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February 11, 2008
"Free Lunch": Stadium subsidies provide all of sports' profits
Pulitzer-winning New York Times tax reporter David Cay Johnston is out with his latest book, "Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill)" - the whole book is worth reading, but of particular interest to FoS readers is that it includes a healthy sampling of stadium shenanigans, especially those perpetrated by one George Steinbrenner and one George W. Bush.
What I want to call attention to today, though - and not just because I'm referenced in it - is a section where Johnston puts together two disparate sets of financial numbers to draw a startling, and so far as I know novel, conclusion:
"Government spending on sports facilities now soaks up more than $2 billion a year," Neil deMause, author of the book and Web site Field of Schemes told Congress in 2007.
According to Forbes magazine, the Big Four sports had revenues in 2006 of $16.7 billion. They counted a tenth of that, slightly less than $1.7 billion, as operating income, which is one way to measure profits.
Putting together the estimates by Forbes and deMause shows that the entire operating profit of the commercial sports industry comes from the taxpayers. The subsidies, in fact, cover a third of a billion dollars in operating losses before this boost from the taxpayers pushes the industry into the black.
It's not quite as simple as that: For one thing, even if the government is spending $2 billion a year on sports facilities, that doesn't necessarily mean sports team owners are getting $2 billion a year in value from it - as I've noted many times before, sports facilities seldom generate enough new revenues to pay back their own construction costs. (And Johnston himself notes later in the book that sports teams seem not to be capturing the entire value of their received subsidies.) Still, it's a pretty impressive illustration of the degree to which the sports industry is no longer about making money by selling a product to its fans; it's about making money by using its product's popularity to extort cash from taxpayers.
Considering all of our other social problems and liberal incentives, who really cares. The public officials continue to approve the construction of stadiums even when they know the taxpayers are funding a losing game. It is almost to sad to read about private gain from public money and it is sad to write about it as well. The struggle continues.
Posted by Evans Newstrom on February 12, 2008 08:53 AM
After every single article on here deals with the same subject / just different clothes, does anyone here even enjoy going to a professional game anymore? All of this talk of taxpayers taking it in the rear, at least they have the option to go to a game and have fun for a few hours.
Posted by concealed78 on February 12, 2008 03:00 PM
I can't speak for everyone else here, but I still enjoy going to games when I can. I can afford it less and less, though, since most of the new stadiums (baseball in particular) are designed to have fewer, more expensive seats.
They sure do have nice cupholders, though. I guess it's hard to put a price on that.
Posted by Neil on February 12, 2008 03:08 PM
Of course we're sports fans here. However, I live in Oakland, and my baseball team (whom I regularly watch on TV, listen to on the radio, and went to see in person before I had kids) is threatening to move unless I and my neighbors pay for a new stadium. My kids need a scholastic education more than an education on why bunting is usually a waste of an out.
Taxpayers still have the option to go to a game; I think the point here is that paying for a sports franchise should be optional for taxpayers (e.g. buy a ticket), not a use of every taxpayer's money (e.g. city builds a stadium).
Posted by Coker on February 12, 2008 03:57 PM
Baseball is a great game, but it has been co-opted by greed. My Yankee tickets went from $18 to $30. According to my calculations, a free mallpark for the Yankees should enable them to *decrease* the cost of tickets. This is kind of like how we're paying for both sides in the war on "terror."
So, no, I guess don't enjoy going as much.
Posted by me on February 12, 2008 04:07 PM
Blueseat tickets at MSG have gone from $25 plus $5 Ticketmaster charges 8 years ago to $40 plus $10 Ticketmaster charges.
It now costs me $50 to sit in the blueseats for a Rangers game.
Posted by Mark from NYC on February 12, 2008 09:50 PM
We have had a situation develop over the years in which professional sports operations have become dependent upon public subsidies. The true magnitude of these subsidies has been largely hidden but have continues to increase. We now have working class taxpayers subsidizing multi-millionaire sports players and billionaire owners.
Posted by Ed on February 13, 2008 07:58 AM
Take heart, sports fans, not all parts of new stadia need to be new and shiny... recycling extends to to ~1 billion USD mallparks:
http://sports.espn.go.com/mlb/news/story?id=3243595
Posted by Jonathan on February 13, 2008 11:18 AM
If you read the fine print of that ESPN piece, though, it says that the Mets may not bring the original apple with them, but may just build a new one.
What do you want to bet the new one looks like this: http://upload.wikimedia.org/wikipedia/en/a/ab/Apple-logo.png
Posted by Neil on February 13, 2008 12:57 PM