Sunday, January 20, 2013

Breaking Stadium Subsidy Revelations...From 2006

Great story on the Man, Economy, and Sport blog - which was actually re-posted from 2006 - about the Seattle Supersonics and arena-building:
Amazingly, the Sonics former owner, Starbucks boss Howard Schultz blamed the government for his own failure to run the Sonics profitably. Schultz and his partners claimed losses of $60 million, which Schultz blamed on a poor lease deal with the city-owned KeyArena.
Schultz has a point. It is difficult for professional sports teams to compete against one another when some franchises receive government subsidies and others don’t. Local politicians are generally eager to give such subsidies, because (1) it’s not their money, (2) the local press is supportive due to their own interest in covering teams, and (3) stadiums function as a patronage machine, dispensing jobs and other favors.
Bottom line: teams that don't receive financial subsidies from their communities have trouble keeping up financially with the teams that do. 
There's also this graf:
Government stadium subsidies have become especially popular with sports leagues because of the growing consolidation of power in the league commissioners’ offices. Sports commissioners are a strange type of chief executive. They have no equity in the businesses they run, and they often have the ability to pick their own employers by manipulating ownership sales, league expansion, and franchise relocations.
It touches upon two topics I've written about over the years:  how politicians often get out-manuvered by sports leagues; and how newspapers cheer for new stadiums.

Finally, this passage (again, remember it was written in 2006):
In 10 to 20 years, there will probably be a new cycle of demand for new taxpayer-funded stadiums. Some existing stadiums won’t even be paid off by then, but that won’t matter to the leagues and their political sponsors. Everyone will assume more debt–primarily at taxpayer expense–to prevent even a single franchise from going out of business.
Good forecasting except it didn't take 10-to-20 years; the Falcons are already leading the charge to replace their 1990s-era artifact while the Dolphins, Panthers, and others are lining up for nine-digit renovation projects.

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