBS SCAM
mittent positions with low wages and few benefits. Hawking hot
dogs and beer or cleaning up after the fans go home is not a sure-
fire route to prosperity. Stadium construction does generate better-
paid work for masons, carpenters, electricians, and the like, but this
is of limited duration. The construction jobs evaporate once the sta-
dium is built.
   For these reasons, subsidy supporters tend to focus on the indirect
job-creation impact of stadiums. Team owners pay consulting com-
panies to write reports--or get government agencies to do it for
free--estimating how much new economic activity will be generated
at bars, restaurants, and other establishments catering to the stadium
crowds, as well as estimating the impact of their expanded payroll
and purchasing on other businesses.
   These reports usually involve some dubious assumptions. For ex-
ample, in a 1999 report on the expected economic impact of a new
stadium in Boston to replace Fenway Park, C. H. Johnson Consulting
Inc. assumed that visitors coming to the new facility would spend 20
percent more outside the ballpark than those who visited Fenway.11
The report's rosy scenario, which included an increase of more than
3,000 jobs, may have had something to do with the fact that the
analysis was commissioned by the Greater Boston Convention and
Visitors Bureau and the Greater Boston Chamber of Commerce.
   Probably the most optimistic estimate of total additional em-
ployment was the figure of 10,000 jobs bandied about when the San
Francisco 49ers were seeking support for a new taxpayer-financed
stadium in 1997. Yet that number consisted almost entirely of tem-
porary construction employment and the thousands of low-wage
retail jobs created by the "mega-mall" that 49ers owner Edward
DeBartolo wanted to build adjacent to the stadium.12
   Another common problem with studies justifying stadium subsi-
dies is that they assume all of the dollars spent at the facility are new
to the region's economy. In fact, that is only true for those fans who
come from far away. Most dollars spent at stadiums are dollars that
would have been spent on other leisure activities in the area. You and

                                    Loot, Loot, Loot for the Home Team   161
I do not have more money and time for fun just because we have an-
other choice in how to spend them.
   Economic projections also tend to overlook jobs that might be
eliminated as the result of a new stadium. For example, construction
of the much celebrated Camden Yards baseball stadium in Baltimore
required the dislocation of a group of manufacturing businesses that
together employed about 1,000 people.13
   In sum, the projections made by team owners and their paid con-
sultants in support of stadium subsidies are little more than vague or
arbitrary promises about job creation and economic stimulus. These
cost-benefit analyses rest on faith-based economics: proponents ask
the public, in essence, to believe that the subsidies will pay off.
   This quasi-religious theme was evident in 1997 during a cam-
paign to win public support for a regional sales tax increase in
Pittsburgh to finance new stadiums, each costing more than $200
million, for the Pirates and the Steelers. At an event sponsored by
the baseball and football teams, U.S. senator Rick Santorum de-
clared: "I know I'm preaching to the choir, but it's time for the choir
to start singing." Sounding, according to the account in the Pitts-
burgh Post-Gazette, "more like an old-time evangelist than a politi-
cian," Santorum urged the audience to promote the tax at their
churches and civic organizations.14
   It's not often that you hear a right-wing politician urging a
mobilization of religious groups in favor of a tax increase, but that's
typical of the topsy-turvy politics surrounding the use of public re-
sources to subsidize the business of professional sports. Con-
servatives embrace tax-and-spend fiscal policies, and liberals endorse
giveaways to big business--all in the pursuit of stadium-based eco-
nomic development.


