Hey, it’s a dog-bites-man story that isn’t from Sochi!

Oh, Mike Florio, what have you written now?

With cities suddenly less relucntant to cough up the cash, the looming effort to build the next generation of stadiums could be aided by the promise of a Super Bowl.

Right, because that never happens currently.

I can only assume that Florio was stuck for a column idea on a boring Friday (the Super Bowl is too far in the past to recap, and somebody else already covered the Olympic cross-country skiing stray barking dog story), and dug into the back of his desk drawer for an old story idea he stopped working on in about 1993. To be fair, he seems to be implying that the success of the New Jersey Super Bowl (it didn’t snow, and people only got stuck changing trains for two hours!) will lead more cold-weather teams seeking stadiums to dangle a Super Bowl as a carrot, but the only cold-weather NFL teams without new or newly renovated stadiums are … hmm. Buffalo, I guess, but they’re about to get a pile of renovation money from the state. Does St. Louis count as “cold-weather”? Washington? And haven’t team owners been using this promise anyway, but using it as  additional leverage to try to pry loose a roof as well? How are poor NFL owners going to get their retractable roofs now, huh, Mike Florio? There, I just wrote next Friday’s column for you. No charge.

ESPN’s profits boosted by $260m in state tax breaks

And in the stories I initially missed over the holiday break department, here’s a lovely piece from the New York Times about how ESPN has gotten $260 million in state tax breaks to remain in Connecticut over the past 12 years:

That includes $84.7 million in development tax credits because of a film and digital media program, as well as savings of about $15 million a year since the network successfully lobbied the state for a tax code change in 2000.

For Mr. Malloy and other public officials in Connecticut, the conventional wisdom is that any business with ESPN is good business. After all, ESPN is Connecticut’s most celebrated brand and a homegrown success story, employing more than 4,000 workers in the state.

“After I was elected, this was one of the first companies that I came to,” Mr. Malloy told reporters after the groundbreaking ceremony, standing next to a senior ESPN executive, according to a recording of the event. “I made it clear that ESPN’s needs were not going to be ignored by my administration.”

At $260 million (and counting) for 4,000 jobs, that’s a ratio of $65,000 per job retained, which is far from a record, but still pretty bad. And that’s assuming that ESPN was actually a risk to move — it just built a new $25 million studio in Bristol, after all. And the network also just laid off 100 employees last spring, something it’s allowed to do because the Connecticut tax breaks apparently don’t come with clawbacks. You know, people, it’s not as if no one has spelled out how to do this right or anything.

Cable companies love sports, but even love has its limits

The always-terrific Matthew Futterman has a great piece up at the Wall Street Journal laying out the details of the brewing war between sports leagues and cable carriers. (It’s behind their paywall, but if you’re not a subscriber you can go through the Google News link instead.) Among his findings:

  • Most televised sporting events bring in a relatively tiny audience, 4% or less of all households. Yet sports channels account for 19.5% of fees paid by cable and satellite operators.
  • Advertisers disproportionately love TV sports because 97% of viewers watch live (and so don’t skip commercials), as opposed to just 75% of viewers for non-sports programming.
  • Nonetheless, some cable carriers are balking at exorbitant fees. AT&T has decided not to carry a new regional sports network launched by the Houston Astros and Rockets, and networks started by the Kansas City Royals, Minnesota Twins and Charlotte Bobcats all failed to be picked up in recent years, leading those teams to give up and sell their TV rights to existing channels.
  • The number of TV households is growing, but the number with cable or satellite subscriptions is not, as more and more people choose to cut the cord. According to Nielsen, five million households in the U.S. now lack pay TV subscriptions, up from two million in 2007.

Add it all up, and it’s still not really clear where the cable price bubble is headed. But for any owners counting on ever-soaring TV revenue to fund their exorbitant purchase prices — or their pricey stadium or arena deals — it’s probably best not to bet too heavily on that.

 

U-T San Diego transcribes Chargers marketing speech, calls this “reporting”

Good morning, San Diego! Let’s see what’s in today’s local newspaper, shall we?

The San Diego Chargers are an economic driver to this region, but some potential for the offseason is left on the sidelines because Qualcomm Stadium can’t attract big-time events

Oh, no! This is indeed a crisis! Who’s reporting these findings, anyway?

said Ken Derrett, the team’s chief marketing officer Tuesday.

Oh. Well, that’s not exactly an unbiased source, but surely the reporter has called an independent economist to see whather they think Derrett’s claims are legit. Right? (Reads. Reads some more. End of article.) Oh.

I’d normally make some kind of sarcastic remark here about the shabby state of journalism, but given that the newspaper in question, U-T San Diego, is run by people who want it to be a “cheerleader” for a new stadium and call out those who don’t as “obstructionists,” it’s tough to argue that there’a any journalism involved here at all. So instead, kudos to U-T San Diego content manufacturer of the month Jonathan Horn for living up to his employer’s corporate business model! They give out Pulitzers for that, right?

