sports ownership

[Triple-S]

Was thinking this would be a good topic to start here. With this city having to deal with lousy owners (Lerner, Dolan), Stadium deals going awry and superstar athletes leaving town and forcing us to rebuild, there really is in a way, something really fundamentally wrong in how pro sports is handled.

On X's and O's with Jerod and LeCharles they had an interesting guest going by the name Dave Zirin, and he made a couple of good points in how screwed up the whole process of having a pro sports franchise. It does seem to be pretty much a one way street, in that the city is asked to pay X-amount of money towards building the stadium/arena and never really sees any money coming back to them.

I was curious, what is everyone's opinion on this board of how a pro sports franchise in a perfect world should be set up in a city like Cleveland?

[davemanddd]

what people fail to realize is that a pro sports franchise also brings in all kinds of ancillary businesses as well like restaurants, bars, clothing shops, etc. and all of those business all employ people who will all pay income taxes and spend money in the cities in which they are located. it's called "trickle-down economics". why do you think the city of baltimore and the state of maryland gave fart mohell such the red carpet treatment like they did in 1995??? they're a cash cow, plain and simple and like it or not, money rules the world.

[Spin]

Personally, after my taxes have gone to stadiums and arenas, I think it's time for Cleveland to address MY favorite sport.

Bring back the Cleveland Grand Prix.

It always drew 6 figure crowds, from all over the hemisphere. It was the best race on the schedule. Open wheel racing is rebuilding from it's civil war, it's time for CLE+ to step up and promote it again.

I haven't seen fit to pay for Browns or Indians tickets for the past way too many years. Now the Cavs are in the same boat with me. Looking at the crowds, I'd say I'm not alone.

Let's use our dollars to do something entertaining. Something that shines a positive light on the area. Brings corporations to town. Makes more sense than building more minor league ballparks (and major league ball parks for minor league teams). Or selling NEOhio to NEOhio...

[aoxo1]

what people fail to realize is that a pro sports franchise also brings in all kinds of ancillary businesses as well like restaurants, bars, clothing shops, etc. and all of those business all employ people who will all pay income taxes and spend money in the cities in which they are located. it's called "trickle-down economics". why do you think the city of baltimore and the state of maryland gave fart mohell such the red carpet treatment like they did in 1995??? they're a cash cow, plain and simple and like it or not, money rules the world.

Actually, no. That's all horseshit peddled by owners and leagues to get cities to cough up cash for stadiums. These things are net drains on the cities that build them, financially.

Now, there is certainly a case to be made that having pro sports provides other benefits to a city. But the financial case is bullshit.

[jfiling]

what people fail to realize is that a pro sports franchise also brings in all kinds of ancillary businesses as well like restaurants, bars, clothing shops, etc. and all of those business all employ people who will all pay income taxes and spend money in the cities in which they are located. it's called "trickle-down economics". why do you think the city of baltimore and the state of maryland gave fart mohell such the red carpet treatment like they did in 1995??? they're a cash cow, plain and simple and like it or not, money rules the world.

Actually, no. That's all horseshit peddled by owners and leagues to get cities to cough up cash for stadiums. These things are net drains on the cities that build them, financially.

Now, there is certainly a case to be made that having pro sports provides other benefits to a city. But the financial case is bullshit.

Exactly. Just about every city newspaper peddles that crap though, even though it's been proven false. An NFL team bring about as much economic benefit to a city as a world class orchestra does.

[mattvan1]

An NFL team bring about as much economic benefit to a city as a world class orchestra does.

Hey! We have of those. Don't we?

[jfiling]

An NFL team bring about as much economic benefit to a city as a world class orchestra does.

Hey! We have of those. Don't we?

I was hoping someone would get that. Nick Gillespie (former editor-in-chief of Reason Magazine and current holder of the same job at Reason TV, and an all around smart-ass and Ohio resident) says:

You want a quick indicator of urban decline in any city you visit? Ask a local what’s great about the place. If the top three answers include “a world-class symphony orchestra,” you’re smack dab in the middle of a current or future ghost town.

[jfiling]

BTW, for anyone who needs to be disabused of the notion that professional sports teams have economic value to the city in which they play, I'd recommend the Field of Schemes website ( http://www.fieldofschemes.com/ ), and eventually I'm going to read this as well:

[Orenthal]

Yeah, the 500+ million facility is paid for by the public, then just handed over to a private owner. Going to be hard to turn that investment into a profit. Sad part is these cities still fight eachother to build them...

I think we are getting closer and closer to the tipping point though...

Guess $150 million just isn't enough anymore...