Not Much Bang for the Bucks

If we go beyond anecdotal information to more formal academic
analyses, the results are no different. The overwhelming majority of

162   THE GREAT AMERICAN JOBS SCAM
studies conclude that stadium subsidies do not pay off in terms of
economic growth or job creation. The limited number of jobs that
might be created exact a high cost from taxpayers--often well above
$100,000 each.15
   This theme of stadium subsidies as a bad investment for cities
permeated the most extensive scholarly volume on the subject--
Sports, Jobs, and Taxes, a 500-plus page anthology published by the
Brookings Institution. In their opening chapter, Roger Noll and
Andrew Zimbalist conclude that new sports facilities "rarely, if ever,
are worthwhile. Sometimes they can be financially catastrophic." 16
   In another chapter of the volume, Robert Baade and Allen
Sanderson analyze economic trends in ten metropolitan areas where
new stadiums had been built. Overall, they find that professional
sports teams tended to "realign economic activity within a city's
leisure industry rather than adding to it." 17 In other words, all that
public subsidies accomplished was to help shift spending from
other forms of entertainment to the stadium, with little in the way
of net employment gain. "Professional sports," they write, "are not a
major catalyst for economic development." 18
   The Brookings volume also includes case studies of stadium sub-
sidies in several cities, including two of those discussed above--
Baltimore and Cleveland, both of which are sometimes claimed to
be exceptions to the idea that public investments in stadiums are bad
deals for cities. In an analysis of the Camden Yards, Bruce Hamilton
and Peter Kahn find that the economic benefits generated by the sta-
dium are far outweighed by the cost to the taxpayers of Maryland.19
A study by Ziona Austrian and Mark Rosentraub of the early years
of Cleveland's Gateway Complex, which encompasses the Jacobs
Field baseball stadium and the Gund Arena basketball facility, con-
cludes that there were some economic benefits, but they came at a
very high price--more than $200,000 in taxpayer funds for each ad-
ditional job.20
   The findings in the Brookings volume are not unique. In a later
review of numerous other studies on the subject, John Siegfried and

                                   Loot, Loot, Loot for the Home Team   163
Andrew Zimbalist write: "Few fields of empirical economic research
offer virtual unanimity of findings. Yet, independent work on the
economic impact of stadiums and arenas has uniformly found that
there is no statistically significant positive correlation between sports
facility construction and economic development." The authors note
that the results of academic research "stand in distinct contrast to the
promotional studies that are typically done by consulting firms under
the hire of teams or local chambers of commerce supporting facility
development. Typically, such promotional studies project future im-
pact and almost invariably adopt unrealistic assumptions regarding
local value added, new spending, and associated multipliers." 21 In
other words, the consultants and team owners are peddling snake oil.


Who's Winning?

If taxpayers are footing the bill and the local workforce is not en-
joying a boon, then the question is: cui bono? Who is benefiting
from stadium subsidies?
    The obvious winners are the owners of the teams that inhabit the
stadiums erected at public expense. These owners are hardly in need
of public assistance. About two dozen of them appear on the Forbes
list of the 400 wealthiest Americans, with a net worth of more than
$750 million each. Paul Allen, owner of the Seattle Seahawks and
the Portland Trail Blazers, is said by Forbes to be worth $20 billion,
making him the third richest person in the country.22
    Forbes also calculates the current value of franchises in the major
sports leagues. The magazine estimates that the most valuable foot-
ball team, the Washington Redskins, is worth $1.1 billion; the most
valuable baseball team, the New York Yankees, is worth $832 mil-
lion; and the most valuable basketball team, the Los Angeles Lakers,
is worth $510 million. For many teams, these amounts have risen
smartly in recent years. The value of the Yankees, for instance, has
more than doubled since 1998.23
    New stadiums built at taxpayer expense do a lot to boost franchise

