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Sports Pork: the Costly Relationship Between Major League Sports And

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Sports Pork: the Costly Relationship Between Major League Sports And No. 339 April 5, 1999 SPORTS PORK The Costly Relationship between Major League Sports and Government by Raymond J. Keating Executive Summary During the 20th century, more than $20 bil- Before the Great Depression, sports subsidies lion has been spent on major league ballparks, sta- were rare; today, they are the general rule. The eco- diums, and arenas. This includes a minimumof nomic facts, however, do not support the position $14.7 billion in government subsidies that has that professional sports teams should receive tax- gone to the four major league sports—Major payer subsidies. The lone beneficiaries of sports League Baseball, the National Football League, subsidies are team owners and players. The exis- the National Basketball Association, and the tence of what economists call the “substitution National Hockey League—including more than effect” (in terms of the stadium game, leisure dol- $5.2 billion just since 1989. lars will be spent one way or another whether a These numbers (all in 1997 dollars) exclude the stadium exists or not), the dubiousness of the billions of dollars in subsidies provided through Keynesian multiplier, the offsetting impact of a the use of tax-free municipal bonds, interest paid negative multiplier, the inefficiency of govern- on debt, lost property and other tax revenues not ment, and the negatives of higher taxes all argue paid on facilities, taxpayer dollars placed at risk of against government sports subsidies. Indeed, the being lost if the venture failed, direct government results of studies on changes in the economy grants to teams, and the billions of dollars spent resulting from the presence of stadiums, arenas, by taxpayers on minor league facilities. and sports teams show no positive economic Looking to the rest of 1999 and the next sever- impact from professional sports—or a possible al years, considering what is already agreed to and negative effect. what various teams and cities are seeking or Unfortunately, many of the proposals for proposing, another conservative estimate indi- resolving the issue of subsidized stadiums and cates that at least $13.5 billion more will be spent arenas, such as government ownership of sports on new ballparks, stadiums, and arenas for major teams, only make matters worse. A step in the league teams. Taxpayers are expected to pay more right direction would be a measure requiring vot- than $9 billion of that amount (in nominal ers to approve any government subsidy for profes- terms). sional sports. ___________________________________________________________________________________________ Raymond J. Keating is chief economist for the Washington-based Small Business Survival Committee, a weekly columnist with Newsdayin New York, and a partner with Capitol Hill Research, a political and economic analysis service. He is coau- thor of D.C. by the Numbers: A State of Failure(1995) and author of New York by the Numbers: State and City in Perpetual Crisis(1997). The home in al sales tax break for the Dolphins in 1997, but which the Introduction state legislators turned him down.8 In 1997, Huizenga complained about los- Dolphins and In 1997, the Florida Marlins served up an ing money on the Marlins (reportedly about Marlins swam amazing story on the baseball diamond. $34 million for the year). The stadium, he said, was not the Having entered the league just four years earli- was a big part of the problem: “Look at the er as an expansion club, the Marlins gained a teams that do have stadiums—the Braves, purely private wild-card entry into the playoffs and went on Cleveland, Baltimore, Texas—all of them have venture it was to became world champions. Former Marlins a great atmosphere and they’re doing well. We owner Wayne Huizenga, of Waste Manage- play in a football stadium. We hear that all the said to be. ment and Blockbuster Video fame, paid a $95 time.”9Before the 1997 season began, the team million expansion fee for the franchise, attempted to rally political support for a new brought in respected manager Jim Leyland to baseball-only stadium. By June, Huizenga put guide his ball club, and rang up a 1997 player the Marlins up for sale. Many speculated that payroll of $53 million (a 77 percent increase this was merely another ploy by Huizenga, over the 1996 payroll of $30 million).1 The who had put his National Hockey League combination worked as the Marlins beat the (NHL) franchise, the Panthers, up for sale in Cleveland Indians in an exciting seven-game late 1995, only to take it off the market after World Series. politicians agreed to erect a new arena for the The Marlins’ ballpark, Pro Player Stadium team.10 (first