Roger Goodell can get in the newspaper just by opening his mouth

From the “Newspapers will report on anything famous people say” department:

NFL Commissioner Roger Goodell said Thursday the league is willing to contribute funding to help build a stadium in Oakland to keep the Raiders in town…

”It’s our stage. It’s part of where we present our game. It’s the biggest part,” Goodell said. ”It’s also really important to the fan experience. Having full stadiums is critical for us. We want to have our fans in the stadium, we want to make sure they have the best facilities, we want to make sure the teams can generate enough revenue to be successful and competitive.”

Wait, you mean the NFL is actually willing to give the Raiders stadium money as part of its league-wide program to provide teams with stadium money? Stop the presses!

Why the WashPost killed my Nationals stadium op-ed

In case you missed it, I didn’t have an op-ed in this Sunday’s Washington Post. That’s actually normal for me — I’ve never had an op-ed in the Post before — except that last week, a Post opinion editor approached me and asked if I’d consider writing something for the occasion of the Washington Nationals‘ first postseason appearance, making the case why the city’s $667 million stadium deal might still be a bad one for D.C. residents and taxpayers.

I spent the next 24 hours writing up 1,000 words on the subject, which you can read below. Only hours after I submitted it, though, I was told that the story was being killed, after someone higher up in editorial had raised “serious concerns” about several points, namely:

  • I wrote that D.C. taxpayers were paying for the stadium, but it’s actually being paid for by taxes on large businesses and taxes on concessions and ticket sales.
  • I wrote that stadium taxes are paying for one-third of the construction cost, but actually they’re paying for twice the cost, and the stadium bonds are set to be retired early.
  • The Post’s figures are that 85% of Nats fans come from the suburbs, so isn’t spending by those fans a net gain?

I supplied answers — more on that below — but the reply was the same: Sorry, it’s being spiked.

I’m writing about all this here not to slag the Post in particular — they were actually very apologetic about the whole mess — but rather to point out how widespread economic innumeracy is among the general public, as well as in news coverage. Each of the objections raised to my piece is an example of a common misconception about how public subsidies work that helps sports owners (and other purveyors of “public-private partnerships”) sell their plans to stick the public with hundreds of millions in costs and still claim that it’s a win for taxpayers.

Let’s take them one at a time:

1. It’s only business taxes and stadium taxes that are paying for the stadium. This one baffled me the most when I first read it — last I checked, businesses were taxpayers, too — but the logic goes something like this: The D.C. Chamber of Commerce agreed to a tax surcharge to raise money for the stadium, so it’s really private businesses paying the largest share of the bills, not the public.

This is a commonly used argument among stadium boosters: It’s not taxing everyone, it’s just taxing business owners/car renters/cigarette smokers/etc. First off, this overlooks the fact that across-the-board business taxes aren’t totally cost-free — at least some small chunk of it is going to get passed along to consumers, or decrease businesses’ spending in other areas and so depress the local economy slightly. But there’s a far bigger problem as well: Once you levy a tax increase for one item, that’s a tax you can no longer use for anything else. My favorite example here remains the four sports lotteries that Maryland put in place to fund the Orioles and Ravens stadiums (it’s not taxpayer spending! it’s just those gamblers paying for this!), only to have the state discover when it later wanted to add new lotteries for other needs that the lottery market was tapped out.

In short: Tax money is fungible. A business tax may or may not be a good way of raising revenue, but however you slice it, once it lands in the public treasury it’s taxpayer money, and if the city then spends it on a stadium, that’s money that’s not available for anything else.

2. The stadium is paying back twice its cost. This is what other outlets reported this summer, but it was a gross misreading of what’s actually going on, which is that those tax streams being funneled off to pay for the stadium are running above prior projections, thanks to the fact that D.C. is the one place in the nation where the economy is actually doing well. That doesn’t mean that the stadium is paying for itself, though — it’s still city tax revenue that’s paying for the stadium, it’s just paying for it more quickly, because D.C. businesses and residents are paying more in taxes.

And, of course, while this is the case so far, tax revenues can swing wildly from one year to the next. Cincinnati’s two stadiums were at one point being paid off quickly, too — before the economy took a nosedive and next thing they knew they were having to sell off public hospitals to make up the shortfall.

3. Suburbanites make up 85% of Nats fans, so that’s all new money to the city. I see this argument time and time again, and it’s based on a gross misunderstanding of the substitution effect: It’s not money spent by out-of-towners that should count as new spending, but rather money spent by people who otherwise wouldn’t spend it in D.C. So people from Rockville who otherwise would have gone into the city to eat at District restaurants — or, for that matter, people from Iowa who are in town on vacation and take in a Nats game instead of going to the Kennedy Center — still represent money cannibalized from existing spending.

