Friday, October 18, 2013

If You Foot the Bill, We Will Pocket the Profits

Trey Smith

Like many Americans, I grew up loving sports. As a youth, I played baseball, basketball, soccer, hockey and, of course, football. I wasn't very adept at any of these sports, but I still dreamed of hitting the big home run or catching the winning touchdown pass. These days I watch ESPN almost every day to catch up on the scores, highlights and background stories, though I rarely watch games from start to finish. I am still a sports nut, but the realization of the typically unfair economic arrangements between privately-held teams and taxpayers has soured my love for most professional sports.

Writing in The Atlantic, Gregg Easterbrook tells why people like me aren't half as enthused as we use to be.
Last year was a busy one for public giveaways to the National Football League. In Virginia, Republican Governor Bob McDonnell, who styles himself as a budget-slashing conservative crusader, took $4 million from taxpayers’ pockets and handed the money to the Washington Redskins, for the team to upgrade a workout facility. Hoping to avoid scrutiny, McDonnell approved the gift while the state legislature was out of session. The Redskins’ owner, Dan Snyder, has a net worth estimated by Forbes at $1 billion. But even billionaires like to receive expensive gifts.

Taxpayers in Hamilton County, Ohio, which includes Cincinnati, were hit with a bill for $26 million in debt service for the stadiums where the NFL’s Bengals and Major League Baseball’s Reds play, plus another $7 million to cover the direct operating costs for the Bengals’ field. Pro-sports subsidies exceeded the $23.6 million that the county cut from health-and-human-services spending in the current two-year budget (and represent a sizable chunk of the $119 million cut from Hamilton County schools). Press materials distributed by the Bengals declare that the team gives back about $1 million annually to Ohio community groups. Sound generous? That’s about 4 percent of the public subsidy the Bengals receive annually from Ohio taxpayers.

In Minnesota, the Vikings wanted a new stadium, and were vaguely threatening to decamp to another state if they didn’t get it. The Minnesota legislature, facing a $1.1 billion budget deficit, extracted $506 million from taxpayers as a gift to the team, covering roughly half the cost of the new facility. Some legislators argued that the Vikings should reveal their finances: privately held, the team is not required to disclose operating data, despite the public subsidies it receives. In the end, the Minnesota legislature folded, giving away public money without the Vikings’ disclosing information in return. The team’s principal owner, Zygmunt Wilf, had a 2011 net worth estimated at $322 million; with the new stadium deal, the Vikings’ value rose about $200 million, by Forbes’s estimate, further enriching Wilf and his family. They will make a token annual payment of $13 million to use the stadium, keeping the lion’s share of all NFL ticket, concession, parking, and, most important, television revenues.

After approving the $506 million handout, Minnesota Governor Mark Dayton said, “I’m not one to defend the economics of professional sports … Any deal you make in that world doesn’t make sense from the way the rest of us look at it.” Even by the standards of political pandering, Dayton’s irresponsibility was breathtaking.

In California, the City of Santa Clara broke ground on a $1.3 billion stadium for the 49ers. Officially, the deal includes $116 million in public funding, with private capital making up the rest. At least, that’s the way the deal was announced. A new government entity, the Santa Clara Stadium Authority, is borrowing $950 million, largely from a consortium led by Goldman Sachs, to provide the majority of the “private” financing. Who are the board members of the Santa Clara Stadium Authority? The members of the Santa Clara City Council. In effect, the city of Santa Clara is providing most of the “private” funding. Should something go wrong, taxpayers will likely take the hit.
I am only sharing a small portion of his article. He offers plenty of other examples of this same scheme at work. In community after community, taxpayers are forced to bear many of the costs WITHOUT benefiting from most or any of the profits! Conservatives like to decry the evils of socialism, but seem to have no problem whatsoever with this form of inverted socialism! The many take on the risks and the few reap the rewards.

What is most galling about this blueprint is highlighted in the second paragraph above. The Ohio county mentioned cut money from the budget of health-and-human-services and gave it to professional sports teams!! That is absolutely i-n-s-a-n-e! Talk about screwed up priorities!!!

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