(Update: November 16 – just thought I’d mention that today is my birthday. That’s not the purpose of this update…)
[Neil deMause, whose Field of Schemes website is the go-to source for sports stadium issues, has been covering the Cobb County stadium story. A few quick points:
1) the originally reported cost to taxpayers, $475 million, was high. It appears that Cobb County taxpayers will be on the hook for closer to $300 million.
2) deMause reports, via Deadspin, that county residents will not get to vote on the proposal.
3) according to deMause’s number crunching and as is standard in such arrangements, proponents of the deal appear to be overstating the likely benefits to Cobb County. Among the sources of the inflated value of the deal are 1) implausible estimates of how much additional sales tax revenue will derive from the new stadium and the fans it draws and 2) even more implausible estimates of how much the new stadium will increase property values in the area.
There are some subjects that, once one engages with their details at all, are so infuriating that it’s hard to know what to say. Publicly financed stadiums fit that bill.
JC Bradbury, a sports economist at Kennesaw State University in Atlanta (and one-time Sabernomics blogger) says that the Cobb County deal has built in a failsafe, whereby the Braves will bear the costs of certain unexpected events – like a player’s strike – that make this a better deal than the standard fare (or, at least, addresses one issue that typically makes these arrangements worse for the locals than the initial touting of them would suggest).]
It was reported this week that Turner Field, which opened way back in 1997 before, as Will Bunch notes, there was even Twitter (!), will be demolished in 2017. The Atlanta Braves, you see, feel that they can no longer field a viable Major League team there. And when city of Atlanta said it couldn’t fork over the $200 million necessary to upgrade the stadium, the Braves went venue shopping. They struck gold. Nearby Cobb County will pony up $450 million in taxpayer money for a brand new, 42,000 seat, $672 million ballpark.
There are few things about which there is greater consensus among independent economists than this – publicly financed stadiums are a homerun for the franchise and a swing and a miss for just about everyone else. Study after study shows that the proponents of these deals exaggerate the benefits and understate the costs. These projects do not, by and large, generate new business. They merely redirect spending from some venues to others. And the arcane terms of stadium financing typically mean that the top line costs to taxpayers are only part of the story of how much the public is on the hook.
In sum, when taxpayers pony up for new stadiums the only surefire beneficiaries are the billionaire owners of the teams that play in the shiny new objects.
The aforementioned Bunch, writing at Philly.com, explains some of what is so galling about all of this:
“…the taxpayers of Cobb County are promising to pay the rest, a whopping $450 million. They’ve promised the money to the Braves even though there’s been no public hearings and no vote. I have no idea how that even works.
So this is not real capitalism at all — it’s corrupted crony capitalism. Now it seems that Cobb County is one of the 100th wealthiest counties in America, and the 12th most educated. So $450 million must be chump change — it’s not like they’re Philadelphia, slashing public school teachers in the face of massive budget cuts. Oh wait…actually they are sort of like that:
Cobb County’s school board approved a 2013-14 budget Thursday night that will result in five furlough days for all employees, the loss of 182 teachers through attrition and a slimmer central administration staff.
The cuts are the result of reduced state aid and lower property tax revenues — although apparently the lower property tax revenues that are low enough to mean fewer teachers aren’t so low that they can’t BUILD A NEW BASEBALL STADIUM! For a team that already has what you and I might, sanely, consider a pretty new baseball stadium.”
So how did the hard hitting journalists at ESPN respond to the story? Longtime baseball writer Jerry Crasnick praised the decision. And his key source of information for the pros and cons of the Braves decision? Why it was a website that the Braves themselves set up to explain the move. How helpful!
David Schoenfield, at the Sweet Spot blog was little more helpful, more or less repeating the same boilerplate, including noting that the parking at Turner field is really bad, without a hint that there is a long history of misrepresentations and broken promises associated with these deals. Or that such transactions might be especially appalling in an era when almost all incomes gains in the United States are accruing only to the very wealthiest Americans.
In the King of Sports, Gregg Easterbrook provides a litany of stadium deals and the egregious ways in which they line the pockets of rich owners at taxpayer expense. I will write more about this soon, but a couple of quick examples here:
1) Santa Clara stadium, where the 49ers are expected to begin play in 2014, will cost a billion dollars or more. According to the terms of the deal, the city of Santa Clara would “only” pay $155 million. Where is the other $850 million coming from? According to Easterbrook, “A new government entity, the Santa Clara Stadium authority, is borrowing $850 million from a consortium led by Goldman Sachs, to provide the ‘private’ financing.”
Here’s the best part – the Santa Clara Stadium authority consists of the members of the Santa Clara City Council. So, the 49ers are not on the hook for the borrowed money- Santa Clara is. In turn, the 49ers will pay rent to the city for the next forty years. When you crunch the numbers, according to Easterbrook, the team took out a 40-year loan at 2 percent, “spectacularly favorable terms that no commercial lender would dream of offering to the best client.” And virtually all football revenue will accrue to the team and specifically owner Denise DeBartolo York, whose estimated personal worth is $900 million (I guess we should take comfort in the fact that she’s not technically a billionaire, at least not yet).
2) Heinz field, home of the Steelers, cost $465 million to build. The Steelers graciously agreed to finance $100 million of that. In 2012, when the Steelers wanted to add three thousand seats, state and local entities floated a $20 million bond and agreed to raise taxes on downtown parking garages to cover the expense. As in virtually all of these arrangements, despite publicly financing, most of the revenue generated by that financing will end up in the team’s pockets.
3) As other franchises have done in recent years, Rams’ owner Stan Kroenke threatened to move the St. Louis football franchise back to Los Angeles. In response, Missouri taxpayers put up $700 million to refurbish the Edward Jones Dome. Forbes estimates Kroenke personal wealth at $4.4 billion. And how did he “earn” such a vast fortune? According to Easterbrook, “he came into his money by marrying Ann Walton, daughter of Walmart co-founder James Walton.”
Why didn’t I think of that?
One could go on and on and on and on. Sports media expend an extraordinary amount of time and energy lambasting entitled athletes and insisting that they are speaking for the fans when they direct their outrage at the privileged athletes who seem not to appreciate their great good fortune. Which, these same media typically note, they only have because of the fans.
There is no more obvious or egregious example of entitlement and corruption in sports than the publicly financed stadium boondoggle, a ripoff of the first order and an affront to common decency.
In that light, was it too much to ask Crasnick or Schoenfield, or someone at ESPN to at least humor people like me by inserting the word “subsidy” into their stories? I like both those guys as baseball writers and am only picking on them here because they actually show up on a search of the website about the Turner field story. But as Easterbrook notes, the general silence on this issue from the major sports network broadcasters is striking.
(Steve Goldman, at SB Nation, has smart commentary about the Cobb County Braves here).