FoS 20: Nick Licata on how to fight for fairer stadium deals

I’ve written at length about how if cities want to avoid getting screwed in stadium deals, they should look to Seattle. (That was pretty much exactly the headline, even.) That wasn’t always the case — the Mariners and Seahawks deals were as big giveaways to team owners as you could find in their era — but starting with the passage of Initiative 91 in 2006, Seattle has been at the forefront of demanding that team owners and stadium and arena developers show how any public money spent on sports venues will pay off for the public.

A large part of the credit for that goes to Nick Licata, who — first as a founder of Citizens for More Important Things, which helped pass I-91, and later as a member of the Seattle city council — helped push for sports projects to be evaluated not just on whether they’d make the team owners happy, but whether they’d be good public investments. Since leaving the council three years ago, Licata has been working with cities nationwide on implementing more just local policies, both via a new book and as chair of the progressive governance group Local Progress. Listen below as we discuss the relationship between good government and good citizen activism, and we totally fail to reminisce about that time we both testified before Congress together.

ND: Hi, and welcome to episode four of the Field of Schemes 20th anniversary interview series. Today’s guest is someone who — and this is the first guest I’m getting this to say about — I first met when we testified before Congress together: Nick Licata, who’s been one of the driving forces behind ensuring that in particular the city of Seattle, but also cities in general, get stadium and arena deals that are fair for the public. After serving as co-chair of the community group Citizens for More Important Things in the 1990s — one of the community groups with the best titles ever — Nick served 18 years on the Seattle City Council, including several years as council president, before retiring in 2015; and since has authored the book Becoming a Citizen Activist: Stories, Strategies and Advice for Changing Our World. Nick, it is an honor and a pleasure to have you here.

NL: Thank you very much for inviting me to talk to you.

ND: You and I have talked over the years about Seattle and stadium deals in general. But I don’t actually know the story of how Citizens For More Important Things got started, and how you got involved in that.

NL: Well, I had been a citizen activist; I was not a city council member at that time. And I’ve always been concerned about how public money is spent, which is a concern that cuts across the political spectrum. And I saw that we were talking about giving literally hundreds of millions of dollars to a private corporation, and a lot of people were on board because they ran a professional sports team — in that case it was the Mariners baseball team in Seattle. And, you know, I’ve gone to the baseball games as a spectator for a long time. I was in Little League, that kind of thing. But it just struck me as, quite honestly, unfair. Why are we giving so much money to what is a business?

And so I made a few phone calls, and I ran into someone I didn’t know really well but who’s active in the Democratic Party, and he was saying yeah, we’re going to put together a group. We talked about a title, and came up with Citizens for More Important Things. It’s funny, ’cause I was just with him yesterday, Chris Van Dyk. And Chris initially thought, well, we’ll just run a few ads and we’ll just see what happens. You know, try to slow this ball down. And things got away from it. The media, actually even the media that was critical, liked the idea of a debate. Community groups responded very well. And then of course the folks that were, I would say, hardcore baseball fans were upset that we’d even question not spending hundreds of millions of dollars to what they say would save the team. So we were all of a sudden thrust into the middle of this great debate.

ND: But people forget that, this was ’95, and everybody always talks about how the Mariners made the playoffs and everybody rallied around them. But there was actually a public vote in Seattle right as the Mariners were about to make the playoffs, or just made the playoffs, and public funding was voted down, right?

NL: First of all, the vote was so close that initially— because we have, even then, a lot of voting is done by by mail — we thought we had perhaps lost the vote. But it turns out we won; we found out a few days later. And then we had a governor at that time, very progressive governor, Mike Lowry, a good friend of mine. But like I said before, the blinders sort of get put on when you talk about sports economics. There were very strong progressive or at least liberal Democrats who were like, “Well, we still gotta save the team, or we still gotta keep it here.” And they would bolster those arguments by basically arguing it’s economic development, which never panned out.

So in any case, he called a special session, which is not all that common, and called the senate and the house together in Washington state. And they came up with a slightly different funding plan, so they could argue that it wasn’t exactly overturning what we had voted down. But in fact in spirit it certainly was. And they ended up giving roughly $500 million to the Mariners.

ND: When did you first run for council?

NL: I ran for council in ’97 and then my first term began in ’98. And I was there till the end of 2015.

ND: And was that a direct result of you having seen what had gone on with, not just the Mariners deal, obviously, but what you’d seen going on as a citizen activist?

NL: Sure. Before then I was very involved in a lot of local issues. Funny you should mention that I did go to Congress talking about professional funding of sports teams; the first time actually I was brought to Congress — and this is both times as not an elected official, just as a community activist — I was there to argue against what they called redlining, and actually help get the legislation passed requiring banks to show where they were making investments: the Community Reinvestment Act. It’s amazing that I had those two opportunities.

So I was working as, of all things, an insurance broker, because I took responsibilities — raising my kid, along with my wife. I was still very involved in stuff, primarily around trying to stop the nuclear weapons arms race and things of that sort, environmental issues. And I was enjoying that far more than being an insurance broker. So I finally just quit that and said, okay, I’m doing so much of this activism, I was sometimes barely in the office — they used to ask me, do you still work here? I was actually scheduled to be management, and I just didn’t want to do that. So I said, “I’ll just leave. You can have all my business,” which consisted mostly of artists. And there was an opening on the city council, and I decided I’m just going to go for it. I figured why not — this is what I’m doing anyhow. Maybe I can get paid for it!

And amazingly I won. Although I quite honestly for a while there didn’t think it was going to happen, given that at that time we had two major daily newspapers, and they both came out against me, as well as the mayor and the majority of the City Council, and on and on. But I had a large network of grassroots people that wasn’t created overnight. It was created over literally a decade or more of working a number of different issues.

ND: That’s interesting, because I think one of the arguments that a lot of politicians would make in terms of not just opposing sports stadium deals, but taking a stand on a lot of issues is it’ll be the nail in the coffin of your career. And here you were somebody who was coming from the outside to some degree and did not have endorsements, but you had a lot of support because of all the grassroots stuff you’d been doing.

NL: Yeah. Actually, that lesson to me — well, two things. One is since I didn’t expect to win, and I did — I mean I tried very hard; it wasn’t like I was sloughing off — once I got in I said, okay, I’m sure that that they will come after me next time and I’m not going to worry about it. Tthis is my advice to anyone in office: You can’t look behind your back all the time, wondering who you’re going to offend or whatever. All you have to do is explain why you’re doing something. You’d be amazed how many people respect why you’re doing something. I had a number of people who actually thought differently about my position on sports teams — although the majority were actually in favor of my position. But they said, you know, you explained it. You didn’t make it personal. I really tried to avoid attacking personalities, but just laid out how what they’re saying doesn’t pan out. I relied a lot on research; I always do all my own research and data. And I noticed if you talk just rationally and respectfully to people, even though they disagree with you, at least in my situation luckily, they sort of cut you a lot of slack. They say okay, at least I know where you’re coming from.

A lot of people said that. So I was very fortunate. I got elected to five terms!

ND: How involved were you with Initiative 91? This is obviously one of the big turning points in the Seattle sports industry, right?

NL: By that time I was already on the council, and I was not the face of the campaign by any means. But everybody who was at the core of putting it together were people who helped me get elected, who I was in touch with. So I worked with them, basically helping design it. Certainly I became a strong supporter early on. I’ve always been writing up op-eds; I probably wrote an op-ed or two on it. The media sometimes would label me as the creator or originator, which is not true. There were people who put a lot more time and energy into it than I did. But because I had such a track record, sometimes the media doesn’t dig deep enough and they just use the quickest thing possible.

But I would say that the unions played a very strong role — SEIU in particular. And to the extent that they did, it was recognizing that if we continue to go forward as we have in the past, we’re literally taking money away from more important things. Our infrastructure is falling apart. We know we need to improve community-police relationships. We need to basically do things to help folks — at that time, homelessness was not the kind of problem that is overwhelming us today, but still, affordable housing was starting to get tight. So there’s a number of ways that we can use public dollars to benefit the most people and that’s what I’ve always argued. I even argued, if you want to subsidize sports, then do it in a rational way.

In fact, that’s what it was all about: We will loan you money at the best rate possible — the rate that they charge for government bonds. But still, it’s a loan. We’ve got to get our money back.

ND: Right. And that was the pioneering thing about I-91 is that there had been referendums before that mostly tended to say, you need to have a public vote before you can have approval of any expense on stadiums over a certain amount. Which was helpful, especially if you were in a city where otherwise it tended to all get done behind closed doors and presented as a fait accompli and nobody ever got to vote on anything. But I-91 was very different in that it wasn’t that — it was based on, okay, anything that happens here, the public needs to get a return on their investment. Which was an idea that had been kicking around in stadium circles for a while, but nobody had ever actually put into legislation.

NL: I mean, it passed overwhelmingly. It was no contest. And again, I’ve encouraged other cities to look at that as a model too: Avoid falling into the trap of, are you for or against baseball, football, basketball, whatever. Are you for in favor of our team or not? Our response was always yeah, we’re in favor of them. But, you know, not to the point that we’re going to take money away from babies and people who need assistance.

So let’s work out something that is reasonable. And the loan situation was very reasonable, and I think people saw it that way. It was like, okay, that makes sense. We’re giving in money for a certain period of time. But you’ve got to give us a return on it. And again, the return was so quite obviously very low, but it still made the point that this is not a giveaway. And I think people like that.

ND: Are you surprised it hasn’t caught on in more cities? I kind of am.

NL: Part of the reason it probably hasn’t is like all of these, I would say, creative solutions that you find in many cities on many different issues, is the need to really get that information out to the cities. You need an ongoing organization that distributes information so they can help one another.

I went from there doing a number of other things, one of which was creating this national organization called Local Progress. I pulled together the first meeting and it went awesome — in fact, I just got back from Minneapolis where we had our annual convening meeting, and we went from less than 30 people, by now it’s close to 800 members across the country, who are self-described progressive municipal officials, and that’s a the broad definition. But basically, yes, we believe in social justice, economic opportunities, making sure there’s racial equality. Those kinds of things. But also cities literally are experimental labs where people are doing things that are innovative, unless they’re stopped by the state and preempted, which is an ongoing battle.

So no one’s really taken that idea and run with it as hard as they could. You need an organization for doing that. Subsidizing sports teams is still a little bit off the radar for so many of the big issues — obviously you’re talking about immigration issues, obviously you’re talking about, unfortunately, violence of police to minority communities. So that is just higher on the agenda.

ND: Does it also hurt that the Sonics did leave after that? Obviously it wasn’t because of I-91, but—

NL: Yeah, it did obviously. The Sonics were always liked. But as I point out, the Sonics left because the owners decided to move. It wasn’t any politician, it wasn’t even the public. It’s a private enterprise. And they decided they wanted to go somewhere else. And that’s really the downside, sadly, of so many professional sports teams — with the exception of Green Bay — the communities really don’t have an investment in them.

