Can the Brazilian protests of using tax monies for sports facilities and cutting spending for services while raising taxes and fees spill over to America?
That is a good question, but the answer is it probably “can’t happen here.” Why? Politicians view sports stadiums and arenas as a way of attracting business to their cities, and there is a certain intangible smugness knowing that your city is “big league.”
To politicians, it is a good investment as sports-venue building creates jobs. In reality, it creates poor jobs, often low wage, part-time work for a ridiculously high investment cost. For owners, it’s good, players too. For everyone else, maybe not.
For the past 63 years in the U.S., local governments have been investing money into public sports facilities that the public cannot use—stadiums and arenas for professional, college and amateur sports usage, not for the everyday ordinary citizen—to the tune of tens of billions of dollars. The trend started in Milwaukee in 1950 when city-elected officials decided to build a stadium with the hope that Milwaukee could attract a major league baseball team.
Government sports spending was nothing new in 1950. Arenas and stadiums around that country sprang up during the depression as Works Progress Administration (WPA) projects between 1935 and 1943. The National Football League (NFL), in fact, still uses one of those WPA projects: Fawcett Stadium in Canton, Ohio, for the annual Hall of Fame pre-season game. The Canton stadium cost $500,000 in 1937. That was not the only WPA project facility built that was used by “big league” teams, minor league teams and college football and basketball teams.
Doubleday Field in Cooperstown, New York, the home of the Baseball Hall of Fame, was a WPA project. Kezar Stadium, the long-time home of the San Francisco 49ers was another. The Rubber Bowl in Akron, Ohio, which hosted an NFL-high school football Thanksgiving Day double header in 1952, was funded by WPA money. The NFL’s Buffalo Bills played football in another WPA project, War Memorial Stadium back in the 1960s.
The All American Conference Buffalo Bills also played there between 1946 and 1946. The National Hockey League’s (NHL) Buffalo Sabres played in another WPA project, the city’s arena into the 1990s.
The stadiums/arenas were built as part of a program that was designed to give people jobs, leave a lasting facility for people to use for generations without giving up to 92 percent of the revenues generated in the facilities to sports owners. The WPA projects spurred economic development and put money in the pockets of the unemployed people.
Today’s stadium/arena funding schemes are not economic generators unless you find the right economist who pushes a couple of decimal points here and there and then looks for a Turkish bath.
Milwaukee politicians changed all of that in 1950, and the city was able to convince the Boston Braves’ baseball franchise owner to leave Massachusetts for little rent and a chance to get virtually every dollar spent in the park to go into the team, not back to the city.
That started the ball rolling and cities began to bid for teams by building new sports facilities and giving away a sizeable chunk of revenues. They were not worrying how to pay down the debt accumulated from the projects.
Someone in Brazil decided the American model of sports funding for facilities was the way to go, despite being a documented failure, and went after the 2014 World Cup and 2016 Summer Olympics.
Brazil landed both coveted events, and that meant a spending spree for sports stadium and facility building, and to pay for it, a reduction of services with tax and fee increases for the population.
That’s what has happened in the U.S. and it has been exported globally. Interestingly enough, no group of people has ever really had a sustained protest against sports spending. That is until now.
Brazilians are very unhappy with what government leaders have done. Now, you cannot blame any sports owners, sports league or sports organization for asking for multi-billion dollar facilities with most of the revenues going back to the owner who takes a risk by buying into sports. The blame clearly sits with politicians and their decisions.
In 2010, New York State Comptroller Thomas DiNapoli told me that there has never been a real study on the impact of government spending on sports and whether it was worth the investment.
The politicians probably don’t want to know and will rely on dubious or bogus studies done by hired hands on the positives of government sports spending. Americans love sports, even if it impacts their lives with higher taxes, less public services and the selling off of municipal assets like a public hospital.
New York City Mayor Ed Koch, who later in life promoted himself and hustled onto radio and TV as the “voice of reason,” left his beloved city with a staggering handout annually by pushing for the removal of Madison Square Garden from the city property tax roll in 1982. The then owner of the building, Gulf and Western, claimed that two of the company’s assets — the NBA’s New York Knicks and the NHL’s New York Rangers — could not compete in NBA circles with San Diego, Kansas City, Cleveland and Milwaukee for talent, and in the hockey team’s case, New York was not on equal footing with Denver, Quebec City, Hartford and Winnipeg.
Koch bought the story and was a major moving in getting New York State leaders to go along with his plan to give Gulf and Western relief. Koch could not take the chance that the Knicks would move to the abandoned market of Uniondale, New York, and the Rangers would set up shop in East Rutherford, New Jersey.
The decision has cost New York City an estimated $300 million over the decades.
The high speed rate of stadium/arena building accelerated after the 1986 federal tax code reform, which left a loophole that owners quickly seized upon. Under the right circumstances an owner could get 92 percent of the gross revenues generated in a facility with a local government taking just eight cents on every dollar to pay down stadium debt.
Stadium and arena costs were not yet in the hundreds of millions of dollars category yet.
In 1990, MLB signed a new deal with Minor League Baseball demanding that every minor league team had either a new or renovated facility by 1994 or the team would have to move. Local politicians for the most part except in a handful of cities bowed down to MLB’s request. Elmira, New York said no to improvements at Dunn Field, which was a WPA project in 1938 and lost a New York Penn League team.
Government sports spending has produced terrible results from the 2000 Sydney Olympics, 2002 World Cup, 2004 Athens Olympics and even last year’s London Olympics, which was good for a certain part of the city but didn’t benefit any other part of England.
The Brazilian demonstration may be dismissed as localized and misguided. After all, think of all the tourists that will flock to Brazil for the World Cup and Olympics. No one is talking about costs and whether Brazil can break even on the events.
The 2014 Sochi Winter Olympics original cost estimate was $10 billion. Now it is $50 billion, but the argument is to think of future tourism and how it is a worthy investment.
In the U.S., a city that has major fiscal problems is cobbling together every resource possible to build a new arena for the NBA’s Sacramento Kings. Glendale, Ariz., may be looking at tens of millions of dollars in subsidies to keep the NHL’s Phoenix Coyotes from leaving the city-owned arena.
Louisiana Governor Bobby Jindal talks a big game about being a fiscal conservative until it comes to Tom Benson, who happens to own the New Orleans NFL team, the Saints, and the New Orleans NBA franchise, the Pelicans. Jindal is continuing to hand out subsidies to Benson, which started in 2001 when Louisiana Governor Mike Foster gave Benson a long-term deal worth $186.5 million to stay in New Orleans and keep the football team in the Superdome. The Foster deal is done; Jindal has a new deal that is still putting Louisiana tax dollars outright in Benson’s pockets.
But, it doesn’t matter if it is a Republican, Jindal, or a Democrat, such as Minnesota Governor Mark Dayton. They cannot say no. There is some sort of prestige in having a big-time sports team around. Given the lack of American media attention to this form of government spending, which rarely pays off, the almost religious-like fervor for football in the U.S. and the general like of sports, it is doubtful that Americans really would ever protest like the Brazilians.
Americans just want their games no matter what the cost.
Evan Weiner can be reached at email@example.com . His e-book, “The Business and Politics of Sports, Second Edition” is available at www.bickley.comand Amazon.com and his e-books, America’s Passion: How a Coal Miner’s Game Became the NFL in the 20th Century, From Peach Baskets to Dance Halls and the Not-so-Stern NBA and the reissue of the 2005 book, The Business and Politics of Sports are available at www.smashwords.com, iTunes, nook, versent books, kobo, Sony reader and Diesel.