named Joe Robbie Stadium, for the for- Speculation continued to run so high mer owner of the Miami Dolphins who built regarding Huizenga, a new ballpark, and his it), was erected in 1987 and is privately owned, future ownership that on the night his team financed with $115 million from the private won the World Series, reporters asked as many sector2—a rare occurrence in this era of tax- questions about the controversy as about the payer-subsidized, often government-owned game. In fact, after winning the World Series, sports venues. Huizenga bought both the Huizenga announced he would not sell the Dolphins and the stadium in 1994 from the team if the taxpayers paid hundreds of mil- Robbie family for $138 million (four years ear- lions of dollars for a new ballpark with a lier, after Joe Robbie’s death, he had purchased retractable roof.11 15 percent of the team and 50 percent of the Huizenga subsequently committed anoth- stadium).3In 1996, he sold the stadium nam- er, and to some more egregious, sports sin: he ing rights to Fruit of the Loom for $20 million disassembled his highly paid championship over 10 years.4The Marlins’ World Series tri- team, giving them no chance to defend their umph in 1997 seemed to be a victory for the title and turning them into little better than a free market. Triple A minor league team for the 1998 base- Off the field, however, the unsavory politics ball season. The team’s payroll plunged by 70 of corporate welfare intruded. The home in percent to $16 million.12The Marlins lost 108 which the Dolphins and Marlins swam was games in 1998—the worst performance ever not the purely private venture it was said to be. for a team that had won the World Series the In reality, the original borrowing was done previous year. They went from champs to with Dade County industrial revenue bonds, chumps because the owner’s demands for sub- though paid off with private dollars.5In addi- sidies went unheeded. tion, the county forked over almost $30 mil- With no subsidized ballpark in sight, lion for road and utility improvements,6and in Huizenga continued his efforts to sell the 1991 the state granted a $60 million sales tax Marlins. In November 1998, he finally sold the rebate—at $2 million annually for 30 years— team for $150 million to John Henry, who is so Huizenga could retrofit the facility for base- also seeking taxpayer assistance for a new facil- ball.7He tried to get another $2 million annu- ity.13 2 Wayne Huizenga’s scheming for taxpayer and the National Basketball Association subsidies is by no means unique in the “wide (NBA)—enthusiastically play the stadium world of sports.” Sports teams sometimes pur- subsidies game. sue taxpayer dollars off the field with greater All the pre-Depression baseball stadiums in tenacity than they do victories on the field. use today were originally built with private And as we shall see, they have been quite suc- funds: Wrigley Field, Tiger Stadium, Yankee cessful in picking off taxpayer dollars. Public Stadium, and Fenway Park. In 1912, Tiger subsidies pad the bottom lines of team owners Stadium (originally known as Navin Field) and boost player salaries while offering no real opened in Detroit at a cost of $500,000.16That economic benefit to the cities involved. They same year, Fenway Park, built at a cost of provide another example of government $364,500, opened in Boston.17 Chicago’s action whereby the few and the influential Wrigley Field was erected in 1914 at a cost of benefit at the cost of the many. $250,000.18 “The House That Ruth Built,” a Federal, state, and local officials have $2.5 million structure built on land purchased shown themselves more than willing to fork for $600,000, opened in New York in 1923.19 over taxpayer dollars to the sports world. And Hockey’s Toronto Maple Leafs put down such willingness knows no political party roots in Maple Leaf Gardens in 1931 (they had boundaries: From the most liberal Democrats previously played in the Mutual Street Arena). From the most to the most conservative Republicans, sports The story of Maple Leaf Gardens shows how, liberal Democrats pork is a rampant, bipartisan effort, and there even in the most dire of economic times, the to the most con- is no end in sight. private sector can build sports facilities with- out government assistance. David Mills servative A Short History of explains: Republicans, sports pork is a Major League Sports Although money was tight because of and Government Subsidies the Great Depression, [Conn] Smythe rampant, biparti- bought land in downtown Toronto for san effort, and Extensive subsidization of sports by gov- $350,000 from the T. Eaton Company ernment has been a fairly recent development (which took a second mortgage of there is no end in in U.S. history. Princeton University political $300,000 and $25,000 worth of stock).
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