ND: Right, or any kind of hooks in them.

NL: Leverage.

ND: As I think we said in our book, but we certainly said over the years, they always say “And now, your Chicago Bulls,” but they’re not really your Chicago Bulls.

NL: Exactly.

ND: I was going to say, it almost even seemed like the way that David Stern the NBA responded to the Sonics leaving, there was not just a “This team has the right to move,” but a “We’re going to make an example out of you.”

NL: Oh, totally.

ND: Because it doesn’t happen that often that teams leave because they are saying that they didn’t get a better stadium or arena deal. And it’s very much a “Well, you dared to make demands of the local sports team owner, and we just can’t have that.” And David Stern over and over again said, “We’re never going to give them another team unless things change.”

Which leads to my next question: It seems like in the long term, obviously the Sonics fans and basketball fans have been unhappy about the team leaving. But the way it’s turned out for the whole discussion that happened around Chris Hansen’s plan and now the Key Arena redevelopment, it really went a completely different way than it does in a whole lot of other cities because you did have I-91 as that governing principle. Regardless of what the specifics of the law said, the idea there was, well, you have to show how the public is going to get some kind of return on their investment.

NL: Yes, exactly. What it did is it created a framework that the public officials felt that the public had already spoken on and quite loudly. Technically legally they could probably still get around it, but I think I think we affected the culture to the extent that when professional teams, in this case, are looking at coming to Seattle, they figured, well, you know, they didn’t do too well. They didn’t really pay attention to what the public’s concerns were. So I think they wanted to make sure they mad an offer that was good enough that they couldn’t be attacked on those grounds. And the thing about Stern that’s funny to me — I think I even remember somewhere he actually personally at me once made some swipe and it was “Oh my god, this guy is so petty, I can’t believe it.” Identifying individuals in cities because, like you said, we dared to question, in that case, a sports clubs of millionaires, probably in some cases billionaires, that own these teams. And they just didn’t want to see their profits clipped.

ND: But at the same time, the way things have turned out — and certainly Seattle doesn’t have an NBA team now, but they certainly are being considered for one — it goes to show that if you have a decent market, the sports leagues can’t blacklist you forever. It would be cutting off their nose to spite their face for the NBA to say, “Well, Seattle treated us wrong, so therefore we’re just not ever going to go to Seattle again.”

NL: Right. If we were a different city it might play out differently. But the reality is it’s a marketplace. And if you have a good market and they have a good product, they’re looking around at their competition thinking, “I could tap this market.” And they look at the cost and the cost-benefit analysis. And the reality is that the kind of requirements we put on and the kind of discussion we’re having are not really going to affect the bottom line all that much. You just work it into the business pro forma and they go, yeah, this works, we can do it.

ND: Something that always gets to me is that city officials never seem to understand the leverage that they have. It’s a negotiation — you can’t just go in and make all the demands that you want, say okay, this is how it’s going to be. But if you’re a city official in a city of any reasonable size, you have a market that is valuable and you are able to put that on the table up against the sports team owner who has a sports franchise that is valuable in the same way. You can’t have a sports team without an owner and without a franchise, but at the same time you can’t have a sports team without a place to play.

And I guess I’m curious, as someone who spent a lot of time both in Seattle local government and also talked to other elected officials, if you have a sense of why that is. Why does it seem to be that whether it’s sports teams or it’s an Amazon or a Boeing or whoever it is, it always seems to be this idea of “We’ve just got to do whatever they say, because they’re the ones who control the economic activity and it’s just the way the game is played”?

NL: Well, that’s a good summary. I honestly agree. Most elected officers really want to do the right thing, they really want to benefit most people. But what happens so often is once they get into office, and even when they win without the support of big business, often they’re still intimidated by big business, or deep pockets. Because I think they lose faith in how they got elected — they lose faith in the potential strength that citizens have if they’re organizing. And that’s why one of the things I always argue is that once you get elected to office, you’re still a citizen. If you were an organizer before, you continue to be; and if you weren’t before, then you should become one. Because the only way you’re going to get anything passed as an official is if you can demonstrate to the other people that you’re trying to get votes from on the council, whatever, there are a lot of people supporting your position.

So I think what happens is that council members — or whoever gets elected — lose touch with their own base. And you have to remember that the folks with money are almost always more likely to be lobbying you. And most of them are very nice; a lot of them are very intelligent. It’s a very slow process of acclimating yourself to “Oh, these are reasonable people.” And then the worst thing that happens, I think — it really tips the balance — is that when they say, “Well, let’s study it,” inevitably they bring in consultants or economists who are probably predilected to noticing and measuring all those things that are good about having a sports team as opposed to lost opportunity costs, which they almost never measure.

And secondly when there’s what’s called a request for proposal, they shape the research in a way that almost inevitably leads you to the conclusion that having an investment of a hundred-plus million dollars is something that will benefit the city. They never do a cost-benefit analysis, a strict one — but they can point to some multiplier effect, which often, as you know, means every dollar they spend on getting the sports team is multiplying more jobs or more economic growth. And that’s a very loose number, if not imaginative.

So the elected officials set themselves up not to challenge the person on the other side of the negotiating table to do the best they can to help the citizens. It’s sort of “Oh, okay, we hear your argument, and we see that we got this study that isn’t really in-depth but it looks like it will support what your cause is.” And then they just roll over.

ND: Yeah, I feel like people in general misunderstand the role of money and the way it works in, certainly, local politics. I think there’s this idea that people are going in and buying politicians, either by offering campaign money or by outright bribes — or by something that’s more of a direct process. Whereas, and you’re not the first person I’ve heard this from, that it’s more about buying access. It’s about the fact that if you’re the big local business person, whether it’s sports or some other business, you can be the person who is having the lobbyists and the people who are constantly in the ears of local elected officials, whereas people who are not in that position have to do that the old fashioned route of trying to call people’s offices and get through to the right person. Is that a fair way of putting it?

NL: Yes. I mean, certainly large contributions do make a difference. And we have in Seattle caps on contribution limits. The last I checked, $750 is the most you could give in any four-year period. So it’s not a whole lot.

But think about it: If you collect ten of those, that’s a lot easier than trying to collect hundreds of twenty-dollar contributions. And also if you look at almost any election, and I’ve looked at Seattle’s and a couple of other cities, you find almost inevitably less than 2 percent of the people voting are giving any money whatsoever to a candidate. So the money makes a difference, but it’s also the access. You remember who gave you money last, you remember who endorsed you. And you build this sense of feeling comfortable around them — feeling like they’re not really trying to manipulate you. And often, quite honestly, the way I’ve found that key businesses — sports teams, whatever — work is that for the most part they don’t care about what you do, particularly in Seattle, on social policy issues. But when you’re talking about something in their play box, they are there a hundred percent and you better be too, or they’re just going to remember that they can come back after you.

ND: Is there any way to do anything about that? Just the fact that once you’re in elected office you are soaking in this world of the business-politics complex, whatever you want to call it, that is going to be steering you towards a certain view of governance.

NL: Well, the short answer is yes. And the longer answer involves basically looking at public financing of campaigns that will allow people who are not wealthy not to be beholden to special interest groups once they get into office. It doesn’t guarantee you’re going to win. But Seattle passed the most unique public financing arrangement in the country, called Democracy Vouchers: Essentially every resident in Seattle up to a certain age gets what’s called a voucher — fifty dollars, and you can give that to a candidate, and the candidate field then can help finance their campaign.

But other cities have various formulas for doing public financing. And what’s really interesting, as a side note, is that with public financing what they’ve discovered is that the group of people who are less likely to run unless they know that they can raise money are women. So an unintended positive consequence of public financing that you find more women running for office.

ND: More broadly, how do you see things going both in the sports stadium world and in terms of how these kinds of decisions about how our money is spent get made? I periodically get asked, “Do you think the tide is turning?” because there’s some success here or there, and I’m always like, “I don’t know, the last five times I predicted the tide was turning I was wrong, so I’m always hesitant to predict it now.”

But this is something clearly you’ve been working on, especially since since leaving the Seattle council and helping form this organization. Are there promising signs? Are there directions that you see are ways to work towards getting to the point where maybe we won’t be having to have this same conversation in another 20 years?

NL: Yes, I do. I believe that strongly. And I as evidence point to, say, over the last two or three decades, what we’ve seen is that cities, particularly our larger cities, have had much more responsive elected officials to their local voters than I think in prior years. And I would measure that by the number of cities who — and you’re in a better position than I am I think — have looked more with a critical eye at just opening up the coffers for professional sports teams, but also at a number of issues that have developed in cities. The last number I’ve seen, up to 10 million people have had higher minimum wages, benefited from them, who live in cities where they’ve passed increasing the minimum wage. That wouldn’t have happened two decades ago. Same thing with paid sick leave. In other words, a number of laws have been passed by councils and mayors who I believe have benefited from the grassroots organizing. But also it’s like changing the culture in that it’s no longer, first of all, white men with cigars in a backroom — you have more ethnic, racial diversity — and also with the growth of public financing, which has been around for a little but growing, you’re getting a more diverse group of people who are in office.

One of the things that I find going around the cities and talking about my book Becoming a Citizen Activist — I always go to talk to people on city councils — one of the arguments that is used that weakens democracy is “The government’s bad” or “We want to shrink government” and “Government’s the enemy.” Well, depends on the government. If you’re talking about dictatorship, yes, that’s true. If you’re talking about democracy, then I don’t think that’s true — in fact, you want a democracy that has a functioning government. Because if you don’t have a functioning government in a democracy, then power is going to fall to those who have the most wealth — who have the most access to those in power and most access to politicians.

And what we’re now seeing is a battle going on. The states are not as close to voters as cities are, and in states like Arizona, for instance, the citizens in a number of cities passed bans on plastic bags because they were concerned about the environment. The state legislature is controlled more by big money, and passed laws that said cities can’t do that any longer. That’s true for any number of other bills or regulations that local cities could pass that states that are more, I’d say, in the pockets of people who have large donations try to override them.

So there is an ongoing struggle right now. We haven’t turned the corner, but we have made progress and the only way we’re going to continue to make progress is to continue to build on what we’ve already accomplished. And to continue to support organizations outside of government, but also people who are in government to make sure that they’re working with a wide range of constituents as possible.

ND: Well, I, for one, promise to try to live long enough to see this change completed if you do.

NL: Right, we all do. This is the thing: I’m somewhat of a believer that we’re never going to live in nirvana, okay? There will always be challenges; there will always be things that are not right; there will always be shortcomings to people that you elect to office. But the moment you believe that it’s not worth trying, then it’s like walking away from the game, because the people left at the table playing the game are totally going to get their way, because they’re not going to look out for your interest.