164    THE GREAT AMERICAN JOBS SCAM
values. The Baltimore Orioles, for instance, changed hands for $70
million in 1989, before Camden Yards was completed. In 1993, after
the well-received stadium was in operation, the team was resold for
$173 million, an increase of 147 percent in only four years.24 Cases
such as these are consistent with a statement made more than a half-
century ago by Cleveland Indians owner Bill Veeck: "You don't make
money operating a baseball club. You make money selling it." 25
Today, owners may also make money on operations, but selling re-
mains a sure thing.
   If you don't believe it, just ask the president of the United States.
In 1989 George W. Bush, fresh from an undistinguished stint in the
energy business, spent about $600,000 to buy a small stake in the
Texas Rangers baseball team while agreeing to serve as a managing
general partner. Before long, Bush and his co-investors got voters in
the Rangers' home town of Arlington to approve a sales tax increase
to pay more than two-thirds of the cost of a lavish new $191 million
stadium and a surrounding development that included an amphi-
theater, shops, and restaurants. The lucrative deal allowed the Rangers
to collect rent from all the nearby facilities. Bush and his partners did
not even have to provide their share of the construction costs up
front. Instead, they borrowed the amount from the public authority
in charge of financing the stadium, which was grandly named The
Ballpark in Arlington.26
   Bush dismissed charges that these arrangements were a giveaway
to private interests. "Corporate welfare has this sinister tone to it,"
he said in 1994. "This project has been totally scrutinized, put be-
fore the people of Arlington, and voted for overwhelmingly." 27
   Bush stuck to that line during his successful gubernatorial cam-
paign in 1994 and again in 1998, when he and his partners sold the
team to leveraged buyout investor Thomas Hicks for $250 million.
This was three times its 1989 value, an increase attributable in
significant measure to the new taxpayer-subsidized stadium. Bush,
still governor, came away from the sale with a profit of $14.9 million
(thanks to an enhancement in his share because of his management

                                    Loot, Loot, Loot for the Home Team   165
role). The New York Times later wrote that it was due to the whole
Arlington stadium experience that Bush "acquired not only wealth
but also the resume he would need to triumph in politics." 28
   It is sobering to think that the current political climate of the en-
tire United States--indeed, the current world situation--can be
traced back to a single subsidized sports facility. Not all stadium sub-
sidies have quite that global an impact, but it is clear that scores of
team owners have exploited America's devotion to professional
sports to enrich themselves and contribute very little to the econ-
omies of the communities in which they operate.


Too Many Convention Centers

The dubious economics behind stadium subsidies are replicated in
cities across the country when it comes to another big-ticket facility--
convention centers. Like professional sports, conventions are sold as
a way to lure large numbers of free-spending visitors to struggling
downtown areas. Consultants--often the same ones who analyze sta-
dium deals--produce reports arguing that this infusion of money into
hotels, bars, and other hospitality businesses will greatly boost tax rev-
enues and create substantial numbers of new jobs.
   This vision of convention-induced development has prompted
city governments to double their capital spending on convention
centers over the past decade, reaching an average of more than $2
billion annually. In early 2005, some 40 cities were planning or
building at least six million additional square feet of convention
space.29
   It's true that this build-up targets an entirely different market than
stadiums serve. Each professional sports franchise is a local monop-
oly, so stadiums are captive; cities, however, compete for a share of
the national convention market. If that market were steadily ex-
panding, then it might make sense for cities to increase their con-
vention center investments.
   But the market is not growing rapidly. Professor Heywood Sanders

166    THE GREAT AMERICAN JOBS SCAM
of the University of Texas at San Antonio has done a careful study
showing that overall national attendance at conventions and trade
shows has generally been on the decline since the mid-1990s. He
refers to conventions as a "faltering industry." 30 Such weakness
means that fewer jobs are created either in the convention centers
themselves or in the surrounding hospitality sector.
   To bolster his case, Sanders looks at attendance for centers in
leading convention cities such as Chicago, New York, Atlanta, and
New Orleans. In each case, the numbers are down from the mid-
1990s, despite numerous expansions in exhibit space. At the Morial
Convention Center in New Orleans, for example, attendance is
down more than 40 percent since a peak in 1999.31
   The bottom line: an increasing number of ever-larger convention
centers are chasing fewer events and dollars. Given that convention
centers are usually publicly owned, government spending on these
facilities does not constitute a direct giveaway to the private sector.
Yet, as with stadiums, this use of scarce public dollars to build and
operate expensive facilities is creating few good jobs.




                                   Loot, Loot, Loot for the Home Team   167