John Oliver: You don't want a New Sports Stadium in Your City

[skanar]

I wonder what would happen if a municipality decided, rather than spend billions on a stadium, to spend the money on seizing a team via eminent domain (to set up a Packers-like setup).

Also of interest to me is the apparent difference between Washington and Baltimore, which have both had largely successful partial public stadiums (Verizon Center, OPACY). Not sure what was different here.

[DrungoHazewood]

I know it will never happen....but, this issue would be resolved if the the federal government would pass a law forbidding professional sports franchises from moving out of their current cities into publicly financed facilities.

If the owner has the money to finance his own stadium, then all the power to him.

So I've mentioned this in the past, but by luck, happenstance, or whatever, the open-league model that most of world soccer uses basically fixes the problem.

There leagues are just constructs to house teams that happen to compete at similar levels. If you aren't good enough for your current league, you get demoted. If you're better than most of your league (and you're not already at the top) you move up. None (or almost none) of the teams are organizationally or legally affiliated with one another. There are few major/minor team setups to complicate things. There are just teams that settle into a level at which they can compete.

A consequence of this is that every town and every city has one or more teams that have, over time, migrated to levels where they can be relatively successful. So it's very difficult to get public money to fund a big stadium project.

Use London as an example. There are quite a few teams there at the highest level (Tottenham, Chelsea, Arsenal, Crystal Palace, West Ham... I'm probably forgetting someone). Other teams at slightly lower levels like Fulham. And still more teams, say Dagenham and Redbridge, at even lower levels. If Chelsea went to the mayor of London and asked for $1B for a stadium the response would almost certainly be laughter, followed by "why would I pay for your stadium? There are, like, eleven other teams here. They're not all getting public money. You're not either. Go build your own bloody stadium." And, pretty much, that's what happens. There are exceptions. I'm sure when the World Cup went to Germany they kicked in some public money for facilities. But that's the exception, not the rule. Here if you don't get half a $billion for a new stadium whenever you ask you move to Austin or Portland or something and you may never get a team back.

I hate that we rely on a group of 30 billionaires to grant us a team we can root for. Tell me that, in an open league setup in about 2006, half the Oriole fanbase wouldn't have switched allegiances to the Towson Turtles, or the Baltimore Canaries or something, and told Angelos we weren't kissing his ring anymore. We were giving them our money and getting them promoted to the Majors.

[Frobby]

We really don't talk about political issue here at the Hangout. So don't get mad. Just post your political rages somewhere that they do! Glad to have you in the discussions.

Seems to me this entire topic is political, though sports related. It's all about how a government should spend its money. What could be more political than that?

My brother, who formerly was the Assistant Secretary of the Treasury for Tax Policy, was a strong advocate for passing legislation denying tax-exempt status for minicipal bonds used to build sports stadiums. If passed, that legislation surely would make it uneconomical for cities to fund sports stadiums. But it never got off the ground.

[InsideCoroner]

So I've mentioned this in the past, but by luck, happenstance, or whatever, the open-league model that most of world soccer uses basically fixes the problem.

There leagues are just constructs to house teams that happen to compete at similar levels. If you aren't good enough for your current league, you get demoted. If you're better than most of your league (and you're not already at the top) you move up. None (or almost none) of the teams are organizationally or legally affiliated with one another. There are few major/minor team setups to complicate things. There are just teams that settle into a level at which they can compete.

A consequence of this is that every town and every city has one or more teams that have, over time, migrated to levels where they can be relatively successful. So it's very difficult to get public money to fund a big stadium project.

Use London as an example. There are quite a few teams there at the highest level (Tottenham, Chelsea, Arsenal, Crystal Palace, West Ham... I'm probably forgetting someone). Other teams at slightly lower levels like Fulham. And still more teams, say Dagenham and Redbridge, at even lower levels. If Chelsea went to the mayor of London and asked for $1B for a stadium the response would almost certainly be laughter, followed by "why would I pay for your stadium? There are, like, eleven other teams here. They're not all getting public money. You're not either. Go build your own bloody stadium." And, pretty much, that's what happens. There are exceptions. I'm sure when the World Cup went to Germany they kicked in some public money for facilities. But that's the exception, not the rule. Here if you don't get half a $billion for a new stadium whenever you ask you move to Austin or Portland or something and you may never get a team back.

I hate that we rely on a group of 30 billionaires to grant us a team we can root for. Tell me that, in an open league setup in about 2006, half the Oriole fanbase wouldn't have switched allegiances to the Towson Turtles, or the Baltimore Canaries or something, and told Angelos we weren't kissing his ring anymore. We were giving them our money and getting them promoted to the Majors.

Excellent post. I loathe public funding for stadiums and how cities and their communities get suckered into it time after time on the back of empty promises about creating jobs and revitalizing the downtown area.

I love how the soccer leagues function here, just as you said. Performance-based placement and a wealth of local competition. The city where I live in Germany (Dortmund) has a population of 600,000 (a quarter of which are at or below poverty levels), and Dortmund draws 80,000 fans a game. Yet the nearest top-tier team (and hated rival) is less than 20 minutes away in Gelsenkirchen. That's like the MLB moving the D'backs to Towson. Granted, there is no real competing sport to draw away fans, but it's impressive nonetheless.