So two things I keep in mind is: One, you have a choice — you have to participate in the game of politics and the game of democracy, because if you don’t someone else is going to run your life. And secondly, you should enjoy that game. It’s like sports. You got to think about it as: This is not just good for everyone and yourself, and not only does it create good, but it’s a good process to go through. That’s why I’m a strong believer in democracy and argue that we have to, if nothing else, protect the vibrancy of our democracy.

ND: Now I’m kind of wishing that I were writing a new book, because that would have been a perfect closing quote.

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FoS 20: Geoffrey Propheter on what we know about stadium impact, and what we should study next

Ever since we first started researching Field of Schemes more than two decades ago, it’s been consensus that virtually all economic studies show that sports stadiums and arenas don’t do much for the localities that build them — but most of those studies were done in the 1980s and 1990s and never updated, if only because academic departments don’t take kindly to doing the same research over and over again.

Enter Geoffrey Propheter, who as a George Washington University grad student in 2012 burst onto the scene with an innovative study of NBA arenas that studied not just how cities did overall compared to similar cities without pro hoops teams — no better at all, just as prior studies had found —  but also if any cities did better than others. His finding, as I wrote at the time:

Propheter did note that a handful of cities (Atlanta, Boston, Chicago, Denver, Indianapolis, and Oklahoma City) appeared to see income gains, but this was likely the result of “income transfers from the suburban area around the central city” — i.e., the same money was being spent in the region, it was just being spent downtown instead of at the local Olive Garden. Basketball-only cities with new arenas since 1995 — that’d be Portland, San Antonio, Orlando, and Memphis if I’m counting right — also saw a positive impact, presumably again because the NBA was the only thing that was going to bring people downtown. But since the overall effect was pretty much zero, this means that other cities actually saw income decline with new arenas, which is less promising.

Propheter has since moved on to the University of Colorado, where he is continuing to push the boundaries of what we know about stadium economics, while joining the chorus of researchers trying to throw some cold water of hard data on teams’ rosy economic claims, particularly in the case of his hometown Sacramento Kings. Listen in on our discussion below, which manages to take in the cutting edge of stadium research, the importance of eSports to the future of research, and whether Roger Noll was right that it’s better to give team owners cheap land than piles of cash.

ND: Hi, and welcome to the latest installment of the Field of Schemes 20th anniversary interview series! I am extremely psyched for today’s guest, economist Geoffrey Propheter, who burst onto the sports stadium scene in 2012 with a study of cities with NBA arenas, which showed in the most exhaustive detail of any study yet that having a pro sports team doesn’t produce any measurable economic benefits for a city. As Propheter wrote at the time, “After controlling for economic strength, the impact of an arena is negative and significant at the 96 percent level. Each facility is associated with a real per capita income decline of $2,430.”

Propheter has since gone on to work for the New York City Independent Budget Office as a property tax specialist and is now an assistant professor in the University of Colorado’s School of Public Affairs. Geoff, it is awesome to have you here.

GP: Thanks for having me, Neil.

ND: So tell me a little bit about how you got involved in looking into sports stadiums and arenas. This is an issue, I know, that academics have sort of considered asked and answered 20 years ago, right? Where there were a lot of studies late ’80s, early ’90s showing no sign of measurable economic impact from sports stadiums. And you took this to a new level with some of your work. What to talk a little bit about how you got involved and what your approach was?

GP: Yeah. So I spent a good deal of my life, pre-college anyways, or pre–graduate school, in Sacramento. So I’m essentially a Sacramento kid. And I grew up loving the Kings, and an arena issue has been on the local policy agenda since at least the late ’90s, in one capacity or another. So it’s been on my radar. And then I get into grad school in public policy, studying taxes, public finance, local government things like that, and I end up finding out that there is an entire field of research out there where you can make money talking about sports. And so this made absolutely perfect sense.

And as most academics do when they set out a path for a future research agenda is you’re trying to figure out where are gaps in our existing knowledge. And at least at the time that I was doing that that basketball arena paper, the one gap that I felt was inadequately addressed in the existing research up until that point was this difference between single and multisport cities. At least at that time, where I was primarily focusing on the NBA and the NHL, this distinction between single and multisport wasn’t appreciated in the existing literature, and yet I felt that there should be a difference. That the marginal cost, marginal benefits of adding one more team should decline with each additional team. But that means that going from zero to one team should have a bigger effect than going from one to two to three and so on.

The other element I tried to capture in that is potential differences within metro regions of interregional inequities or differences in economic activity. So I attempted to account for that to deal with sort of the redistribution arguments that often come up. But the main contribution of that paper is the single versus versus multisport cities.

ND: Right. So you found that it is comparatively better — comparatively more advantageous for a city that doesn’t have any sports team to actually get a sports team, right? So whether it’s a Sacramento or an Oklahoma City or someplace like that. To the degree that you can tell, is it enough to push some of these things over the top, to where it winds up becoming a reasonable economic investment? Or is it just at least it’s a less bad deal than if you already are on the map because you have three different teams and it’s just adding a fourth one.

GP: Yeah, so I think the first thing to keep in mind is that’s probably always better to talk in terms of likelihoods and probabilities. So I like to say that a single city going from zero to one has a higher probability of being better off than a city going from one to two. Now that’s a relative evaluation — you’re comparing cities based on their number of teams that they have. Whereas the question I interpret you asking more is “Does this particular team or this deal make this city better off, or is this a net gain for this particular city?” And that’s sort of this absolute evaluation. And the answer to that, as with all of these is that it depends, right? The devil’s in the details. And you may be better off, you may not be.

The Sacramento case, which stands out in the study that I did, is fairly unique. That was a positive gain, at least when we measure the economic activity in per capita income at the MSA level. But the context of Sacramento at that point in time is extremely unique. Probably the closest thing that we have to a similar circumstance would have been Oklahoma City when the Sonics were relocated there, where you had this latent fan base. People liked sports in Sacramento, but it wasn’t it wasn’t clear to the nation that this was a budding hotbed of basketball crazies. And you had a couple of, I don’t know if “visionary” is the right word, but at least highly motivated Sacramento-based developers who bought the Kansas City Kings, went through the stadium debate over there, ultimately did the Art Modell thing and moved them to Sacramento, put them up in what’s by today’s standards a shanty of a temporary arena for a couple of years — I think the capacity was like 10,000. The grandstand flooring was plywood packed full of people. The sound of all these people stepping on essentially plywood during a basketball game — that’s when the cowbells started supposedly.

So that sort of environment really helped boost, not just the city’s image on a national scale, but it did have — at least based on these numbers — an economic effect on on local incomes. I don’t think that that is the rule for most cities going from no team to one team.

ND: Does this indicate that maybe the places where it might make more sense for cities would be someplace like Las Vegas getting a hockey team or, I mean, Portland already has basketball but if it were to get baseball it would be a little bit more on the map. Is there any way to tell what the dynamic is that’s going on here? Is it literally just that you’re putting your city on the map in a national conversation in a way that it that it wasn’t before?

GP: Well, I don’t think the Sacramento getting the Kings all of a sudden made people go out and draw down their savings to increase local economic activity. I think some component of, in that particular case the Kings and I guess all cities in that zero to one circumstance, drawing in some economic activity that otherwise would not be there.

But the question really is that it’s a matter of degree. How much is that team drawing in is going to vary from one city to another. Sacramento had a lot of other things going for it: being the capital of California, being an outlet for people being priced out of the Bay Area, which is still something true to this day. And maybe Sacramento would’ve been better off or at least not any worse off than it is today, at least as a metro region, if the Kings never came. I can’t tell. I don’t know. But it’s certainly plausible.

The actual mechanics and the factors and the inputs that go into how a city ends up faring both in the short run and in the long run when you add professional sports is so locally context dependent that that it’s hard to get at those distinguishing factors using sort of the standard academic approach of systematic data collection. Really what you need is in-depth case studies, and then try to you do enough of those, and you can extrapolate the narratives and the stories and the circumstances that led to success or failures — however that’s defined — across multiple studies.

That case study approach, though, that qualitative research design that I think would be more beneficial at this point in the academic literature, just is not something that economists or policy analysts are trained to do.

ND: So if you were to design a study — I’m a rich dude and I want to give you a whole lot of money to study something is really going to answer some of those questions you were just talking about. What would it look like?

GP: Oh.

ND: Not to put you on the spot.

GP: My reaction to any sort of any sort of policy intervention is we’re trying to mimic what’s done in the physical sciences in a laboratory with randomized controlled trials. And so the question is first can you do a randomized controlled trial? And depending on how much money you’re willing to give me, what that would look like is you essentially build two identical cities, you give one of them a pro sports team and you don’t give the other one the team, and you see what their outcomes are like after you give them give the one the team. And, you know, that’s a lot of money. It’s also a lot of time. So we would never ever actually be able to do something like that.

ND: Well, I will say that the sports owners of America seem to be trying to give you as many data points as possible. If we were having this conversation 20 years ago it would be like, well, everybody builds a stadium or arena and then we have to wait 40 years for them to build a new one before we can tell anything. But now, we’re talking 15, 20 years we’re going to have a lot more opportunities for comparative studies now.

GP: Yeah, but I think the way into this is eSports. Because right now eSports doesn’t really have the same sort of structure as professional. It doesn’t have sort of this cartel element to it. Anyone can generate their own eSports tournament and charge a fee. It’s not very regulated. It’s really popular. It’s a lot like the gambling and marijuana industries right now.

And I think eSports is sort of this future and it actually is a potential way in which we could increase the usability of existing sports venues and so might also be an interesting impact for future research and for local governments more generally.

ND: Right. Because the NBA isn’t going to expand by 50 teams, but you could easily have 50 new eSports centers in different cities. That’s interesting, I hadn’t really hadn’t really thought about that.

Before we move on from Sacramento I want to talk a little bit about the Kings. Everything that we were just saying obviously is about the Kings coming to Sacramento from Kansas City. Whereas there was also the whole more recent fight over the new arena which I know you got dragged into a little bit, in that at least some Sacramento Bee columnists were calling you for comment. Any thoughts on sort of how that whole thing went down? It’s kind of interesting in that it’s one of the few examples of a reason stadium or arena battle in California where a bunch of public money wound up going into — I mean, California is really the exception to the rule for these things. The Giants couldn’t get public money, and the Chargers couldn’t get public money, and in city after city — the A’s are probably not going to. But the Kings did. Any thoughts both as someone who’s studied this stuff and as a Sacramento native sort of how that whole thing evolved?

GP: My thoughts are sort of scattered, as with most of my thoughts on arenas and stadiums and economics in general. As a fan, there’s a part of me that is glad that the team is staying. But since I’m not a Sacramento resident, I’m also glad that I don’t have to pay for it. And so I’m freeriding. As long as I’m not a Sacramento resident, I’m going to support Sacramento subsidizing the Kings every single day and twice on Sunday, because I’m not there to pay for it, but I get to enjoy the benefits.

