pageok
pageok
pageok
Government Subsidies for the New Yankee Stadium:

Tonight's major league all star game may be the last major contest held at Yankee Stadium, a great sports icon that will be replaced by a newly constructed stadium of the same name beginning next season. Unfortunately, the new Yankee stadium was partly financed with at least $200 million in state and city government subsidies, and possibly as much as $450 million. In addition, the city has also provided the Yankees with $941 million in tax-exempt bonds, and the team is lobbying for an additional $350 million. Although the Yankees will have to pay the bond money back, it still constitutes an additional public subsidy because the money is tax-exempt and presumably comes at a lower interest rate than the Yankees would have to pay if they borrowed the same amount from private lenders.

In this 2006 post, I criticized these public subsidies for the new Yankee Stadium, as well as sports stadium subsidies in general. Studies by economists almost uniformly show that stadium subsidies create no net economic benefit for cities, but are instead a pure transfer of wealth from taxpayers to owners and players. The latter, to put it mildly, are not exactly needy. Public subsidies for stadium construction might even leave cities worse off by diverting valuable land and public funds from more productive uses.

In fairness to the Yankees, they are far from the only sports team to get government subsidies for a new stadium. However, the subsidies in this case are far greater than in any other. At a total price tag of $1.3 billion, the new Yankee Stadium will be the most expensive sports facility ever built in the United States, and the third most expensive anywhere in the world. As far as I know, no other stadium in American history has ever gotten as much public funding as this one. Moreover, the Yankees and New York City officials are lobbying to get the IRS to change its regulations to make it easier for them to get the additional $350 million in bonds they are seeking. If the IRS agrees to the change, it would facilitate further subsidization of sports stadiums across the country, not just in New York City.

In the article linked in the last paragraph, Democratic New York state legislator Richard Brodsky is quoted denouncing the Yankee Stadium bond deal as "government by Soviet-style bureaucracy." That's somewhat of an exaggeration. Nevertheless, there is every reason to oppose this kind of sports stadium socialism.

As regular VC readers know, I'm a big baseball fan. However, I also believe that baseball teams (and other professional sports teams) should pay their own way with funds earned from willing fans. Taxpayers who aren't baseball fans shouldn't be forced to subsidize the entertainment of those of us who are.

The original Yankee Stadium was built with private funds, as were virtually all the great sports stadiums of the first half of the twentieth century. Today's sports team owners are far richer than their early twentieth century counterparts. If they want to build new stadiums, they should pay for it themselves.

Hauk:

Tonight's major league all star game may be the last major contest held at Yankee Stadium

As a Red Sox fan, I hope so...
7.15.2008 4:39pm
krs:
Taxpayers who aren't baseball fans shouldn't be forced to subsidize the entertainment of those of us who are.

Baseball has already captured the federal government. See, e.g., the antitrust exemption; Flood v. Kuhn.
7.15.2008 4:41pm
Rhode Island Lawyer:
The Yankees pay a lower interest rate on their debt since the source of funds are tax-exempt bonds; however, the value of the "public subsidy" is the foreogone tax payments on the interest income paid to bondholders.
7.15.2008 4:42pm
Mark Butler (mail):
As a Mets fan, I agree with Hauk's sentiment.
7.15.2008 4:44pm
GMUSL '07 Alum (mail):
And how much more expensive than these federal subsidies were those for the Big Dig? Shoddy work that employs Kennedy cronies is expensive, you know.

"Taxpayers who aren't Massholes shouldn't be forced to subsidize the entertainment of those of us who are."

Or, to be more serious, why should those of us who don't drive in the Boston area subsidize the commute times and mental well-being of those who do?

In fact, I get a positive externality just thinking about Massholes suffering from traffic the way we suffer from their accents.
7.15.2008 4:49pm
Bald man:
Any time I hear about these kind of deals where one private entity gets certain tax benefits, I would why this is not the most basic violation of equal protection.