They did spend a few billion on renovations and improvements for the World Cup, but all on 12 stadiums which are in regular use, including Dortmund. Far better than Brazil, which spent twice as much (and a far greater percentage of their GDP) on stadiums that now sit vacant.

[Plutarch]

Back in doctoral program days I used to do a lot of research and writing on sports economics including things like the economic impact of public spending on sports related initiatives and infrastructure (also on items such as maximizing ticket revenues for sporting, or other events). Having continued to review and comment on more recent (proposed) expenditures like the Boston 2024 Olympics (don't get me started on this) it is extremely rare for any such initiative to have a positive impact on a city/region and in many cases the initiative has an over all negative impact on not only the local population (city/region) but also on a wider demographic (state population - this depends on the size of the state among other factors).

[byrdz]

Boston's next big dig!!

[Rich Mac]

So I've mentioned this in the past, but by luck, happenstance, or whatever, the open-league model that most of world soccer uses basically fixes the problem.

There leagues are just constructs to house teams that happen to compete at similar levels. If you aren't good enough for your current league, you get demoted. If you're better than most of your league (and you're not already at the top) you move up. None (or almost none) of the teams are organizationally or legally affiliated with one another. There are few major/minor team setups to complicate things. There are just teams that settle into a level at which they can compete.

A consequence of this is that every town and every city has one or more teams that have, over time, migrated to levels where they can be relatively successful. So it's very difficult to get public money to fund a big stadium project.

Use London as an example. There are quite a few teams there at the highest level (Tottenham, Chelsea, Arsenal, Crystal Palace, West Ham... I'm probably forgetting someone). Other teams at slightly lower levels like Fulham. And still more teams, say Dagenham and Redbridge, at even lower levels. If Chelsea went to the mayor of London and asked for $1B for a stadium the response would almost certainly be laughter, followed by "why would I pay for your stadium? There are, like, eleven other teams here. They're not all getting public money. You're not either. Go build your own bloody stadium." And, pretty much, that's what happens. There are exceptions. I'm sure when the World Cup went to Germany they kicked in some public money for facilities. But that's the exception, not the rule. Here if you don't get half a $billion for a new stadium whenever you ask you move to Austin or Portland or something and you may never get a team back.

I hate that we rely on a group of 30 billionaires to grant us a team we can root for. Tell me that, in an open league setup in about 2006, half the Oriole fanbase wouldn't have switched allegiances to the Towson Turtles, or the Baltimore Canaries or something, and told Angelos we weren't kissing his ring anymore. We were giving them our money and getting them promoted to the Majors.

Well said. That system does put the damper on the extortion employed by sports franchises today. However, it does bring up a whole new set of issues.

It essentially creates a sports caste system of the haves and the have-nots. I know that many of the posters here already feel as if the Orioles are competing in an uneven system with the large market teams, but it is nothing compared to what many Euro Football Clubs face. Look at the EPL for example. The Big Four have absolutely dominated the sport with little to no sign of any of them relinquishing their stranglehold on their less-off brethren.

In that system, an established team in a large market can steamroll the competition.

[DrungoHazewood]

Well said. That system does put the damper on the extortion employed by sports franchises today. However, it does bring up a whole new set of issues.

It essentially creates a sports caste system of the haves and the have-nots. I know that many of the posters here already feel as if the Orioles are competing in an uneven system with the large market teams, but it is nothing compared to what many Euro Football Clubs face. Look at the EPL for example. The Big Four have absolutely dominated the sport with little to no sign of any of them relinquishing their stranglehold on their less-off brethren.

In that system, an established team in a large market can steamroll the competition.

That's true, but if we're speaking in hypotheticals or alternate universes there's no reason why you couldn't design an open league that also features some combination of revenue sharing and salary restraints. The EPL could set up a rule that says for each pound of salary over X a team would have to pay an equal amount into a pool that gets split by the other teams in the league. Or that you are ineligible for the Champions League if you have a payroll more than some amount. Not that they will, they think that's weird American socialism rewarding failure, but they could do that.

[slakattack]

Back in doctoral program days I used to do a lot of research and writing on sports economics including things like the economic impact of public spending on sports related initiatives and infrastructure (also on items such as maximizing ticket revenues for sporting, or other events). Having continued to review and comment on more recent (proposed) expenditures like the Boston 2024 Olympics (don't get me started on this) it is extremely rare for any such initiative to have a positive impact on a city/region and in many cases the initiative has an over all negative impact on not only the local population (city/region) but also on a wider demographic (state population - this depends on the size of the state among other factors).

I never cease to be impressed by the depth and breadth of the real world experience of my fellow hangouters.

[George]

That's not the same money. You are taking it from schools and roads.

This is really an issue where the federal government should step in. We give sports leagues all sorts of legal breaks, and this is a place where cities need to collectively bargain the terms, instead of letting the billionaires play them against each other.

Nailed it. Exemption from Anti-Trust laws is a farce. Public funding of stadiums for billionaire owners is one more example of egregious corporate welfare.

