Posted September 5, 2014
Drew Johnson - The Washington Times -
The start of a new professional football season Thursday night provided a stark reminder that taxpayers have contributed heavily to the success of the National Football League, with billions in subsidies for new stadiums and even more construction projects on the horizon.
The public funding of the stadiums has helped push the value of most NFL teams well above the billion-dollar mark, while putting little back into the hands of taxpayers, according to critics of the practice.
NFL owners and executives often come to local lawmakers promising jobs, investment and prestige to the host communities, if they’ll just pitch in for some of the costs associated with building what are now billion-dollar stadiums. Most communities oblige, putting the taxpayer on the hook. But there is little evidence those hefty public expenditures pay off.
“More than 20 years of academic research has failed to find a significant relationship between an investment in a sports stadium and significant job or income growth,” the Reason Foundation determined in a 2007 study.
Denise DeBartolo York and John York, the husband and wife owners of the San Francisco 49ers, are the latest NFL owners to have asked for public subsidies. When the 49ers play their home opener Sept. 14, they will christen their new home, Levi’s Stadium, that drew $114 million in taxpayer support.
The value of the 49ers is estimated to be about $1.6 billion, according to a recent study by Forbes. And the York’s are expected to clear $100 million in annual profits this year, even after spending the same amount to pay down their portion of the stadium’s construction, the San Jose Mercury News reported. Between the Yorks’ expenditures and the public handout, the 68,500-seat Levi’s stadium cost more than $1.2 billion.
To help fund the public’s portion, lawmakers agreed to a 2 percent tax on all hotels in the San Francisco Bay Area suburb of Santa Clara where the stadium was built.
For sacking taxpayers and improving their bottom line with public subsidies, the San Francisco 49ers win this week’s Golden Hammer, a distinction given weekly by The Washington Times for questionable taxpayer spending.
The 49ers did not respond to requests for comment.
Santa Clara officials and 49ers executives have assured taxpayers the subsidies were justified because the new stadium would generate jobs and be a boon for the local economy.
The new stadium “attracted $12 billion in private investment for projects either built, under construction or entitled in the surrounding area, including 900,000 square feet of office space at the recently completed Santa Clara Gateway office complex,” Santa Clara Mayor Jamie Matthews, told the San Francisco Chronicle in August.
However, one of the mayor’s shining examples of investment — the office complex — would’ve been built anyway, a source affiliated with the complex told the Chronicle.
Public funding of NFL stadiums never pays off for the taxpayers, according to Neil deMause, author of the book “Field of Schemes” and editor of a website of the same name.
“If there’s one thing that economists can agree on — and they don’t agree on much — it’s that any local benefits from public spending on sports stadiums is a slim fraction of what their boosters claim,” said Mr. deMause, a leading critic of public subsidies for sports stadiums.
“Without having crunched the specific numbers, I’d say Santa Clara should consider itself lucky if it comes close to recouping that $114 million — but then, Santa Clara should already consider itself lucky for only being on the hook for that amount, given that most stadium deals take a far bigger public cut.”
Indianapolis, for example, contributed $620 million toward the $720 million price tag of the Colts’ Lucas Oil Stadium — the equivalent of $1,866 per household in the Indiana capital.
The Washington Redskins, under owner Daniel Snyder, are currently contemplating building a new stadium, touching off a courtship from Maryland, Virginia and the District of Columbia and plenty of talk about possible subsidies and incentive packages.
The Redskins’ current stadium FedEx Field, was privately financed two decades ago by then-team owner Jack Kent Cooke, though the state of Maryland and Prince George’s County kicked in a reported $70 million for infrastructure improvements near the stadium site.
Other projects have been much more costly to taxpayers.
When the Tampa Bay Buccaneers built a new stadium in 1998, local and state taxpayers picked up the entire tab. Cincinnati-area residents paid for 94 percent of the Bengals’ facility, and taxpayers covered 90 percent of the expenses related to building the Baltimore Ravens’ M&T Bank Stadium.
In Dallas, when the actual costs of building the new Cowboys stadium exceeded initial estimates by more than a half-a-billion dollars, lawmakers slapped five new taxes on city residents, including a citywide half-cent sales tax increase to fund most of the cost overruns.
Pricey state-of-the-arts stadiums, usually funded with taxpayer dollars, are a crucial component of the NFL’s business model and, the NFL argues, an individual team’s competitiveness.
In 2012, NFL commissioner Roger Goodell noted that such stadiums are, “our stage. It’s part of where we present our game. It’s the biggest part. And it’s also really important to the fan experience.
“Having full stadiums is critical for us. We want to have our fans in the stadium, we want to make sure they have the best facilities, we want to make sure the teams can generate enough revenue to be successful and competitive.”
No matter how great the NFL team, the economic impact of a new stadium hardly ever lives up to expectations, economists warn.
“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,” Holy Cross Economist Victor Matheson told the Atlantic, on his theory for determining the taxpayers’ actual return on their investment in a profootball venue.
But that doesn’t seem to be deterring local lawmakers.
Atlanta Falcons owner Arthur Blank, the billionaire co-founder of The Home Depot, recently convinced the Atlanta City Council to pony up $200 million to subsidize the cost of a new stadium to replace the Georgia Dome — even though the Georgia Dome is barely two decades old and is still regarded as one of the best sports arenas in America.
In 2016, the Minnesota Vikings will open a new field financed with $500 million of taxpayers’ money.
And with new stadiums being contemplated for Washington, the San Diego Chargers and several other NFL teams, only a “zombie apocalypse” could prevent owners from not courting the public for subsidies, Mr. deMause quipped.