Does that amount to all of the 85%? No way. But as I noted in my op-ed, even if 50% of Nats spending is new, each fan would have to plunk down $300 per game to pay back the stadium’s costs from new sales tax revenue alone. (Or, if you prefer, if 75% of Nats spending is new to D.C., they’d have to spend $200 a head. Either way, not bloody likely.)

Now, are all these points arguable? Sure, though I’d certainly argue that doing so with all of them simultaneously requires twisting your brain so far over backwards that grey matter leaks out your ears. More to the point, though: None of this is arguing about facts, but rather about the interpretation of facts. Which you would think would be the whole point of opinion pages. Instead, my interpretation was ruled outside the bounds of acceptable debate, because people in power say that the Nats’ stadium is a money-maker, so it damn well must be one.

Anyway, you can read my rejected essay below. Further discussion welcome, especially with regard to what was supposed to be my main point: Not how much the stadium cost taxpayers, but how former Mayor Anthony Williams got snookered in negotiations, when he actually had the leverage to cut a far better deal…

***

Nats May Win, But They’re Still a Loss for D.C.

There’s no denying it: As moments worth waiting for go, this is a big one. When the Washington Nationals take the field today for the National League Division Series opener, the broadcasters will run down the numbers. It’s been eight years since the former Montreal Expos relocated to D.C. Thirty-three years without baseball before that. Seventy-nine years without a postseason appearance, and 88 since Walter Johnson brought home Washington’s only championship.

This, no doubt, was what Mayor Anthony Williams anticipated on that day eight years ago when he donned a red cap, led council members in a round of “Take Me Out To The Ballgame,” and declared proudly that “the American game is rounding third and at last heading back home to the nation’s capital.” After a years-long search for a new home, the Expos would be transplanted to Washington in exchange for a promise of a $440 million stadium — a number that later swelled to $530 million, then $614 million, and ultimately $667 million, almost all of it footed by taxpayers.

It was a huge ransom — at the time, it was both the priciest U.S. baseball stadium to date and the most heavily subsidized. Innumerable economists had studied the level of economic impact that sports stadiums have on their host cities, and come to the overwhelming consensus: not much. Sales-tax receipts? They don’t budge. Per-capita income? No effect. On the brink of Williams’ deal with MLB, 90 economists signed a public letter warning that “the vast body of economic research on the impact of baseball stadiums” suggests that one “will not generate notable economic or fiscal benefits for the city.”

So how has it worked out? The excitement over a division title aside, any economic benefits are still uncertain. What’s now more clear than ever, meanwhile, is that when Williams bargained to land the Nats, he gave away the store.

Both the D.C. economy and the Navy Yard neighborhood are booming, but it’s hard to say how much, if any, is the result of the Nats, and not the new Metro stops, parks, and other amenities the District has provided. In fact, development immediately adjacent to the stadium has if anything lagged, with fenced-in lots bearing banners that promise possible townhouses and sports bars to come. (This last is a common problem for new stadiums, which are not nearly the catalysts for revitalization they’re claimed to be, in part because of all the in-house restaurants and high-end shopping designed to bring fan spending inside the turnstiles.)

The ballpark itself generates some tax money, but only enough to pay off about one-third of its cost. And while stadium boosters like to tout ballpark taxes as found money, they’re not: Most people have a more or less set amount they spend on entertainment, and if they’re plunking down cash for baseball tickets, much of that substitutes for dollars they’d otherwise have spent elsewhere. In fact, because ballpark taxes are kicked back to the team to help pay for Nationals Park, any spending shifted from Dupont Circle restaurants to ballgames ends up a net loss for taxpayers.

Washington, with so many fans coming from outside city limits, comes out a little better in substitution terms. But even if we count half of Nats fans as “new” spending, they’d each have to spend more than $300 a game on tickets, food, and souvenirs for D.C. to be made whole on its annual $32 million stadium tab.

All this would be easier to swallow if it were just the price that cities have to pay for pro baseball — but all evidence is that D.C. badly overpaid for the Nats. Let’s go back to 2004: MLB had obtained the Expos and promptly set out to conduct a bidding war for the team’s services, but after two years it had gone nowhere, and the team was playing several “home” games a year in Puerto Rico in an attempt to draw fans. (Asked if this should be considered an embarrassment to baseball, Selig could only mumble, “I don’t know if ‘embarrassment’ is the right word.”) Other suitors for the Expos’ hand included northern Virginia, whose leading candidate, Arlington, had just withdrawn its bid on the grounds that citizens didn’t support it, and Portland, which a few years later would cement its commitment to baseball by converting its only ballpark to soccer-only, driving its minor-league team out of town altogether. One pair of prospective owners turned out to have faked their resumes as investment-banking tycoons; another, to have falsely claimed that he once sang backup for Sting.