So on the one hand that’s sort of the fan in me. On the other hand, [if I try to take myself out of being a fan] originally this facility was going to be on the other side of the river in an abandoned rail yard, as opposed to where it is right now, which is in downtown near the Amtrak terminal. And that rail yard location — I can’t recall specifically why it was moved just a mile south, but I presume it had something to do with some federal regulations that rail sites — brownfield, it continues to receive a lot of remediation. It may have taken too long of a time given you know the NBA threats to approve a relocation to Seattle, and so maybe the downtown location was the more expeditious of the two given given the constraints. And the downtown location is not a horrible location except for traffic.

So I get the location. It’s part of this new wave of creating integrated urban real estate development projects. You’re going to build a facility as an anchor in this larger development site where you’re going to build up hotels and residential towers. So within that sort of perspective it makes perfect sense. The traffic I still don’t get how it solves that problem when you also don’t spend money to improve alternative infrastructure.

ND: I mean it makes sense from an urban planning standpoint I guess that makes sense from an economic development standpoint if there’s so much evidence that you’re mostly just moving economic activity around?

This is one of the questions I always ask is are stadiums acting as catalysts to help develop neighborhoods or are they just helping to redirect it to the area that city officials or developers particularly want. Like the Nationals Park in D.C., for example. I think you certainly see more development happening now there than before the stadium. But it took a while to get going. And I mean, it’s D.C. There pretty much isn’t a scrap of land anyway that doesn’t have a crane on it. So would it have happened anyway without the stadium but it just got sped up?

GP: Yeah. So the one thing that’s always good to keep in mind: Anything you want to do with a stadium you can do without a stadium. So if you’re using a stadium or an arena — a sports facility — as justification to revitalize an area, the reality is you can do revitalization without sports. You don’t need sports for that. We have existing public policy tools that can do that.

The two big ones that are on my radar, at least on a research standpoint, are both tax incentives and rezonings. And I think both of these, when we look at Barclays — your neck of the woods — we see how these interact and could have produced the same or more development in an area without sports than with, and without a sports facility. So in the case of the Barclays Center, it’s located in — well, it’s not technically in downtown Brooklyn, at least according to the city maps but it’s right next to it. And that big chunk of downtown Brooklyn got rezoned in 2004 and it was an upzoning, so you released all of this buildable space that was cut off from the market due to government regulation and you open it up.

Alright, so now you have this increase in buildable space. Now at the time this is happening, there’s increasing demand for housing in Brooklyn — in particular in downtown Brooklyn, where you have access to the lines that go directly into lower Manhattan. And highest and best use during the housing boom was residential, so whereas this upzoning was supposed to increase commercial property, it actually ends up increasing residential property by ten times more than anticipated. And the Barclays Center site, the Atlantic Center site, is right on the outside of this rezoning. And so over time, as prices in the rezoned Area increase, people start to search for cheaper land prices, and they’re going to be pushed out of the rezoned area towards Atlantic Yards. That would have happened regardless if Barclays Center was there or not, just in virtue of the fact that the area was rezoned in 2004. And so when we look at the Barclays Center and we see activity development activity that’s going around the Barclay Center, notwithstanding the actual Atlantic Yards development itself, that development was bound to happen.

ND: It’s something that’s always puzzled me. Because Ratner, who bought the Nets and then built Atlantic Yards and then immediately sold the Nets — this is not a guy whose life’s dream was to own an NBA team by any stretch of the imagination, if you’ve ever seen the guy, right? So it always baffles me what he was thinking. Was he thinking that, okay. he could make money on a building a lot of housing on the site, but he wasn’t going to get hold of the site because he needed to have the hook of something sexy, right? “I’m going to bring pro sports back to Brooklyn” was something that was going to get attention of local elected officials. Did he genuinely think that having the arena would stir up more interest, you would be able to get more development and sell housing for a higher price that he would have otherwise? I’m never quite sure exactly what his plan was. And I’m not really sure he made a ton of money off the deal because he wound up having to finance a lot of it during the financial crisis, which made it difficult for him.

But it always sort of baffles me what the developers are thinking. I understand the elected officials who may be drinking the Kool-Aid and thinking, well, it’s shiny. It’s something that we can point to and say “We brought a team back.” But you would think that real estate developers would be a little bit more hardnosed about this stuff, and yet they seem to drink their Kool-Aid as well.

GP: Yeah, I agree. I have thought about why franchise owners in general want to be real estate developers — because that’s the trend. And the best that I can come up with is being a landowner, both today and in the history of mankind, usually makes you better off. And in the particular case of sports, you can get the development without the without the arena. And that’s the weird thing for Bruce Ratner is he was not a franchise owner first. Sure, he bought the Nets, but he was always a developer and then got into sports, as opposed to most other owners that I’m aware of. Ranadive is not a real estate developer — that’s not his background — and yet he’s engaged in some real estate development around the new arena. And so that’s sort of the reverse of Ratner.

So Ratner does stand out. And the only logical explanation is the one that you just offered is that he saw this land — really it’s potential land, because before you box over the rail yard you can’t do anything with it. And in order to get buy-in from everyone you needed something sexy, and basketball was sexy enough. That’s the only explanation, that basketball was a means to an end.

ND: Let’s talk briefly about this new trend of sports team owners becoming real estate developers. because it’s obviously something we’re seeing in tons of places. I had Roger Noll on here, and he was talking about how this is a promising sign: they’re not asking for cash anymore, they’re just asking for land that they can develop. Which is on the one hand, I guess, better than asking for lots of cash. On the other hand, as we’ve seen in situations like the rejected Angels deal to redevelop the area in the parking lot around their stadium, you can wind up getting just as much value in free land or discounted land as you wound in a stack of twenties. So I’m curious what you think about this, both as someone who watchedthe sports industry and in terms of public policy as well.

GP: I’m split, but I think I lean slightly more to I think this is a better thing than a worse thing. And the main reason why is government is really good at one thing — regulation — and it’s okay at a lot of things, but it’s really really really bad at property management. And if government can get out of the property management business, most of the time, and state and local governments have eventually figured this out in the course of administering the property tax and tax liens, so now local governments across the country have tax lien sales, and that’s a way to get out of the property management business.

And the same thing with land. If you gave the land to private interests — notwithstanding some challenges with the property tax structure that can create some inefficiencies — you’re generally going to get higher and best use in the hands of private developers than if you left it in the hands of government ownership and then had the government try to negotiate with private developers and things like that. Soa very general sense, I like that aspect.

The fact that land, especially in urban areas is basically going to only increase in price and often at a much higher rate than either inflation or the next best alternative, 30-year Treasury bond, means that the government is giving up an appreciating asset in order to do what? In the case of sports is “I don’t want to give some cash either to build a stadium or to make some capital improvements.” That’s on my radar because that’s what happened here in Denver a couple of years ago where for Coors Field days they essentially traded land away so that they didn’t have to give something like 200 million dollars for capital improvements to Coors Field.

So on the one hand it intuitively is appealing. But on the other hand, I can’t shake the fact that land is in such short supply, especially in urban areas, that the government may have been able to, if they had the expertise, to do something more productive at least from a public policy, public values, social values standpoint. You can do anything with the land, and in this case you’re trading it for sports.

And that is the part that’s unsettling. Because generally speaking there are other things besides sports that we value in a community. I could have given it to a nonprofit who could then turn around and sell it, use the proceeds to, I don’t know, pay for homeless shelters or improved sewer lines or who knows, right? Some other local public good besides sports. And when I think about it that way, I kind of go, okay, this is less attractive. But I still think in general I err on the side of it’s better that they do this than just write a check or put themselves on the hook for debt service by issuing tax-exempt bonds.

ND: Right. The trick I guess is just to make sure that once you’ve establish that it makes sense to do something with with the land for a public benefit — whether that’s, like you said, sports or something really different — that you’re actually getting something close to the maximum public benefit. In the same way that you know you want to make sure that if you’re you know giving land to the Rockies for Coors Field that you’re getting them to sign a lease extension for the maximum number of years, at least, that they’re going to do. As opposed to some of these places where, I forget if it was the Panthers, I think, wound up getting close to a hundred million dollars in renovation money, and they signed a six-year extension or something like that. And you’re, like, okay, sure, maybe 80 million dollars isn’t the worst thing in the world — but at least get them to sign like a 15-year extension or something like that, because what you’re giving away you can only give away once.

GP: Yeah. And in the case of this land if it’s it’s government owned that means it’s also exempt from property taxes, and as long as you’re not giving tax breaks to the developer to develop the land, then once you make that transfer it becomes taxable and you start collecting property taxes from it. Now, the developer could turn around and say, oh, if I have to pay property tax on this I’m going to lower my price for the land, or I expect you to pay me more in some other capacity. But notwithstanding that, the fact is as land returns to the tax roll — and again as a property tax researcher, I like the tax base to not be eroded by exemptions, so I also like that idea. But whether or not the franchise owner is able to secure additional tax breaks to ensure that that land remains tax exempt fully or in part — that also probably varies context by context. I’m not sure in the case of Denver if they also get an exemption for it. I don’t think they will. Denver is not as willy nilly handing out exemptions as New York City is.

ND: Right. I know that’s something that often gets little attention. The New York Islanders arena deal, I still don’t think they’ve really established what the tax situation is going to be with that, if I remember right. They had said, well, it’s still going to stay in state hands so there’ll be some sort of payment in lieu of taxes. But, again, “some sort of” could mean an awful lot of different things. And you’re seeing the same thing with the Diamondbacks right now where they’re talking about building a new stadium, and it could end up going on Native American reservation land. So there’s just so many different tax situations that they it makes a huge difference.

GP: And I’m fascinated that what happened with the Red Bulls arena in Harrison. How that didn’t spill over to other jurisdictions yet, where in New Jersey — and it could just be particularities about New Jersey law — where the government ownership of land was not sufficient to warrant exemption from property taxes for any private tenant.

ND: Right, the Red Bulls expected they were going to get a property tax break because it was going to be on government land, and a court ruled that it was because it was a private use that whoops, no, sorry you still got to pay.

GP: Yeah. So I haven’t heard of court cases like that challenging other instances. And one way to get around this, you mentioned PILOTs. Now the pilots in New York, it’s used a little differently elsewhere, but for eds and meds, higher education and hospitals, they attempt to avoid this situation, like the Red Bull situation, by voluntarily negotiating what’s called a payment in lieu of tax to local governments, to sort of mollify them so they don’t end up going to court and trying to get their exemption rejected or annulled. So, yeah, I’m fascinated why that Harrison New Jersey case hasn’t spilled over to other deals yet.