If the Yankees can benefit from hundreds of millions of dollars of tax exempt bonds, the U.S. Constitution says that I am entitled to equal protection from the tax laws.

It really doesn't seem complicated.
7.15.2008 4:49pm
xx:
"And how much more expensive than these federal subsidies were those for the Big Dig?"

That's an odd comparison. You really don't think government has more business paying for infrastructural improvements than for stadiums?
7.15.2008 4:56pm
byomtov (mail):
The Yankees pay a lower interest rate on their debt since the source of funds are tax-exempt bonds; however, the value of the "public subsidy" is the foreogone tax payments on the interest income paid to bondholders.

But don't the Yankee owners pay correspondingly higher taxes, because they have a smaller interest deduction? Not sure how that works out.

There is a subsidy from NYC taxpayers, depending on who is finally obligated for the debt, in that the city will pay a higher rate on future bond issues because of this.

Even though the bond issues are favorable, it's not really accurate to compare them to direct subsidies for the purpose of determining who has gotten the most public funding.

That said, I generally agree that stadiums should be mostly privately funded.
7.15.2008 4:57pm
byomtov (mail):
In fact, I get a positive externality just thinking about Massholes suffering from traffic the way we suffer from their accents.

You don't like the accent, stay home.

By the way, you might read this:

We'd like the posts to be civil, of course (no profanity, personal insults, and the like)
7.15.2008 5:03pm
wm13:
Why does Prof. Somin say that the Yankees have to pay back the bonds? That is not normally the way these stadium deals work. Generally, the bonds can only be tax-exempt if they are repaid with tax revenues, not if they are repaid with user revenues.
7.15.2008 5:08pm
Ilya Somin:
And how much more expensive than these federal subsidies were those for the Big Dig? Shoddy work that employs Kennedy cronies is expensive, you know.

I'm against federal subsidies for the Big Dig. But one bad government subsidy doesn't justify another.
7.15.2008 5:09pm
Mark Field (mail):
I just want to take the opportunity to agree with Prof. Somin on this one.
7.15.2008 5:24pm
LM (mail):
There are some things, like rescuing disaster victims and puppies, that are just too compelling to resist. I like to think massive tax subsidies for George Steinbrenner fall into that category.
7.15.2008 5:26pm
PatHMV (mail) (www):
I don't think sports stadiums should be singled out for this attention. This is what constitutes "economic development" efforts for most states and cities today... find a big employer or other industry "center," and give them financial incentives to locate in your area instead of 2 states over. The theory is that the economic development they spur will generate more tax revenue, in the long run, than is spent on the subsidies.

I once worked on a deal (for the government) whereby our state was granting awards to private businesses competing for contracts to build federal warships. In effect, my state, one of the poorest in the union, was subsidizing the construction of U.S. Navy vessels, so that they would be build here and not in one of the other 2 states where that particular company had locations. The cities and states are cannibalizing each other in this regard, to the great benefit of the private companies who are, no doubt, laughing all the way to the bank.

States and localities should compete with each other for business by establishing business-friendly regulatory conditions in general, not by awarding massive cash subsidies to specific companies and industries.
7.15.2008 5:30pm
Mitchell Freedman (mail) (www):
And to think NYC's then Mayor Wagner and City Architect Robert Moses, back in the mid-1950s, refused to let Walter O'Malley buy a new parcel of land in Brooklyn to build his own stadium for the then-Brooklyn Dodgers. And of course O'Malley refused (yes, refused!) to accept any direct public subsidy money. He wanted to simply pay fair market value for real estate to build his stadium. If I also recall correctly, he was willing to also help (not a lot) to pay for the subway system to the extent it would be passing through his proposed new stadium (Ever the businessman, O'Malley hoped his white flight fans would use the subway to go to the new stadium from the Long Island and other area suburbs).

