It’s time for a national re-examination of government funding of sports arenas. Minnesota has deep budget problems. On a per-capita basis, the coming shortfalls may be as bad as California’s, even though the total sum in that state is much larger. Virtually all cities in the metro area are cutting back on services, even things like snowplowing, because of fiscal constraints.
Yet many still call for government funding for a new football stadium. Vikings owner Zygi Wilf uses shaming phrases to describe elected officials who oppose spending several hundreds of millions of public money for a stadium. If they don’t snap to attention, it is feared, Wilf will take his team somewhere else — probably Los Angeles. That is not an idle threat.
If this seems like an old tape being replayed, it is. The issue has been around for decades, and it will be as long as sports leagues and team owners succeed at playing cities and states off against each other. When times were prosperous, the issue was less pressing. But the economy is sour right now and likely will be for an extended period just as structural changes like baby boom retirements and increasing health costs cause enormous ongoing budget problems. So we need to deal with the issue.
Free-market purists argue that professional sports games are no different from selling onions or renting DVDs. Let free markets operate, and make team owners construct their own stadiums as in the old days. They will do so in areas where it is most profitable. Areas that lack enough fans to pay for a stadium or support a team will have to do without.
This ignores the fact that the structure of U.S. professional sports, with one monopolistic league — the NFL, NBA, NHL, etc. — in each sport is not a perfectly competitive market. The leagues’ monopoly power to limit the total number of teams allows them to put state and local governments over a barrel and extract subsidies.
Local leaders are willing to go along because there are genuine spillover benefits to having professional sports teams. Their presence is an amenity like a good park system, good schools and good hospitals. Moreover, states with individual income taxes benefit from capturing some of the monopoly profits embodied in players’ mega-salaries.
But these spillover benefits are finite. And unfortunately, the true cost of taxpayer-built stadiums is not well understood. A stadium costs taxpayers something like $5 million per game played there. Only die-hard fans see that as money well spent.
There are few good options. We can try to get a national law to limit state and municipal funding of stadiums. This will be opposed by the leagues, by team owners and by municipalities that dream of a new team. It would benefit cities that have teams right now to the detriment of cities without teams.
We can refuse to play the game and tell Wilf that if he is not willing to play in the Metrodome or build his own stadium, he is welcome to leave. In that case, he probably will. I’d be happy with that, but some of my friends and neighbors would be bereft without the Vikes.
Or we can give in to extortion and build yet another facility, using whatever accounting tricks, “public-private partnerships” and dedicated sales taxes we can to disguise the true amount transferred from the public to Wilf. If we do that at the same time we are cutting education funding, laying off police officers and dropping thousands from basic health insurance, it will certainly say something about our values.
© 2009 Edward Lotterman
Chanarambie Consulting, Inc.