The Real Welfare Queens

It isn’t who you think; the leeches who live on public sympathies while returning little social value. A sustained debate has been held in this nation on the costs and benefits of items ranging from food subsidies to heating oil subsidies to free health care. Across the nation, it is human capital, and the commercial infrastructure it supports that is up for debate. But in the wide-ranging argument over who is worth the money, one group remains conspicuously above criticism; professional sports owners.

We love our major league entertainment in America; I am a long-suffering fan of the Cleveland Browns, and a rabid supporter of the Los Angeles Dodgers. As a former high school athlete (not very good) and youth sports coach (better than average), I am a believer in the value of sport. I am also, however, a believer in prioritization. To put a twist on a favorite quote from Mr. Holland’s Opus, “If I must choose between football and long division, I choose long division.” In the movie, the principal is canceling the music and drama programs to close a budget gap, the football program he leaves untouched. That is an example of Hollywood reflecting life, but our high schools are just following the trend we the people have established at the big league level. At a time of teacher layoffs and wholesale attacks on the idea of public education, our nation continues to spend public money at a rate of $1 billion per year on stadiums for professional sports. If you are one of those good folks who are outraged at $4 million earmarks to study bear DNA, you might want to take notes.

extortion [ɪkˈstɔːʃən]

n

the act of securing money, favours, etc. by intimidation or violence; blackmail

extortionerextortionistn

To be sure, there are critics on a local level, and taxpayers who have been successful in the fight against these efforts. But critics of publicly-funded stadiums are harassed and marginalized, while the supporters of legalized extortion are allowed to spread their lies without constraint. We are talking about the only capital asset, and principal driver of revenue, for privately-owned ventures, and these Real Welfare Queens have convinced the public to finance them. Writing for the NFL on that league’s propaganda site, Albert Breer included these nuggets in a piece on which team would fill the NFL’s need for a franchise in Los Angeles:

Minnesotans have to be careful here, or whistling by the graveyard could land them a similar fate to what the people of Cleveland got.-On chances the Vikings will relocate

But maybe most important is that the Spanos family has been working for more than a decade to solve the stadium situation, and eventually, they might be forced to look elsewhere…

The Chargers have been a threat to move for some time. It seems like the Spanos family genuinely doesn’t want to pull the trigger. But eventually, enough becomes enough. This is one worth watching.-On the Chargers stadium “situation”

The good people of Minnesota and San Diego have bought tickets, supported advertisers, and waived property taxes for years, but the implication of this article is clear; pay for a new stadium that the owners can then charge higher ticket prices for, or loose the team. And that is the simple fact, often overlooked, in this argument; new stadiums that offer better revenue potential, do so because the operators can justify much higher ticket prices. Fans are threatened to pay more up front for the priveledge of paying more down the road, or else. These new stadiums also, as new facilities for all business do, reduce operations costs. In New York, where public financing will cost local taxpayers an estimated $4 billion over the life of the projects, the savings for teams in the cost of capital and operations are immense.

These values would be wonderful if the businesses provided the funds themselves, but they don’t. Hotel operators, restaurants, contractors, lawyers, doctors, and most non-profits have to build, buy, or lease their own facilities. Why are professional sports owners given special luxury. I suppose they could claim hardship, but where is the proof? The NFL is just the latest league to be unable to decide how to share revenue with its players; it generates $9 billion per year in revenues, pays almost nothing in property taxes (which means it gets the same benefits ascribed to schools and churches), and can’t be bothered to open up its books for review.

That’s right folks, $9 billion per year generated in facilities that were substantially funded with public money, and the NFL thinks it has a right to financial privacy. We give them (all of them, baseball, hockey, football, and basketball) business, loyalty, anti-trust protection, and tax benefits, and they don’t have the business acumen or dignity to pay for their own facilities. But they do have accountants and p.r. geeks on staff, ready to make their case for the value of public extortion. They do have a cadre of media elites standing by to extol the “benefits” of “sports-led development”.

Bullshit!

The next time you hear of or read a story that tells you how much money will be generated by a new stadium you and your neighbors will pay $500 million for, do what a real business person does; analyze the alternatives. There is no capital management without an analysis of the alternatives. If indeed we raise this tax, or provide these loan guarantees to this private business owner, how much could be generated with alternative investment strategies? What if we provided $1 million block grants to small business owners, aspirational entrepreneurs, and non-profits in the area? Would they generate more traction than one stadium staffed with largely temporary labor? Would they return more benefit to society than a facility that is a giant tool for ticket and hot dog price inflation?

I promise you, none of the articles you read (or stories you hear on ESPN) will feature such an analysis, just inflated speculation on “economic impact” with little or no context. It is the most common m.o. of these people to prey on the lack of economic and financial education of everyday folks with real jobs and families. All the better for the Steinbrenner’s, Wolff’s, and Spanos’ of the world if their patrons provide both factory funds and retail revenue, they can sit back and act as profit consolidators.

These business models can be accomplished responsibly; my own beloved Dodgers (with apologies to the good folks of Brooklyn), have played their whole history in Los Angeles in privately financed accommodations (and Dodger Stadium is beautiful). Our hated rivals up north, the despicable San Fransisco Giants, have also done themselves and their fans proud by playing in a gorgeous facility by the sea…also privately financed. It can be done, but only if the extortion and bribery that characterize current stadium dealings is done away with. The current paradigm gives these owners, and their media shills, all of the leverage.

The citizens of Minnesota, having fought the good fight against buying the Vikings’ future stadium, might be punished with the sight of their team playing home games in a downtown L.A. stadium. The developers of the Los Angeles stadium claim that public money won’t be involved, but they (like the NFL) have never been open about where the cash is coming from, and have never addressed shortfalls to the public that are implicit in their proposal. This is the kind of problem that could, with brutal simplicity, be solved by federal action. This is emphatically a matter of interstate commerce, and perfectly fits the model of interstate dispute that the Founders envisioned. A federal law banning the use of funds in the construction of facilities used by private franchises that cross state lines would bring a crisp end to the “pay us now or we will move the team” argument. This isn’t the biggest problem facing our democracy, but there is a strong movement in our nation to address wasteful spending, and this action could be taken without causing individual areas undue harm.

The Rational Middle is listening…

 

One thought on “The Real Welfare Queens

  1. This came out of left field (pun intended, lol) but it’s an awesome article. I rarely see a post here on TRM that doesn’t expand my thinking in unexpected ways.

Comments are closed.