The Big Con: Publicly Funded NFL and NBA Sports Stadiums.

By Patrick Andendall

This was the response I got regarding the below graphic drawing attention to Wisconsin Governor Scott Walker’s priorities.

“Romney was working hard to win support from several top names including casino magnate Sheldon Adelson, New York Jets owner Woody Johnson and New York hedge fund billionaire Paul Singer, among others. But he had not locked down public support from many top GOP donors and bundlers and “clearly wasn’t going to have the kind of support that people would have thought,” said one veteran Republican donor.”

It was that name Woody Johnson that got me riled up. I have already written about how the Oligarchs in waiting are asset stripping off the backs of the American people. These billionaires, they are the moochers. Many of them pay so badly, or pollute so wantonly, or avoid taxes so brazenly – that it is the Tax payers that have to clean up after their mess. They have no interest in paying a living wage – and the rest of us have to chip in.

Those massive profits are made possible in part by the billions of taxpayer dollars that local governments spend on teams, coupled with tax breaks worth hundreds of millions for the teams, the league, their sponsors and fans.

“I’ve been studying this for 15 years, and I still can not believe cities and states are lined up begging to give money to these very profitable [teams],” said Villanova professor Rick Eckstein, an expert on stadium finance.”

“The basic idea is that sports stadiums typically aren’t a good tool for economic development,” said Victor Matheson, an economist at Holy Cross who has studied the economic impact of stadium construction for decades. When cities cite studies (often produced by parties with an interest in building the stadium) touting the impact of such projects, there is a simple rule for determining the actual return on investment, Matheson said: “Take whatever number the sports promoter says, take it and move the decimal one place to the left. Divide it by ten, and that’s a pretty good estimate of the actual economic impact.”

Others agree. While “it is inarguable that within a few blocks you’ll have an effect,” the results are questionable for metro areas as a whole, Stefan Szymanski, a sports economist at the University of Michigan, said.”

Forbes explains the only two Net Tax Payer Benefits that the tax payer gets back are 1) steering purchases toward activities with higher tax rates and 2) taxing out-of-town visitors. By following the Math, one can follow who benefits from virtually all of the Tax payers money.

“It is easily possible (and in fact quite likely) that a new stadium will produce more in related economic activity than the cost of any public financing (even if a government pays for all the costs). However, it doesn’t matter if businesses take in more money than taxpayers shelled out to build the stadium; what matters is whether the taxes collected from all that activity are more than the up-front taxpayer cost. A visitor to the Super Bowl might spend $500 on an airplane ticket, $2000 on his hotel, $300 on food, plus $500 on the ticket to the game. That sounds like a lot of economic activity for just one visitor. However, the plane ticket generates roughly zero money for local and state governments (there may be some airport taxes but they will go toward running the airport). The hotel stay probably produces $200-250 in tax revenue, the restaurant bills another $20, and the game ticket another $35. That means the over $3000 in spending really amounts to around $300 in tax revenue. Some of that tax revenue has to go toward government costs associated with the holding of sports events: extra police, traffic control, perhaps more public transit, etc. At the end of the day, only a very small fraction of total spending associated with stadium events is left over to help pay back the taxpayers for building a stadium.

Businesses near the stadium like restaurants and hotels might win from the extra local spending, but why should taxpayers pay so that a few favored businesses can see greater profits?

On to the second point. When people spend money to go to a sporting event, they cannot just pull that money out of thin air (tragic, but true). Rather, the money comes from their family budget, meaning something else has to give. If I buy tickets to an Atlanta Hawks game, the result of that spending might mean several fewer trips to the movies, not going to a local amusement park, or not going to a local restaurant or two.

Stadium boosters like to point to all the money I will spend going to, at, and associated with my trip to see the Hawks, but they never focus on the fact that other businesses are going to lose a roughly equal amount of spending that I would have done instead. All that substitute spending would also have produced tax revenue. Those taxes associated to sporting events are not all new revenues, but mostly just substitutes for taxes that would have been collected on an alternate activity.

In fact, local and state governments get new tax revenue from stadium-related events in only two ways: steering purchases toward activities with higher tax rates and taxing out-of-town visitors.”

Therefore all these tax payer subsidies end up in the pocket of the massively profitable franchises and massively wealthy owners like New York Jets owner Woody Johnson, all so he can sell absurdly expensive tickets and suites to the likes of New York hedge fund billionaire Paul Singer. (A suite at the Superbowl costs between $400,000, $1,000,000) Both these guys have been strong supporters of Romney, and we should all know what that means. 

The Atlantic reports “Taxpayers have, in stages, provided about $1 billion to build and later renovate what is now known as the Mercedes-Benz Superdome. (All monetary figures in this article have been converted to 2013 dollars.) The Saints’ owner, Tom Benson, whose net worth Forbes estimates at $1.2 billion, keeps nearly all revenue from ticket sales, concessions, parking, and broadcast rights. Taxpayers even footed the bill for the addition of leather stadium seats with cup holders.” 

Now sit down and imagine your are going to spend the next three or four hours watching an NFL Football game. Hidden behind all the noise and fanfare, all the ads and product placements, hidden behind that is the hallucination that you are there to watch a sporting event – the mirage of sport, the biggest trick of them all. During this 3-4 hour time span the NFL and it’s owners will provide you the tax payer fan with less than 11 minutes of live action. Now to put this into some type of perspective (since perspective has been long gone) the Worlds most popular sport which we have to call Soccer – has two halves of play, each with 45 minutes of uninterrupted play—for 90 minutes of action. 

Forbes Magazine Explains:
While the league office is run as a not-for-profit “trade association” promoting [the] interests of its 32 member clubs,” all but one of those clubs are privately held, for-profit companies that reveal next to nothing about their finances. 

The 31 privately held teams keep their finances shrouded in mystery.

“Beyond the normal tax concerns, profit squeezes can be used to negotiate down player costs and convince lawmakers to pay for new stadiums. Operating expenses, according to Vrooman, are where teams tend to “blow the most smoke,” when outside parties have been able to look at their books. “The non-player costs are highly irregular to say the least,” he says. “The scams range from owners employing themselves to disguising taxable return on equity as tax-sheltered interest on club debt.”

But perhaps a clue to the underlying wealth, of these tax payer mooching machines, can be found in how well the Commissioner gets paid.

At the NBA coaches meeting last month, length of games was a topic, and it was suggested the NBA consider a shorter format that would reduce the length of game as a means to reduce minutes for some players and maybe improve the flow of the game.
 
Did they really say that? You have got to be kidding.

Public college is not a “money sink” – researchers in California reckon tax payers get a 450% return on their investment. I can not speak for Red States, where Stupidparty devotee parents may have a more harmful impact on their Children’s ability to develop critical thinking skills. I also provide a specific example of what happens to ones personal growth if you can get a good education.

Regarding opposing research – be wary of any Institution with the words Freedom or Heritage or Patriot in the title as that would most likely be Koch and Co backed fake research Institutes. There is good money to be earned in being a tool for the Oligarchs. Never forget what Freedom really means to these Ayn Rand devotees:

“Freedom (n.):To ask nothing.To expect nothing.To depend on nothing.”
― Ayn Rand The Fountainhead

The Road to Fascism & the Road to  Ayn Rand’s Galt’s Kingdom—lead to the same Koch palace.