With rivals like those, Mayor Williams could have felt justified in thinking that he had the leverage to take a hard line in stadium talks, especially with three new anti-subsidy councilmembers set to take office. But when baseball relocation chief Jerry Reinsdorf told Williams that his proposed two-thirds/one-third public-private split “is fine, but three-thirds/no-thirds is more of what we had in mind,” Williams didn’t tell him to get the hell out of his office. He said, in effect, “okay” — agreeing not only to pay for the stadium, but for all cost overruns and future capital repairs as well.

Instead, D.C. could have done what Seattle did this year: Emboldened by a voter referendum that barred sports deals where the city didn’t turn a profit, the city council there told hedge fund financier Chris Hansen that if he wanted a new NBA arena, he’d have to pay for it mostly from his own pocket. Because Seattle, like Washington eight years ago, is by far the league’s best vacant market, Hansen agreed — and even agreed to give back some arena taxes to pay for transit improvements. It’s the rare case where city leaders realized that teams need access to their ticket buyers more than the city needs a sports franchise, and won.

If Williams and the D.C. council had followed that path, then today Washington could have not just its first pennant in eight decades, but a stadium that is a model of how to host pro sports without draining the public treasury. And that would be a victory worth celebrating.

Neil deMause is co-author of Field of Schemes: How the Great Stadium Swindle Turns Public Money Into Private Money and runs the stadium news website fieldofschemes.com.

U-T San Diego columnist: I was fired for not being “positive” enough about stadium deals

On Friday afternoon, the newspaper U-T San Diego summarily dismissed columnist Tim Sullivan. The U-T, you may recall, was bought last fall by right-wing hotel owner Doug Manchester, who immediately declared that newspapers should be “cheerleaders” for projects like sports stadiums. Sullivan, you may recall, has done some excellent work conveying the awfulness of most sports stadium deals. And Sullivan, for one, sees a connection:

The links tell a little of the back story of my conflict with Union-Tribune CEO John Lynch (who I have yet to meet in person). The first is a column I wrote when he ran a local sports talk station. The second is a piece that appeared on the Voice of San Diego web site shortly after he became the new CEO of the Union-Tribune.

He then quotes Lynch’s Voice of San Diego interview:

Lynch said he wants the paper to be pro-business. The sports page to be pro-Chargers stadium. And reporters to become stars.

“It’s news information, but it’s also show biz,” Lynch said. “You get people to tune in and read your site or the paper when there’s an ‘Oh wow’ in the paper.”

He wants that sports page to be an advocate for a new football stadium “and call out those who don’t as obstructionists.”

“To my way of thinking,” Lynch said, “that’s a shovel-ready job for thousands.”

Lynch and Sullivan later clashed over the CEO’s plan to force U-T newsroom reporters to produce content for a new TV station on top of their other job responsibilities. But Sullivan notes that he went along with the paper’s “multimedia” plan, and thinks the reasons for his firing had more to do with his being pegged as one of those stadium “obstructionists”:

Though I can’t read Lynch’s mind, I am inclined to believe that my firing was the result of multiple factors: 1) My failure to endorse a new stadium without wondering whether that’s good public policy, a justifiable expense or a good deal; 2) My comparatively healthy salary; 3) My age and/or demographic. Our two other sports columnists are also white males: Nick Canepa, who is older but a local institution, and the youthful Kevin Acee, who was just promoted to that position. Acee has been identified as one of the paper’s “stars.”; 4) The erroneous issue of whether I was “on board.”

In any event, a newspaper whose management has declared that stadium opponents are public enemies has just fired its only reporter — a columnist, mind you, whose job is to express opinions — who has focused on critically investigating stadium deals. Either this is the biggest coincidence in the history of coincidences, or the U-T has just signaled that it intends on giving up the journalism biz to become an advocacy site for its owner’s political ideology. Which we kind of knew already, but this is another nail in the coffin.

San Diego Union-Trib owner: Newspapers are for backing stadiums

Hotel magnate and gay-marriage-hater Doug Manchester announced last month that he was buying the San Diego Union-Tribune for $110 million. Today, the Voice of San Diego reports that Manchester has told a local TV news program what role he wants the newspaper to play:

“Local newspapers need to be a cheerleader for what’s right and good for the country, such as promoting the new stadium or whatever,” Manchester told KUSI anchors. “I felt that there’s been a lack of that here in San Diego. And so that’s one of the motivations.”

Local news outlets cheerleading for sports projects has a long tradition, of course. They’re just usually not quite so bald-faced about it.