[Orenthal]

Sorry about the Hank/Edgey double post, but I found this...

http://news.illinois.edu/news/04/1117stadiums.html

The only think I don't see, but I am sure was covered is a comparison to cities without sports teams. It is easy to say net drain, but what about compared to other cities without sports temas? Perhaps the rate of drain has been larger in the macro...???

[aoxo1]

Yeah, the 500+ million facility is paid for by the public, then just handed over to a private owner. Going to be hard to turn that investment into a profit. Sad part is these cities still fight eachother to build them...

I think we are getting closer and closer to the tipping point though...

Guess $150 million just isn't enough anymore...

It seems to me, and this is just an impression, that there is a trend towards teams contributing more money to new stadiums, whereas for a while it seemed that cities were basically footing the entire thing (plus seemingly giving the teams tax breaks, a share of revenue from other events, etc).

[StewieG]

I may be completely wrong on this, but I thought cities build and own the stadiums, while teams lease the stadiums from the city?

[GodHatesClevelandSport]

Great article from the NYT about the debt left behind by stadiums that are looooong gone:

http://www.nytimes.com/2010/09/08/sport ... wt=nytimes

[jb]

Great article from the NYT about the debt left behind by stadiums that are looooong gone:

http://www.nytimes.com/2010/09/08/sport ... wt=nytimes

Yeah, I found this shocking. Still paying off the Meadowlands.

Just a note that stadia investment does help micro development big time. To wit - E 4th doesn't happen w/ out Gateway, and I don't know if many are old enough to recall what a ghetto the Central Market area was. Macro? As has been stated, not so much.

[danwismar]

aoxo1 is right that the benefits are often overstated, and there are now lots of studies that say the economic impact is often minimal...especially after a few years, but it's not like there's zero economic benefit to cities that build new sports facilities. Take a look at Baltimore's as one example...and JB cites our own smaller scale examples. It's not a windfall...but it's not nothing either.

And certainly some cities do it smarter than others. I believe that CBS is city-owned. Typically there's a sweetheart lease deal with the team, at least at the beginning...but at some point, somebody has to step up for the city and strike a deal with the team that isn't so one-sided. The "kiss my ass or I'll move the franchise" gambit has to be a little outdated in this day and age, doesn't it? The lust for sports teams by cities with all kinds of other problems has to be waning a bit, I'd think.

It's another reason not to be overly excited about Gilbert's casino operation bringing in all kinds of development. Some will come, and it may or may not justify the negatives that also come along with casinos...we'll see.

[aoxo1]

No, it's less than nothing. It's negative. No one builds a stadium for 500m-1b in order for a few bars and restaurants to open up. It's a huge amount of money that then can't be spent on things that are actually important.

How would you feel if your stockbroker said, "Well, your $10,000 investment is gone, but at least it returned $100 over its lifetime. That's not nothing!"?

edit: he might add "And so what if your roof is leaking, your foundation is cracked, and your credit card is maxed out... you've got $100!!"

[Ziner]

All I will say is not building a dome (or at least retractable roof) is uber stoopid. Look at the difference the dome in Indy brings in to that town compared to what CBS brings to Cleveland. Think about this, that stadium will be 30 years old and have roughly been used 350 times and the NFL will be calling for it to be replaced.

[Triple-S]

Wasn't there rumblings back in the early 90's that the Browns and Tribe would share a domed stadium back in the day?

Original plan was for a downtown domed stadium, but local voters rejected an increase in property taxes to fund the proposal.

http://ballparks.com/baseball/index.htm

[FUDU]

Great article from the NYT about the debt left behind by stadiums that are looooong gone:

http://www.nytimes.com/2010/09/08/sport ... wt=nytimes

Yeah, I found this shocking. Still paying off the Meadowlands.

Just a note that stadia investment does help micro development big time. To wit - E 4th doesn't happen w/ out Gateway, and I don't know if many are old enough to recall what a ghetto the Central Market area was. Macro? As has been stated, not so much.

So the gist of your post is that if you are looking for an opportunity as a small business owner in a few pecific industries, then go to where the stadiums are being built...if not take a civil service test.

[danwismar]

No, it's less than nothing. It's negative. No one builds a stadium for 500m-1b in order for a few bars and restaurants to open up. It's a huge amount of money that then can't be spent on things that are actually important.

How would you feel if your stockbroker said, "Well, your $10,000 investment is gone, but at least it returned $100 over its lifetime. That's not nothing!"?

edit: he might add "And so what if your roof is leaking, your foundation is cracked, and your credit card is maxed out... you've got $100!!"

