Other news outlets are starting to pick up on what a crazy year this was for sports stadium deals: Just in the last couple of days we’ve had headlines reading “Sports stadium deals hand even more taxpayer money to billionaires” and “Public subsidies for stadiums are exploding.” The lessons that writers are taking from the eye-popping subsidy deals for the Washington Commanders and Kansas City Chiefs, though, are, uh, interesting.
Let’s start out with that first article, which ran on the nonprofit-owned Stateline news service. It noted the record-breaking numbers for the Commanders and Chiefs stadiums, then quoted sports economist Geoffrey Propheter as saying that these deals will end up doing a favor to other team owners seeking their own stadium deals, because “now teams can look at the Kansas deal and say, ‘Hey, what we’re asking for is not nearly as bad or as crazy or stupid as what Kansas is offering.’” It also quotes another stadium expert (that’d be me) as noting that in both cases, the elected officials who landed the stadium deals had been “negotiating against themselves,” since nobody else was offering the many billions of dollars that Kansas and D.C. ultimately came up with — and “the more they get away with that, the more their fellow owners are going to be emboldened to ask for the same thing.”
So far, so good: Because sports team owners often successfully employ the “all the other kids are doing it” argument, the Chiefs and Commanders deals are likely to lead to more multibillion-dollar stadium subsidy demands. But this brings us to article #2, by Tampa Bay Times columnist John Romano, which takes that conclusion to some unlikely places.
Romano is a weird one in the stadium coverage landscape: He’s been critical of Tampa Bay Rays ownership for demanding too much in stadium talks, but has also been an advocate for Rays stadium subsidies so long as they’re kept to a half billion dollars or so. Here, he takes the record-breaking stadium subsidies and runs with them, predicting that it could lead to a higher public price tag for a new Rays deal:
For the typical taxpayer on Main Street USA, the real culprit is your crazy neighbor in Kansas. Or Washington D.C. Or any number of other desperate municipalities.
We’re not talking about the actual cost of construction — which is significant and rising daily by itself — but the public funds/enticements that are being tossed around so towns can either lure or retain baseball, football, hockey and basketball teams.
The Chiefs and Commanders deals — and, for some reason, the Atlanta Braves deal with Cobb County, which Romano also throws into the mix — raise the prospect that “municipalities could recoup their initial investment with funds from property taxes on new construction, liquor taxes in new bars and restaurants, and a variety of other fees and taxes that would not otherwise exist without the project,” something Romano terms an “intriguing idea” before immediately noting that economists consider it “a load of hooey.” Still, there are “intangible” benefits from hosting a sports team, says Romano! Though “critics suggest that concept is also vastly overrated”! The answer must lie somewhere in the middle, or at least in just dumping the two arguments into a Word document and letting readers figure it out for themselves!
If Romano column is disappointingly bothsidesy when it comes to evaluating the alleged benefits of stadium deals, the headline it ran under put its finger definitively on the scale: The full hed is “Public subsidies for stadiums are exploding. Can Tampa Bay keep up?” That’s a very different question than whether “keeping up” is even worth it, and it makes it sound like the challenge here for elected officials is to find a way to meet the new stadium subsidy thresholds, regardless of whether they make any economic sense. After all, as Romano argues in his conclusion, it’s really all about what the guy next door is offering:
As history has shown, it only takes one desperate community armed with municipal bonds to completely change the landscape — and the zip code — of a baseball or football team.
Yeah, if Tampa Bay doesn’t come up with three or four or six billion dollars, the Chiefs and Commanders deals show that the Rays might … move to the next city over? Which would also be in Tampa Bay? “Cities are bidding more and more billions of dollars to secure stadium deals” is pretty obvious; “cities need to bid more and more billions of dollars to secure stadium deals” is a very different thing, especially when they’re bidding against themselves.
Is this really any different from the standard real estate/realtor strategy of getting the purchaser to bid higher on an already overvalued house?
“you bid $355,000 and aren’t the high bidder. I can’t tell you what the other offers are but I’d sure hate to see you lose this house over twenty or twenty-five thousand”.
Sure, put like that, why would you want to “lose” a house for $25k?
Except you’re not losing $25k. You are losing $380k. Never forget that.
There is a price at which any asset is a good, fair or bad deal. It is absolutely never about “getting to yes”. That is a term used by extortionists who would like you to forget about what it is costing you to ‘get to yes’ and just focus on completing the deal, no matter the consequences.
It appears that you changed the name of the Tampa Bay columnist from Romano to Moreno partway through the post.
Whoops! Thanks, fixed.
All your tax dollar are belong to us!
At a time when the mainstream media is finally beginning to talk about an AI bubble, I have to wonder why nobody wants to breach the possibility of sports franchises also being in a longer-term valuation bubble. Perhaps it’s because the tech industry has well-established itself as boom-n-bust by now, while the major financing events for sports (broadcast rights, stadium shakedowns) take place on longer time-scales.
If a baseball lockout or strike happens like some people expect, then perhaps it’ll cause a few heads to pop up about how dire this stuff looks on the financial side, especially for the less popular baseball/hockey half of the big 4. I’m not holding my breath, though.
MLB and NHL valuations might drop or stagnate. But NFL and NBA valuations can be sustained for awhile by billionaires and trillionaires from petro-oligarchies wanting to buy in, even if (for now) they use financial shell games to disguise their investment. See, for example, the financing of the $10 billion purchase of the Lakers.