Thursday, April 4, 2013

Why Subsidize a Stadium? Why Not?

Bloomberg's Jonathan Mahler in "Is Jeffrey Loria the Worst Owner in Sports?":
The economics here are pretty basic. In short, the system is rigged. Sports leagues control the supply of franchises. And their finances aren’t a matter of public record.
It is, of course, absurd that public money is being lavished on private entities without any requirement of demonstrated need. And it’s by no means just the Marlins. Carolina Panthers owner Jerry Richardson has been demanding more than $200 million to renovate his football team’s stadium, even as leaked internal documents show that the Panthers turned a $112 million profit in 2010 and 2011. Asked why his flush team shouldn’t cover the costs, Richardson answered with almost refreshing candor: NFL franchises “are so coveted, they don’t have to pay,” he said. “There are only 32.”

For that matter, the Marlins’s neighbors, the Miami Dolphins, are looking for a couple hundred million dollars in public subsidies to refurbish their privately owned stadium.   And why not? As Dolphins Chief Executive Officer Mike Dees explained: “Just because somebody is wealthy enough doesn’t mean he should invest money in a way that is unwise.”

Dees is right about one thing: Investing money in a stadium is unwise. Study after study has demonstrated that sports teams have very little economic impact on their communities. Unfortunately, too many feckless local officials either refuse to accept this truism or are afraid of being blamed for driving away the hometown team.  

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