Why did Wagner and Moses oppose selling that particular land in Brooklyn? Because, said Moses, it was government "Section 8" land, even though there were no realistic plans to use the land at the time O'Malley sought to purchase it. It is ironic, however, the LA City Council had no problem selling Section 8 land in Chavez Ravine in Los Angeles to O'Malley, which land was not being foreseeably slated for public use at that point (Chavez Ravine's land area had been condemned eight or nine years earlier and people lost their homes and property to the city in return for the City's promise to build new, modern facilities and homes for those people. Red scare politics later did in this "socialistic" plan, leaving the property owners...screwed).

Yet, O'Malley is still the Devil to many NYers who also appear to accept subsidizing millionaires' sports palaces...On the other side, those who decry the Kelo decision (I was partial to Justice Kennedy's narrow concurring opinion from a cautious judicial philosophy perspective) could perhaps comment as to whether they would have endorsed selling the section 8 property to O'Malley in either Brooklyn or LA when the land had been originally condemned and taken by the government from private landowners...
7.15.2008 6:03pm
Gordo:
The problem is that as long as a few cities are willing to be blackmailed, the rest of us are screwed. It's a race to the bottom.

Witness recently the Seattle Supersonics NBA team. When the City and State of Washington refused to pay hundreds of millions for a new basketball arena (or a major revamp of the existing Key Arena), the owner said "Adios" and took the team to Oklahoma City. Some say he was planning to do so anyway, but the blackmail attempt was certainly useful in getting the rest of the NBA owners and the disgraceful Commissioner Stern to back him.

Seattle at least has two major sports teams left (thanks to mega subsidies to build them new stadiums in past years). I can only imagine what could happen in a town with only one major sports team, as is common in the NBA (Portland, Sacramento, Salt Lake City, San Antonio) when that team threatens to bolt unless blackmail is paid.
7.15.2008 6:27pm
John (mail):
There is no municipal subsidy in the issuance of tax exempt revenue bonds, which these seem to be (i.e., the bondholders get repaid from Stadium revenue, not from the City). The "gimmick" is that the bonds use the tax exemption of the City to do this (technically, the City's industrial revenue bond agency borrows the money from the public by issuing bonds, lends it to the Stadium owner, and gets repaid from the Stadium owner in order to repay the bonds' principal and interest). The City is not on the hook for repayment, since the bondholders only get repaid from Stadium revenue. The result is that neither the City's treasury nor its credit is affected.

The argument that the City "loses" its tax revenue on bonds that a private financing would generate assumes (a) that the bondholders are all NYC residents, which is unlikely, or (b) that there would be a private financing at all, in the absence of the revenue bonds, which is also unlikely.

It's hard to see who loses here. The risks are all on the bondholders and Stadium owners; a new economic enterprise (or at least the construction of it) creates jobs--which do produce tax revenue for the City--and the Yankees get a new park. What could be better?
7.15.2008 6:52pm
stunned:
Your posts are extremely repetitive. Just the link to your 2006 post would've been plenty sufficient.
7.15.2008 6:55pm
glangston (mail):
So, essentially, the Yankees are just getting favored treatment over other entertainment venues.

I'm constantly amazed that Los Angeles has not sold out to the NFL. I guess they have a basic disagreement on who should be courted.
7.15.2008 6:58pm
dew:
Just a few years ago, Massachusetts told both the Red Sox and Patriots (Bob Kraft) "no" on every plan they had (and each had several) for the taxpayers to finance new stadium plans.

To start, both also wanted the state to acquire/give them large chunks of land in South Boston. Kraft was looking for a large parcel of (very) prime real estate on the waterfront, free of course. The Sox, slightly less ambitious, simply wanted a chunk of a parcel that was already occupied by the biggest factory in the city (Gillette, who had no interest in selling part of their factory, so eminent domain). The taxpayers "only" paying for new stadiums in their current locations was a later "fallback" position. Kraft even played a very public game of chicken, threatening to move his team to Hartford, Conn. He was told basically, don't let the door whack you on the way out.

Both eventually got some "infrastructure upgrade" agreements on surrounding roads, some of it just packaging already planned public road improvements, as face-saving for the owners.