ND: So anything else that you see on the radar in terms of new fields of study or new discussions in the public sphere that you are looking ahead to involving sports facilities?

GP: Yeah, I think there’s a couple. Public finance and the real estate dimensions of sports facility research are the leading edge. It’s where I envision academics going. The real estate development aspect has seen considerable momentum in the last four to five years. And I think that’s only going to grow as we figure out where the limits of our existing knowledge is. Most of the research to date has focused on how stadiums affect residential home prices. I did one for the Barclays Center looking at commercial land prices. These are all attempts to estimate how does this hypothesis that a facility attracts economic activity to its immediate vicinity show up in, in this case, property markets. And we should be able to measure that economic activity in other ways as well. But the nice thing about property markets is that the data is readily available, and property markets also have some nice attributes: There’s a lot of transactions that happen, especially in residential property, and so it gives us a lot of data points as well.

ND: Geoff, thank you so much for being here. It’s always a pleasure to pick your brain on this stuff. It’s interesting to these sort of conversations about the nitty gritty of the economics of whether it’s sports stadium development or real estate, because you know these are really the questions that we need to answer to figure out not just are decisions that have been made in the past stupid, but what are the decisions that make sense going forward.

GP: Yeah, no problem. I appreciate the time to talk. The thing about sports is I love it both as a fan and as a player — rec player, anyways. I’m very unhappy that the Nuggets and Kings did not draft me this year. I will try again next year, and I will keep trying until I get that lucky phone call.

ND: We will all be rooting for you.

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FoS 20: Frank Rashid on what two decades of fighting to save Tiger Stadium taught him about American politics

There were innumerable people who helped Joanna Cagan and I learn the nuances of the sports stadium subsidy business when we first began our research more than 20 years ago, but I think it’s say that no one devoted as much time and expertise to the cause as Frank Rashid. A Detroit English professor and lifelong Tigers fan, Rashid was one of five friends who in 1987 founded the Tiger Stadium Fan Club, which became one of the longest-lived community groups fighting first to preserve a historical ballpark they loved as fans, and later to stop the flow of public funds to a private stadium project as concerned citizens.

One of my most enduring memories of researching Field of Schemes is of Rashid driving me and a couple of friends around Detroit, regaling us with tales of past and present government mismanagement and racist urban planning, along with a few tidbits of Detroit baseball lore (“That’s the house Ty Cobb lived in when he supposedly murdered a guy”) — and afterward, getting to visit the model of a proposed Tiger Stadium renovation, designed by architects John and Judy Davids, that was in storage at Rashid’s house. I was fortunate enough to get to go to a couple of games at Tiger Stadium with Rashid and other Fan Club members, and even more fortunate to get to get to testify alongside him before Congress. The book and this website simply would not exist as such without him, and given the amount of advice and knowledge he and other Detroit activists shared with people facing similar battles in other communities, neither would much of the stadium subsidy opposition nationwide.

ND: Hi, and welcome to the Field of Schemes 20th anniversary interview series! I am extremely pleased today to be joined by Frank Rashid, who is one of the cofounders of the Tiger Stadium fan club and who recently celebrated, if I’m counting right, his 30th anniversary as a stadium activist. Am I right about that?

FR: I think that’s right, from ’87 to — yes, we did mark it.

ND: I had to think about when the Tigers were in the playoffs. The Darrell Evans series.

FR: That’s right.

ND: Well, thank you for being here. You’ve been somebody who’s been you know following and involved with this stuff even longer than me which is —

FR: I think I’ve been following it longer than you’ve been alive, Neil.

ND: It’s entirely possible! I know this story and readers of the book know the story, but tell me a little bit about how the fan club got founded.

FR: It actually started when I read a column by a classmate of mine, Mike Betzold, in the Free Press. He had gotten wind that the Tigers — under Tom Monaghan, this was some time ago — were making noises about a new stadium. Not even 10 years had passed since the publicly funded renovations that were supposed to guarantee the stadium’s future for at least 30 years from that point, from 1978. I didn’t know an awful lot about the stadium finances, but I at that point just loved Tiger Stadium — it was one of the locations in Detroit that was common ground for many of us and that we loved growing up. So I called Betzold and I said, “Is there anything that can be done about this?” So he said, “Well, you know, maybe we can put something together.”

So we got a few of our friends: my brother Kevin, Jerry Lemenu, Bob Buchta, and Mike and I, and we got together for a pizza at Buddy’s pizza in Detroit, which is an institution, and watched the Tigers get no-hit and still win against Baltimore, I think it was September 2nd. [Ed note: It was indeed September 2nd, but it was Cleveland the Tigers beat despite being one-hit.] And while we were doing that, we made plans for what we were going to do. We pooled our money, ordered bumper stickers and T-shirts, and handed them out to people outside the stadium for anybody who would give us their name on a mailing list. Some of them were even accurate!

And so we started a group, and it caught on. We got a lot of favorable publicity because we tried to keep the issue very light at first, make it kind of a pro sports thing, a feel-good “people love Tiger Stadium.” And got a lot of great publicity from the local media, and that got us members. Three hundred people showed up for our first membership meeting in February of ’88, just a few months after we got going. And they turned out to be some real loyal, strong, wonderful people — people like Catherine Darin and Eva Navarro and people who had been with us for a long time — both of those wonderful women are now deceased. But it was a wonderful gathering of people and it stayed light for a while, even as we were learning more and more about baseball stadium economics, and starting to realize what a boondoggle this really was in the city of Detroit. And how really wrong it was when you had a treasure — Tiger Stadium I would say is a treasure like Fenway Park or like Wrigley Field, both of which are still still going and still contributing to healthy franchise values for their team owners.

So as we got this going it became, especially for me, much less of a baseball — even less of a historic preservation issue, even though I’m a strong preservationist — it became really about “How can we be subsidizing the wealthiest people in our society?” And I came to realize this is not unusual, but this was the issue that landed in my lap. And so I started to fight it even more intensely because of that.

ND: One of the first realizations that Joanna Cagan and I had working on the book was we went into it thinking, like I think a lot of people who follow this casually did, that “Oh yeah, this is one of those battles where the sports fans are all saying ‘the teams need to get whatever they need,’ and the people who aren’t sports fans are saying ‘no, don’t spend our taxes.’ But there are plenty of people, whether it’s in Detroit or the Fenway Park folks — really you can pick the city, there are plenty of sports fans who are opposed to these deals, either in spite of or because of their involvement with the team.

FR: Yes, I think that’s it. You know, I recently have written something about this where I was thinking about the deal that the teams have with us. We give them our loyalty, we buy their merchandise, we listen to their advertising, we read their stuff in the newspapers. We support them. But we don’t have to turn over hundreds of millions of public dollars that can go to other more worthy projects that are legitimate public interests. And that’s where the deal got broken. There are more intense Tiger fans than I was — but not too many. I just grew up loving this game, loving this team, loving the experience of baseball in Detroit and a Tiger Stadium. And to me they broke the deal. The illusion was that they were our team. The Tigers are our team. That’s what they sell. And I realized, no. That illusion doesn’t work for me anymore. And so it’s been really painful to realize that — that the loyalty isn’t mutual.

ND: Do you think that’s something that’s hard for sports fans to realize? Certainly plenty of fans resent their teams and their team owners for all sorts of different things whether it’s trading all their good players or charging too much for ticket prices — or tearing down a stadium. But it seems like it’s hard to navigate believing in the team as something that’s a communal experience. You wear the gear, but you at the same time are recognizing that it’s a corporation that’s owned by somebody — we may be attached to ordering things off of Amazon, but very few of us, I would think, wear hats with the Amazon logo.

FR: Yeah, it’s the same kind of thing. Hey, sell us this illusion that they are our team, and because we like it, we buy it! It’s the Detroit Tigers. It’s the Ford Motor Company, but it’s the Detroit Tigers. They’re ours. It’s the Boston Red Sox. It’s the New York Yankees. It’s the Los Angeles Dodgers. The teams belong to the community; that’s the illusion.

We willingly suspend our disbelief about about the fact that it’s a business and the owners may be a crook or a racist or whatever. But the team was ours. And that’s the hard part to realize that really that is an illusion. You can accept it for a while, and then sometimes it’s not so not so good anymore.

ND: So the Tiger Stadium battle went on, if we count it as starting from from ’87 , when did they finally, they left in —

FR: 1999 was the last game.

ND: And when did they tear it down?

FR: 2009, finally.

ND: So in the various stages, it went on for over 20 years. And when I tell people about the Tiger Stadium Fan Club , it’s always, well, this is one of the great success stories of citizen organizing — except for the end.

FR: Yeah, except for the fact that all of our work paid off in: not only do we have a new baseball stadium, we have a new football stadium, and a new arena! You can’t imagine what great success we all feel.

ND: It’s just like Star Wars, only if Darth Vader won at the end!

This is probably beyond the scope of a short interview, but what are some of the things that you feel like you learned during all that time, maybe that other people in other cities could take away from this in terms of anything from discoveries about the way that this system works to discoveries about what works and what doesn’t in terms of organizing.

FR: I think there are a lot of ways to answer that question. The large issues are: It opened my eyes in many ways to the way we subsidize the wealthy in this country and the ways stadiums are one instance of this and that that’s a larger battle. But this is an important part of it. And there’s a whole feeding frenzy on the stadium game — it’s not just the team owners and the players, it’s the construction people and the developers and the real estate people and the lawyers and a whole bunch of politicians, of course. And it’s all legal — I mean most of it is legal, as far as I know — but it’s a bad game. It’s something that’s stacked against regular folks. And so that’s part of it.

And I recognized too, through fighting two ballot initiatives — or one ballot initiative and one referendum — on this issue, that that system, it’s not just one person, one vote. Because the system is rigged in favor of those who are going to profit from the team. They can all contribute to a campaign. It’s Citizens United at the local level, because it’s their freedom of speech to be able to contribute to a pro stadium initiative. They’re the developers and they’re the bond attorneys and they’re the construction people — they’re all the people who are going to profit from this.

So when you are trying to take part in a referendum about a stadium issue, that’s great that we have those referendums — they should come to votes, they often don’t. But that doesn’t mean that it’s a fair fight. It’s not a fair fight. That’s something else, and it opened my eyes so the ways in which elections work.

There were a lot of larger issues I learned about as a result of this. I specialize as an academic in research about contemporary Detroit, in addition to its literature, and I have been made aware of the way in which cities work and the way development happens in cities, not always for the most altruistic or the most public spirited reasons.