[Ohfan67]

Public financing of stadiums is terrible. Economically stupid. Ludicrous even. BUT, in the majority of cases it is exactly what the public wants. How much b*%*(A## and moaning has their been about public investment in Camden Yards? I think the public in most cities that invest in stadiums are ultimately pretty happy. By the way, the government/public makes very similar and equally dumb investments in tax breaks and infrastructure for businesses all the time. Major manufacturers like Toyota, Honda, BMW, and other car makers, for example, often have relatively poor southern states basically bidding on new production facilities via tax breaks, infrastructure investment, etc. Economic analysis after economic analysis have shown that the states rarely recoup their investments. But tell that to someone who's brother or sister works at the plant or at a part supplier plant that was built nearby. Tell that to a city that celebrates a championship. Stadiums, like most public investment in private business, is a bad financial deal for taxpayers, but in the end that's not why the public ultimately agrees with the investment. Similar deal in college football. I work at a large public university that is completing a 500 million dollar stadium upgrade. Not a new stadium for 500 mil, an upgrade (about half the stadium was rebuilt). Half a billion dollars. There's some griping from faculty and a little from the public, but overall most folks will be proud of the stadium and if the football team wins everyone associated with the university will be happy and there will be financial and other benefits to the university. But they won't really recoup that money, but folks will be happy.

[crowmst3k!]

Part of me would say: use that money to expand the public transit options in Baltimore, but Camden Yards provided motivation for development of the Baltimore Light Rail, so there's that.

[DrungoHazewood]

Public financing of stadiums is terrible. Economically stupid. Ludicrous even. BUT, in the majority of cases it is exactly what the public wants. How much b*%*(A## and moaning has their been about public investment in Camden Yards? I think the public in most cities that invest in stadiums are ultimately pretty happy. By the way, the government/public makes very similar and equally dumb investments in tax breaks and infrastructure for businesses all the time. Major manufacturers like Toyota, Honda, BMW, and other car makers, for example, often have relatively poor southern states basically bidding on new production facilities via tax breaks, infrastructure investment, etc. Economic analysis after economic analysis have shown that the states rarely recoup their investments. But tell that to someone who's brother or sister works at the plant or at a part supplier plant that was built nearby. Tell that to a city that celebrates a championship. Stadiums, like most public investment in private business, is a bad financial deal for taxpayers, but in the end that's not why the public ultimately agrees with the investment. Similar deal in college football. I work at a large public university that is completing a 500 million dollar stadium upgrade. Not a new stadium for 500 mil, an upgrade (about half the stadium was rebuilt). Half a billion dollars. There's some griping from faculty and a little from the public, but overall most folks will be proud of the stadium and if the football team wins everyone associated with the university will be happy and there will be financial and other benefits to the university. But they won't really recoup that money, but folks will be happy.

I'd argue that it's exactly what vocal fans of that sport want. But I'd bet that a sizeable majority of people would be against their tax dollars going towards a stadium for a sport they don't regularly follow. And die hard fans of any particular sport are a tiny minority of the overall population. A lot of these stadium referendums go through multiple votes before finally getting enough die hards among the 22% of the population that got in the car to go out to vote to make 50.01% to pass the thing.

[Ohfan67]

I'd argue that it's exactly what vocal fans of that sport want. But I'd bet that a sizeable majority of people would be against their tax dollars going towards a stadium for a sport they don't regularly follow. And die hard fans of any particular sport are a tiny minority of the overall population. A lot of these stadium referendums go through multiple votes before finally getting enough die hards among the 22% of the population that got in the car to go out to vote to make 50.01% to pass the thing.

I hear you, but notice that I didn't really say the majority of the public, but rather in the majority of cases it is what the public wants. The public meaning people that vote on the issue, etc., not just a random sample of people taken after the idea is proposed. And if you take a random poll after the team wins then it will be the majority of people.

Stadiums are modern day cathedrals, temples, Roman colosseums, etc. Public investment in these things is a poor economic decision, but we are a highly social and cultured species that invests a lot in "the clan"/"the tribe". Big, gaudy buildings where large groups of people gather seem to be wired into our DNA. We love the shared experience...kind of like a bunch of baseball fans finding each other on the internet.

[Plutarch]

Stadiums are modern day cathedrals, temples, Roman colosseums, etc. Public investment in these things is a poor economic decision, but we are a highly social and cultured species that invests a lot in "the clan"/"the tribe". Big, gaudy buildings where large groups of people gather seem to be wired into our DNA. We love the shared experience...kind of like a bunch of baseball fans finding each other on the internet.

This is very true; most people like to identify themselves as part of a group, be it a sports team, a religion, a political party and where (or for whom you work). BUT....that reasoning is not how these initiatives are sold to the public; the public has one after another incomplete or flawed economic study (telling about the supposed increases in the number of jobs, business, or tax dollars) jammed down their throats until enough people believe it so it will pass a referendum.

People are having their emotions played. Economically these types of capital expenditure have 2 possible outcomes: Private Profit and/or Public Debt (sometimes both occur). What you never find is a private entity that loses any money in these ventures or the public reaping any of the financial benefits.