Not a terribly sound analogy...

It's not like the city "invested" (or spent or borrowed) $500 million that otherwise might have been spent building sewers or roads or schools or whatever. In the case of the Gateway complex here, it was largely done by sin taxes, enacted for this specific purpose....dollars acquired by taxing voluntary purchases of non-essentials for behaviors that society (right or wrong)has decided it wishes to discourage anyway.

Now, if you want to make the case for similar sin taxes to be used for other things...fine...try to get it past the voters, but it's not like millions of public dollars were diverted from other uses to build these sports facilities...(again, using just the local ones as my examples)

To the extent municipal or other bonds are used for financing, these don't represent investments somehow "lost" for the investors who bought them either. I'm far from an expert on the matter, but these too are assets with anticipated future returns (which are of course not guaranteed).

Regardless of how much or how little ancillary development emerges around the facilty, there's no way the stadium itself (at least in our Cleveland examples) is a 100% "net" loss, as you imply. It remains developed real property with a market value, ongoing revenue streams and supports significant employment in and around it.

You seem to suggest that if we hadn't built them, there would somehow be hundreds of millions of available public money sitting around ready to be used on worthwhile projects, and that's just not the way it is.

Or that the presence in the city of pro sports franchises (can we agree that in the absence of state-of-the-art facilities, the teams would not stay in Cleveland?) doesn't bring in millions of dollars in revenues to the city in the form of sales for hotels, restaurants, bars, plus wages and salaries and their tax revenues. Of course it does.

[jb]

Wasn't there rumblings back in the early 90's that the Browns and Tribe would share a domed stadium back in the day?

Original plan was for a downtown domed stadium, but local voters rejected an increase in property taxes to fund the proposal.

http://ballparks.com/baseball/index.htm

Yeah man, the Hexidome. George V was pushing it. A property tax was on the ballot to pay for it but failed. Don't recall Art's role in it, but I have a vague memory that the Indians and MLB were luke warm at best, hodling out for a BB only park.

[jb]

Great article from the NYT about the debt left behind by stadiums that are looooong gone:

http://www.nytimes.com/2010/09/08/sport ... wt=nytimes

Yeah, I found this shocking. Still paying off the Meadowlands.

Just a note that stadia investment does help micro development big time. To wit - E 4th doesn't happen w/ out Gateway, and I don't know if many are old enough to recall what a ghetto the Central Market area was. Macro? As has been stated, not so much.

So the gist of your post is that if you are looking for an opportunity as a small business owner in a few pecific industries, then go to where the stadiums are being built...if not take a civil service test.

No comprende. Again?

[aoxo1]

So you're of the opinion that the money raised with those sin taxes would have just evaporated into thin air? Of course you aren't; it would have been used for some other, more productive purpose. Generating economic activity. Generating tax revenue.

There would be $500m more sitting in the public's pockets, whether held privately or by the government. Now, if you think that the stadium was a better and more productive use of everyone's money than what they would have used it on, sure, ok. But I doubt you feel that way. It's a clear case of the government crowding out private economic activity.

And clearly I wasn't even speaking to the issuance of municipal bonds. Obviously those provide a real return to investors, although they obviously represent a debt the city or state has to pay back. No real difference between those and taxes, other than semantics. I also clearly did not state that it was a 100% net loss; there is indeed some "return", but when that return is dwarfed by the costs I find it completely disingenuous to say there is a small economic benefit. Studies don't just find that there is a small or nonexistent benefit, they find that these stadiums are detrimental. There is a benefit to a small group of people, but the overall picture is one of waste and loss. I don't know how you can say that it brings in millions of dollars in revenues with a straight face, without considering that these revenues are dwarfed by the costs associated with building them.

As far as "developed real property"... sure thing. You let me know when a city manages to sell one of these things or find some highly profitable use for them. But I guess the Silverdome showed how moronic that is (cost to build: $220m in 2009 dollars, sold for $583k in 2009). If the stadiums are worth anything, it's because they are build on valuable land (NYC stadiums, possibly), and in that case no sane private investor would build a stadium on them. Because it is a huge waste of valuable property.

[jb]

But I guess the Silverdome showed how moronic that is (cost to build: $220m in 2009 dollars, sold for $583k in 2009).

Couldn't someone buy Detroit for $ 583,000?

[Cerebral_DownTime]

But I guess the Silverdome showed how moronic that is (cost to build: $220m in 2009 dollars, sold for $583k in 2009).

Couldn't someone buy Detroit for $ 583,000?

Hey if we all pool our money we might be able to buy Detroit.