So those are the large things. Along the way, though certainly we learned very early on — there were five of us to start with, and we were a bunch of writers and artists and teachers — we didn’t have the expertise to make this work. But if we got the word out, which we were able to do early on, to people who did know how to make it work, like the architects and the lawyers and the urban planners and people who just had influence, knowledge, ability that we didn’t have. That was our what we did. Andthe reason that the fight lasted as long as it did and was as successful as it was — ultimate failure though it ultimately became — was that there were all these great people who were brought together by their love of this ballpark and their interes, later on , in the subsidies for the wealthy. And that became kind of wonderful, meeting all these people that I wouldn’t otherwise have met. And how it jelled — how really great the effort was as a result of that process. I think I could, if I had the energy, start another organization, if I had a Tiger Stadium to work with, something that people loved. If I were able to pull together those diverse groups of people into this, that’s something really useful.

I also found out: Do not overbuy merchandise. When we did the first hug of Tiger Stadium I let two of my pals talk us into “Oh, we’re going to have so many people.” We had this souvenir book that we spent quite a bit on, itt was pretty glossy, pretty nice. And we ended up where we bought , I forget, 10,000 of them or something — we ended up with nine hundred and eighty that I had to get rid of. Along with several posters and all kinds of stuff like that.

ND: I think I still have a couple dozen of those in my closet.

FR: I think everybody in the United States might.

It was don’t believe what they say about how popular you are and how great you are. Be real careful about the money. When you’re grassroots you can’t waste money. And it took us a long time to get out of debt, and time and energy that would have been better spent working on the issue.

ND: That said, though, I think you did have was successes. The Fan Club story has tons of examples of both the power and the failure of American democracy, right? Not just the way that the referendums went , and the power of money there, but I always remember the story — I’m probably going to mangle it, but what was the governor’s fund —

FR: Oh, the Michigan strategic fund!

ND: That he managed to use as a slush fund and then, am I remembering right that it went to a state court and the ruling was, “Yeah, he’s not allowed to spend it without legislative approval, but we’re going to let it go this time”?

FR: Yes, exactly. That’s how they got the $55 million for Comerica Park. But then they went back to the well and got much more through the Michigan strategic fund for the hockey arena.

ND: Oh, that’s the same fund! I didn’t even realize.

FR: Yes. So this is a fund that if you go to their website, you look at what kind of money they give out, it’s supposed to be for worthy development projects: things that will help diversify Michigan’s economy, things that will help Detroit, help commercial districts. And you’ll see a few hundred thousand grant, 30,000 grant, maybe up to five or maybe ten million. But not 55 million, and not 260 million or whatever they ended up using from it for the hockey arena.

From what I can see, this is really unprecedented use of this fund. Some of it’s passthrough money that goes through this fund, but that’s the vehicle they use to make this happen. And that is not the way the fund was supposed to be used. It was set up by Democrats, by Jim Blanchard, to be a development fund to help diversify Michigan’s economy, badly in need of diversity. And the Republicans, John Engler in particular, opposed it, thought it was a terrible idea — big government. And he was going to close it down, and then lo and behold, when the stadium thing came up, he found a way to make use of it.

And then it kind of lay dormant. I shouldn’t say dormant — it was doing its good work through the Granholm administration. And then when the Ilitches wanted a hockey arena, they came back to Rick Snyder, the Republican governor now, and got it.

You know, I don’t understand the fiscal responsibility of this. Big government works for big business, but it doesn’t work for other folks.

ND: And that’s the thing again — there are some people who will approach this whole thing as “Why are you opposed to public spending on sports?” And at least for me, I feel like it’s not fundamentally about whether the government should ever spend money that helps sports projects, it’s about who the government is serving.

FR: That’s right.

ND: Is the government serving the public interest, or is it serving the interest of people with money? And you really cannot have better examples than Michigan and all these sports projects.

I wanted to talk to you a little bit about the list that became Chapter 4 of Field of Schemes, “The Art of the Steal.” I think you unintentionally started that by saying, “Somewhere I have a list of what the playbook is.” And I called you up, and I said, “Can I get that list?” And you said, “Well, we have to figure that out. It’s like a list or anything.”

FR: I remember that conversation.

ND: We sat down to figure out, here’s the things everybody does. It’s that there’s economic benefits of it, saying the team s going to move, it’s saying you can’t compete — whether that means compete monetarily or compete for players or compete on the field. And it seemed like this amazing snapshot of the mid-’90s sports business. And ten years later we came back to work on the new edition of the book, and we didn’t have to make any changes to that chapter at all. And if we did a new version of that now, I think it would be exactly the same, because it’s really the exact same same playbook. It just does not change.

Does that surprise you any, that it has managed to go on this long, and they’re just doing the same tactics over and over and over again, sort of cycling through them — if one doesn’t work, you try the next one. But did you expect that by the year 2018 we would be on to something different?

FR: Yes, you know, I did. And that’s another thing you learn is how short the memory of the public is — and of the press, and of a lot of political leaders and activists, even. We don’t really learn from what has happened and from the tricks that have been played on us before. And so a threat to move is going to still be a threat to move — people don’t want to take the chance.

And so all of those little steps that they follow, the little playbook on how to do this, are still very much in operation. I’m shocked. One of the funny things was that they used to say you know there’s Spalding concrete in Tiger Stadium — some cement fell down. Well, you know what happened about three years ago at Comerica Park? Some cement started to fall down. So I’m pretty sure we’re going to start hearing some noise about Comerica Park, just not safe and it’s time to time to start thinking of a new place.

ND: It’s almost 20 years old now, right?

FR: It’s almost 20 years old.

ND: That’s ancient in ballpark years!

FR: Yeah. So we will see.

The problem that I think we will have with a lot of the newer generation of stadiums is that so many of them are right downtown, and are supposedly anchors for all kinds of development, that in selling that aspect of it they’re going to have to figure out what do we do about this big gaping hole we’re going to leave in this area. One of the stages we should add is “Don’t talk about what’s going to happen to the other facility.” They never plan — at least they didn’t plan what was going to happen here for Joe Louis Arena or for Tiger Stadium before they move to the other facilities. That really should be part of the part of the discussion, since these are huge swaths of land that the city should have some plan for once they’re going to be abandoned. And right now they’re just starting to talk about what’s going to happen with Joe Louis Arena after they’ve already built this new arena.

ND: They still haven’t built the soccer stadium, so they can repurpose Comerica to be the soccer stadium. And build their baseball stadium somewhere else.

FR: Yeah, that might be what happens. But really, keep it simple and play to ignorance is part of what’s there. Don’t complicate it by worrying about what’s going to happen to the old place. Even though the civic leaders should be should be on them about that. That’s where they fall down on the job.

ND: So do you see a way that this is ever going to end? When Roger Noll, the sports economist, was here, he was saying, I think that the tide started to turn here. And, as I think I said to him, I’ve predicted the tide was turning before and been wrong, so I’m always hesitant to say that. But part of it’s just that I don’t know what kind of end game you can have. I think people are getting somewhat more skeptical. I think it doesn’t seem as unusual for people to say, “Well, of course economists all agree that sports stadiums aren’t worth big economic numbers and aren’t worth big subsidies. But again, it doesn’t seem like — every week or two it seems like it’s another team that comes out there and is saying, well, of course we need to get more money for renovations or for a new stadium. It’s hard to see it ending any time in our lifetimes.

FR: I kind of agree with you, Neil. But I also know that there is more awareness. There’s more awareness in Detroit. There was a big push — it didn’t work out well — in the wake of the arena deal, which was an obscene deal, because it was right after we declared bankruptcy! I mean, it was in the midst of all of this awful stuff with emergency managers, and taking money from the pensions of the public employees as part of the grand bargain, and threatening the Detroit Institute of Arts collection, and oh, by the way we’re going to turn over nearly 300 million dollars, and the land, to the Ilitches for this new hockey arena.

So in a sense I think it was so obscene that there was more awareness. And then John Oliver came out — so there is a shared understanding among more people now. There was a movement to do a community benefits agreement in the wake of the Little Caesars Arena deal. And then of course the political establishment said, “Oh, good idea, but this one’s a little too you know strong in this way.” And so they put another one on the ballot and put all their strength behind that — Mayor Duggan, by the way. And that’s what we have. We have a very weak community benefits agreement — but there is a community benefits agreement. That language is now out there, and there is a there is a strong group of people, not just Tiger Stadium Fan Club members anymore, who realize what a bad deal this is.

ND: So maybe Roger is right in that the success that the movement to raise awareness at least about these deals has had is that team owners are increasingly … “too embarrassed” isn’t the right term, but that they can’t manage to stand up in public and demand quite the same lavishness of subsidies as they once did. So they’re resorting to, “Well, just give us a little bit here and give us some land and give us some tax breaks — which still adds up to hundreds of millions of dollars. But I guess that’s better than just being able to say, “Write us a blank check.” Although, of course, in Las Vegas the Raiders are practically getting a blank check.

FR: No, you’re right. It’s not going to be a sudden stop of this kind of stuff. Even Obama tried a couple of years in the budget to get rid of federal supports for these things. So there was a discussion; it was happening. And I’m finding it happening more on different levels and that we’re not the only ones bringing it up in Detroit, at least locally. And I think that’s true nationally, too. I think there’s awareness of it. That awareness doesn’t always translate, as we know, into policy change, though. Because there’s too much of a gap between awareness, academic research, all of the things that contribute to our knowledge of how bad these deals really are, and the deal getting done right. The media are not always filling that gap of translating what we know about how bad these deals are into the discussion, because they’re still addicted in some ways to fairness, and they just play off two arguments against each other as if they’re of equal worth.

ND: “Fairness” in scare quotes, right? Not actual fairness, but “balance” and the fairness of “We’re not going to try figure out what’s true, it’s just about you know picking two people with opposing opinions and saying well, therefore…”

FR: And I think that’s changing a lot in the media. But it’s still there n the local media a lot. So until you can really inform the public and bring out the real discussion and the debate and what information exists, the folks with money can wage the campaign that is a a disinformation campaign.

ND: So I’ve got to ask you: Have you found yourself able to watch baseball again yet?

FR: If I’m sitting in a bar and the ball game is on, I will watch it. And I o go back sometimes late at night, when I can’t work anymore, and look at old things like Willie Mays making his catch on YouTube. I still get pleasure from the game. But it’s very hard to follow the Tigers. Much as I would never have believed it. I wonder now how I ever had the time to always make sure I had the radio on at a certain time and could go to 20 or 30 games a year, or however many I ended up going to, and following it in the papers. I spent a lot of time of my life doing this. And I’m puzzled as to how I made that happen.

ND: Is that a good feeling or a bad feeling?

FR: It is a relief. When you love something you’re obligated to it, and to suddenly find yourself free of the obligation, it’s not all bad. There are things I miss about it. But it’s not as much as I would have thought. The Frank Rashid in 1990 or 1985 or whenever I was the most rabid fan that I could have been would be very surprised that he was so able to let it go.

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FoS 20 interview: Roger Noll thinks the stadium subsidy tide just might be turning

With 2018 being the 20th anniversary of the publication of the first edition of Field of Schemes — and also, not coincidentally, the 20th anniversary of the launch of this website — I wanted to do something special to mark the occasion. And so I am very pleased to announce the first installment of the FoS 20 interview series, where I chat with stadium and arena experts I’ve gotten to know over the last two decades to discuss where the subsidy racket has come and where it might be going.

The choice for guest #1 was an easy one: Stanford University economist Roger Noll was one of our first big interviews for the articles that ended up blossoming into our book. Noll continues to be one of the nation’s most knowledgeable followers of sports business, and if he still has lots to say that’s pessimistic about that world — those wagering on future success for the Las Vegas Raiders and Major League Soccer might want to avert their eyes here — he actually thinks there may be some signs of a light at the end of the subsidy tunnel.

Click the audio player below to listen to the audio interview in your browser, or skip down to the transcript if you prefer to read a lightly edited version of our talk. Either way, enjoy, and I’ll be back next month with another installment.

ND: Hi, everybody, and welcome to the Field of Schemes 20th anniversary interview series. Our guest for this inaugural episode is Roger Noll, who is an economics professor at Stanford and one of the definitive experts on sports economics, including coauthoring the book “Sports, Jobs, and Taxes,” which was one of the first in-depth investigations of the sports industry, including stadium deals and their financial implications. Hi, Roger, thanks for taking the time.

RN: Hi! My pleasure.

ND: So I remember back when Joanna Cagan and I were first working on the book, and we were first starting to do the research, we contacted you with questions like “Are cities being blackmailed into having to put up more money than it’s worth for the economic benefits they get back?” And your response was something like: “Yeah, it’s even worse than that, because there really aren’t any economic benefits to speak of!”

RN: That’s right.

ND: We’re still in the same situation, right? That’s remarkably unchanged. Is there anything we’ve learned in the last two decades to tell us otherwise or if there’s any exceptions or anything?

RN: Oh, I see a new dawn arising. Admittedly, this is inconsistent with the Raiders deal in Las Vegas, but in general in the last few years the resistance against huge public subsidies for stadiums has increased, and it’s much more difficult now for a team to get a large public subsidy than it was in the early 2000s. I think it definitely got worse after you talked to me last time. That sort of peaked in the early 2000s, and then since the Great Recession it’s been hard for a team to get a large public subsidy.

What you observe now is that the subsidy is more likely to become indirect, and more like conventional ways of attracting companies to locate in your area, like giving them the right to develop a whole bunch of land with tax increment financing of infrastructure, and things like that. So you give them tax breaks, but you don’t do it directly. It’s like the Los Angeles Rams facility and the L.A. area.

So I actually think that it’s hit its peak. And of course Las Vegas, which is an interesting one to talk about because it now looks so out there — it’s so different than any deal that’s been done in the last few years. The Las Vegas Raiders deal is now the exception, whereas in 2000 to 2005, it would have been the rule.

ND: Let’s step back for a second and first talk about the about how things have changed in the last few years. What do you attribute that to? That people finally read our books?

RN: Well, I don’t know how to apportion blame between you and me! But I think that notwithstanding the power of the press, the other thing that happened of course is that a bunch of cities got in deep financial trouble for the deals they made in the late ’90s and early 2000s. You know, Cincinnati, and the Phoenix area. So I think that that the reality came home that as the price of stadiums went up and up and up and up, and they became a significant component of a budget of a city or a county, that the failure to generate the incremental revenue that was promised in the initial plan caused serious financial harm that could easily be attributed to the stadium deal. And that has added a lot of a lot of heft to the arguments of the opponents.

So I do think that sports just overreached. They kept getting more and more and more money, a large part of which went to investing in much more elaborate facilities — things that had a lot more bells and whistles that went well beyond what you would actually need to have an economically viable business investment. And this caused financial hardship that then meant that the next round of requests for new stadiums, people did not respond as favorably as they had in the past.

ND: There’s a couple of other outliers, right? You’ve got the Texas Rangers, you’ve got the two stadiums in Atlanta, maybe you could throw the MLS stadium in D.C. in there. But you’re saying that those are becoming more the exceptions to the rule than the other way around?

RN: Yeah, what I’m saying is that the hit rate has gone down. It used to be the case that 75 percent of the time, teams would get a good deal. And now it’s down to like 25 percent of the time. You’re right, there’s still some bad deals out there. But there’s also a lot more deals where all the local government is providing is the land and the infrastructure, and the team is basically paying for the facility. And the way that it makes it work out financially is they get ancillary development rights in the area surrounding the stadium.

And this is actually a good thing for cities because it forces teams to do more like the Washington Bullets [ed. note: Wizards, obviously; Noll is old-school] facility in downtown D.C., where you actually try to develop a sports facility to be more integrated in the local economy as opposed to be walled off from it. In the late ’90s and early 2000s, the design of a sports facility was you’d have a facility and then you’d surround that with a parking lot, and you’d surround that with a freeway. So the probability that someone could actually escape and spend a dollar outside the facility was zero.

Now, if you’re going to be building an ancillary development that’s integrated with the sports facility, that enhances the value of the facility and the value of the surrounding businesses. Even though a smaller fraction of the net business may be going on inside the facility, the fact that it’s integrated with the greater community is actually beneficial. So that’s why the Los Angeles experiment with their new facility for the Rams and Chargers is especially interesting, because no one has ever successfully integrated a football facility into a local community before. And this will be a first if it works.

ND: I assume it’s a challenge because the football stadium is in use such a small amount of time. All sports venues, you have the problem that it’s just people flooding in and flooding back out a limited number of times a year. But football’s the worst for that, right?

RN: Football is exactly the worst. That’s why it is the singularly worst investment that a local community can make is to build a pro football stadium. But we’ll see what happens with the Rams. I don’t think there is any real solution to it, but you can make it better by having the facility be built in such a way that it has more uses, it is more modular. I don’t know whether they’re going to succeed in doing this in Los Angeles, because I don’t know enough about the plans — of what the inside of the facility is actually going to look like. But it’d be interesting to see if they experimented so that instead of, except for a few tractor pulls, being used ten times a year, it will be in fact use maybe 50 times a year. If they can do that, that’s a big benefit for the community.

ND: We’ve talked plenty of times over the past 20 years about the expectation that if the direct subsidies dried up, you would just see a lot fewer new stadiums being built. And that may be the case, but I certainly am surprised that you’ve got Los Angeles, you’ve got the new Warriors arena in San Francisco, you’ve got the Islanders talking about one in New York. MetLife. The new arena renovation that’s going on Seattle. It’s not unheard of for team owners or arena developers or people like AEG to say we actually will invest private money in sports venue. Is this a surprise to you? Or do you think this has to do somewhat with finding other ancillary ways of bringing in money that aren’t directly through trying to pay off the construction costs just by selling tickets.

RN: It’s a surprise that it’s gone as far as it has. It’s not a surprise that qualitatively this is the direction it’s taken. My expectation was that what they would do is simply make the stadiums less expensive — have fewer bells and whistles. But also, if you can recall, I remember talking to you about how Fenway Park was the past and it might be the future. The Boston Red Sox were forced into this by the lack of footprint. They had they didn’t have a lot of land. So they were forced to have the neighborhood be a beneficiary of Red Sox games as opposed to being a competitor.

So it doesn’t surprise me that there has been this attempt to have greater integration of the facility and the local community. And the dual use aspect of it that the Rams and chargers are playing in the same facility — again, 20 years ago, NFL teams thought it was anathema to share stadiums.We were in an area where sharing od stadiums was almost done — all of the shared stadiums had been essentially dispensed with, in all of sports, and we were moving to every team controlling its own facility. Again in football, especially, it makes no sense not to share stadiums multiteam team cities. And now we have two!

I think those things were foreseeable. But I think that the integration of the facility into multiuse, and with the rest of the community, the degree to which it is going to happen we underestimated it. And it’s probably going to happen more than we thought was possible 20 years ago.

ND: Which is much better from an urban planning standpoint, clearly. The one thing I wonder is whether it opens the door to — you know, we already have seen the shift away from direct subsidies, just going to the state legislature and asking for 300 million dollars in cash, to, well, give it to us in terms of tax breaks, give it to us in terms of free land, give it terms of other operating subsidies things down the road, because that’s easier to get to get passed. And we’re going to make this back by building other development around the stadium.

But then I wonder whether you’re at risk of seeing more things like the proposal in Anaheim that didn’t happen with the Angels — where it was, “Oh, we’ll pay for a whole new stadium! We just want development rights to the entire parking lot.” And the mayor there demanded a assessment and discovered that the value of the parking lot was worth more than the renovations they were doing. So I wonder whether there’s an opportunity for a different form of extracting public wealth or public opportunity cost or public value — just not through cash.

RN: Well, there’s always that danger. Tthat is to say that what form the subsidy takes, it’s still a subsidy. I was deriving joy from the fact that the actual magnitude of the subsidy has roughly been cut in half by now. I view that as a gain.

But you’re right, it’s still there. And it’s still an uneconomic investment. It still doesn’t have a good return on investment. So yeah, it would be better to have it be zero, but it’s certainly better to have it be two or three hundred million than to be 700 million. That’s sort of my take on it.

ND: I don’t mean to be the voice of doom. But as someone who has predicted that the tide was turning before and been completely wrong…

RN: Oh, I agree with you! And your skepticism is deserved. I agree that if these things turned out to be hugely successful, then I can imagine the magnitude of the subsidy coming back, so that any community benefits that arise from these multipurpose developments get completely captured by the owner of the sports team. That would be too bad. I can see that possibility happening. At least for now, that’s not where we are. And then if it turns out to be that this is the problem in the future, we can write another book!

ND: Let’s talk for a second about the Raiders, because I think you called that the worst deal you’ve ever seen. I think I’ve called it the worst deal I’ve ever seen.

RN: I think it was the worst deal we’ve ever seen!

ND: Talk a little bit about why it’s the worst, and then how on earth this happened. Because I think a lot of us thought, “Man, Mark Davis has painted himself into a corner. He has failed to get a chunk of the L.A. market. He is screwed.” And he walked away with 750 million dollars. How did this happen?

RN: I think he’s still screwed. In the sense that, yes, he got 750 million dollars of a two-billion-dollar facility. But if you read the financial plan, it is completely insane. They are expecting that something on the order of 40 percent of the people in attendance at those games are going to be people who drive up from L.A. They have 25,000 people per game getting to the game by walking from their hotels on the strip to the facility. And notwithstanding that in September in Las Vegas it’s 100 degrees, and the closest hotel on the strip is three quarters of a mile away.

So they’re expecting NFL fans — who are not exactly working class — to walk in 100-degree heat for somewhere between three quarters of a mile to three miles to get to a football game, and the reason that this is in the plan is they have no parking.

And they’re anticipating that the number of Las Vegas area people who will attend a game is 15,000 fewer than the number of season tickets they sold this year in Oakland.

ND: So, are we looking at a scenario where this could be a disaster for both the state of Nevada and the team? I would say that this was the first time but I guess we’ve had, I mean, arguably the Marlins stadium…

RN: This is the first.

ND: Well, the Marlins stadium was not a success for both sides, and the Glendale arena — there’s a few where everybody winds up unhappy. But this seems like it could potentially be not just everyone ending up unhappy, but it being a complete disaster for everyone.

RN: Exactly. When I said first, I meant the NFL. But you’re right, it looks like the Phoenix Coyotes. That’s exactly what it looks like. They’ve gotten themselves into a fix where their own forecasts of the local market demand for their product is substantially less than the local market demand for the product where they currently are — and they’re moving anyway.

ND: Is this just because Mark Davis check for 750 million dollars on it, and thought, “I can’t pass this up”?

RN: I don’t know anything. I’m trying to put a rational actor spin on it. My expectation is that the only way this makes logical sense is Mark Davis thinks he’s going to sell the team within the next couple of years.That maybe Sheldon Adelson or Steve Wynn or somebody like that will buy it and make it part of the Strip, basically.

I can’t see that this makes financial sense. Because when Adelson pulled his $650 million out of the deal, and that was replaced by a bank loan of 650 million, that sort of sealed the doom as far as I’m concerned for the Raiders as a business entity. Because they will collect a significant amount of money for naming rights and PSLs and all that. But he’s going to be hundreds of millions of dollars in debt to build this himself, with projected revenue substantially less than he has now.

So I think the only conceivable way out for him is that he will sell it to one of the hotel moguls in Las Vegas, and that that mogul would buy it because they think they can somehow integrate the marketing of their hotel chain. As you know the strip in Las Vegas, almost everything on their is owned by one of three companies. So if one of those companies buys the Raiders, they may think they’re getting a marketing advantage over their competitors for their casinos. So maybe that’s what he has in mind. But I can’t see the football team in and of itself being a viable enterprise in a stadium, even with its $750 million subsidy.

ND: This does seem to be one of the directions that things are heading, where you are seeing more stadiums being built as kind of loss leaders in these battles among big hotel owners or casino owners or arena operators, AEG and people like that. I can only understand this plan to spend a billion dollars on a new arena in Belmont Park in Queens as a turf war between Madison Square Garden and the owners of Barclay Center and things like that. Because as much as New York is a huge market, there’s a lot of arenas here right now. I can’t imagine it makes sense any other way.

RN: I think you’re absolutely right. And that is bearing in mind that an arena makes more sense than a stadium. Even so, New York now is well beyond full capacity for arenas, and building still another one makes no sense at all.

ND: Let’s talk for a second about shelf life. One thing that we have seen, even if the subsidy numbers are going down, is that 20 years ago we used to say when stadium is 30, 40 years old, the owner is going to want to start demanding a new one. Now it’s 20 years and you start looking ahead ot 20 years, so 10, 15 years down the road, it’s not unusual for an owner to say, “Well, you know, we’ve got to start talking about what comes next.” How long can this continue, this trend? I guess there’s two questions: One is what’s driving that? Is it just that they think they can get away with it? And the other is: Is there a limit? Can literally you start asking for a new stadium before the old one before the previous one is finished being built?

RN: This is one of the most interesting things going on in sports. And I think it has a two-part answer. The first part of it, of course, is you keep asking for more and more frequently because as sports become more and more popular in society, more closely integrated into the social fabric of a city, the greater the leverage the owner has to get more. So that’s the first part. The second part is the huge technological change has taken in the actual design and operation of sports facilities. As you know, the footprint of a contemporary stadium or arena is several times as big as the footprint of an arena or a stadium would have been built at the same seating capacity 25 years ago. And that’s because so much more stuff is being put inside the stadium there. It’s basically the shopping mall. So what’s gone on is the opportunity for ancillary revenues other than just selling tickets, and how that requires more space, and how that then leads to the demand for at least a serious renovation, if not a complete replacement of an older facility.

Now, both of these arguments hinge on the growth of the sports continuing. And I think for Major League Baseball and the NBA I don’t have any problem with that. I don’t see the end coming soon. For football, it’s not so clear. I mean, the NFL may well have peaked two years ago. The all-time historical peak of interest and willingness to pay for the NFL may well have peaked in 2015 or 2016.

And if that’s the case, then it’s going to come to an end. Because that takes away both the demand side for generating still more revenues, and it takes away the leverage of the owner to get more out of a local government. Meanwhile, back in the NBA, they are continuing to get bigger and better facilities with more and more opportunities for revenue generation inside. And they have actually a better prospect for integrating the facility into the local neighborhood for spillover benefits that they can capture.

So the NBA is different and it may well continue on the path it’s been on for the last few years. And likewise Major League Baseball. For the NFL and then to a lesser extent hockey I don’t see it continuing. And so I think that we may see a divergence here that the NBA and MLB sort of continue on the path, and the NHL and the NFL find it getting increasingly difficult to get new stadium deals, and the expected useful life will start to creep up again to the 30-year or 40-year range it was before.

ND: Do you have guess at what’s going to happen with MLS? Because it seems like they’re kind of in this weird cusp where they’re both building interest from a fairly low level — they’re going from being the fifth most popular sport to 4A — but legitimately growing in popularity. But at the same time, they are starting from a far distant beginning point, and so much of their business model seems to be based on, “Well, we’re just going to keep selling more expansion franchises and hope that that keeps” — right?

RN: I’ve had to spend a lot of my time in the last couple of months explaining precisely why the MLS is not a Ponzi scheme, but you might think so.

No, you’re absolutely right that the profitability of the original set of franchises in MLS is completely dependent upon expansion. It is true they have secured some television. They have increased their popularity. But it’s nowhere near enough to justify the prices of the franchises and the costs of the stadiums. And obviously expansion can’t go on forever. Plus, this additional problem is they are a sport that depends upon a vibrant minor league system.Every nation on earth that has good soccer, or football, has multiple divisions. MLS has taken this policy attitude that it’s going to try to mimic baseball where the MLS teams control the minor leagues. And that just raises their costs again. It doesn’t create a viable community-based independent demand like we see for second and third division clubs in Europe. And without promotion and relegation, you don’t have this positive prospect of teams going up and down so occasionally they get to be major league teams.

So I don’t see the business model of MLS justifying the amount of expansion that’s currently going on and the expenditures on new facilities. So I think if we move out 10 years, what do you think is going to happen, I think MLS has a good chance of having happen to it what happened to the North American Soccer League in the 1980s when they did the same thing: They got overexuberant and overexpanded.

ND: Now you’re the one who’s even more pessimistic than me. I’m not saying you’re wrong! But that’s the nightmare scenario that everybody is afraid of.

So I’m sure you get this question all the time, because I certainly do, which is people saying so what’s a good deal? What is a reasonable involvement that governments should have? Whether it’s what’s an example of a specific stadium that’s good, or how do you determine what a price point is. Because don’t think you or I ever say—

RN: Never should do it.

ND: Never should do anything — nobody should ever build stadiums, we should just shut down all sports and make them go play in some other country. And there obviously is some benefit to having a team, to having a new stadiums, to all these things, even if it’s nowhere near what the owners and their boosters claim. So what answer do you give to that, in terms of what makes sense for governments to do — or what’s a way for governments to figure out what they should do.

RN: I actually think there is a positive case to be made for government involvement in the provision of localized sports facilities in the same way that they provide libraries and parks and symphony orchestras and ballets — that this is part of the culture of a city. And if government is honest up front and says, “We’re not doing this because we’re all going to get rich. We’re doing it because we want this to be a part of our community, want it to be part of the cultural environment of the community in which we live,” that’s fine. Then where does that lead you? It leads you in actually the direction things have been going in the last few years, with a few exceptions, which is the integration of the facilities into the local community, giving responsibility for the design of the investment and the cost of the investment in the facility itself to the sports owner. If you’re going to subsidize it, you can give them the land and give them the infrastructure, but you don’t want to be paying directly for the bells and whistles. You want the decision about bells and whistles to be done by the team itself so that they only spend money on things for which there is some purpose other than being a monument to the owner. If, like in the case of Jerry Jones in Texas, for example, he’s willing to pay for monuments to himself — and that’s okay, I don’t have any objection to that — but the citizens of the community don’t have to build monuments. They don’t have to build his pyramids — he can build them himself.

And so I think that approach where you use things like giving away the land and the infrastructure and giving them some property tax breaks, but not paying for the stadium itself and not committing yourself to underwrite the operating revenues of that facility, subsidize the team and its operations, that’s the way to go. And if you present it that way — yes, we’re giving them something, but you decide as a citizen whether to vote for it on the basis of whether you’re willing to pay to have a local team be part of our community — that’s the right way to run the politics. My objection I think, and pretty much yours too, has always been don’t try to sell us snake oil. Don’t try to tell us we’re all going to get rich when we’re not.

ND: I guess the question then is how do you determine what the value is right of the team and of a stadium and things like that to fans and to taxpayers. Because clearly there is a value. But if you’re going up there and you’re saying. “Oh, this is not could be an economic benefit, we’re just doing this as a community asset,” unless you’re having some sort of referendum about it, you can still just go through and ask whatever you want, and just say, “Well, we’re being upfront about it now: We’re just we’re just doing this because we think it’s cool.”

RN: Most cities do not have a referendum every time they build a park. As long as the politics of it is discussed openly and the facts are presented in an objective fashion then I’m not so much worried. I mean, you can get corrupt situations where essentially a team might bribe a city council to give it a subsidy. But I don’t think that’s been the fundamental problem historically. I think the fundamental problem historically has been that the politics of large stadium subsidies dictated making the economic argument that somehow this was going to make all the property in the city more valuable.

Now we know from experiences in the ’90s and 2000s that it’s not true. We have lots of data now to say it’s not true. So I think it’s fairly easy to beat off that argument now, compared to what it was 20 to 30 years ago. And if people stop making that argument and local governments continue to decide they want to help teams and keep them, and it’s part of the normal political discourse of the community, I wouldn’t be terribly upset if indeed what is the common way to deal with it now becomes the norm. I would be upset obviously if the profitability argument came back and cities started just giving straight cash subsidies for stadium construction like the Las Vegas deal. I think that that would be a bad deal.

ND: But you’re you’re actually somewhat hopeful that things are heading in a direction that we may not be having the same conversation in another 20 years.

RN: I think that’s right. I mean I would say cautious optimism is the exact right way to put it.

ND: I guess I can’t hold you to that if you have a qualifier there. But I hope you’re right.

RN: I do too!


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