Despite cries of financial anguish at the time, both teams seem to have done OK the last few years without any government financed stadiums.
7.15.2008 7:01pm
PatHMV (mail) (www):
John at 5:52pm.

The people who lose are all the other businesses who are not sufficiently politically favored to be allowed to use the city's credit rating and tax exemption to borrow funding. It's also the federal taxpayers who lose the taxes on the interest money that the private, wealthy, for-profit sports teams should have to pay, were they treated like other private businesses.

And speaking from experience, even if the legal obligation for repayment is limited to stadium revenue, if in fact the bonds were not to be repaid, I can assure you that the bond rating agencies would downgrade the city's credit rating. The city wouldn't be legally on the hook for repayment, but they'd have to pay a lot more interest to borrow money in the future.
7.15.2008 7:14pm
Malthus:
Why waste your time on the Yankee Stadium fiasco, when you could take an interest in the waste, mismanagement and racial discrimination represented by our national parks, forests and monuments?

In your visits to Yellowstone, Glacier, Rocky Mountain, Zion, Mesa Verde, Chaco Canyon, Great Sand Dunes, etc, you will almost NEVER see a Black, Mexican or Native American face, even in NM, where the majority of residents are of Mexican-American extraction. Indeed, the same holds true of the damn "libert bell" monument smack dad in downtown Philly. If teachers weren't forced to take their classes there, you would never see the face of a minority. Let's hope Obama does the right thing by selling off all those white country clubs from Yosemite to Williamsburg.

Disney World. which does not tax our minorities for its support attracts real minorities from all over the world!
7.15.2008 7:21pm
Benjamin Davis (mail):
PatHMV - thanks for reminding us that there is no free lunch and showing how that operates in this setting.

Malthus - Please don't pave Yellowstone and turn it into a parking lot (hattip to Joni Mitchell). I had the chance to go just north of there for the first time this past year (51 years of age) and do some flyfishing for the first time. What a wonderful experience! Horseback riding - had the saddle go around and fell off on the ground. The horse definitely was snickering at me. But I lived out all my western fantasies from way too many westerns - Open Range, The Good the Bad and the Ugly, and on and on.

As a city kid, flyfishing was just not on my radar screen. Give us time malthus, we'll get out there and love it every bit as much as everyone else who has gone before. Just don't look for me rock climbing or trying to commune with the bears like some crazies.

True bear story from one of my friends on the flyfishing trip. A couple of years back he finished up fishing around 7h00 pm and was walking back to the ranchhouse - about a mile walk straight while the Slough Creek bends in a loop to the left. As he kept down the path he heard a snort etc noises down by the creek and saw a Grizzly/Black bear mother (my memory gets fuzzy on the type of bear) down there with her cub. My friend kept walking along the path and ma stood up, smelled the air, and then started walking up towards the path. My friend kept walking along. The bear caught up to him on the path and was about 10 or 15 feet behind him. At this point, my friend decided walking on was not really working. So he turns around and waves his fishing rod and gear and makes noise at the bear. Ma looks at him, looks at the cub down by the creek, looks at him, and looks at the cub a few times. In his waving, my friend accidentally pokes ma in the nose with the end of his fishing rod! The bear does the back and forth a couple of more times, and then, turns and heads back down to the creek to be with the cub.

So the friend gets back to the lodge and someone says he was late for dinner. He replies, "Heck, I was almost dinner!" (Ok there might be a little embellishment on this last part but you get the story).

Last one from that trip, Sandra Day O'Connor was on that trip. She is a hell of a flyfisherperson and a very nice lady. You better believe I was surprised when I turned the corner in the first meeting room and she was there. Got to do a presentation on commercial arbitration for her at dinner which was quite a treat.

So keep Yellowstone alive and the BearTooth Highway and all that stuff out there. It is way too cool and the common heritage of Americans and humankind.

Best,
Ben
7.15.2008 7:39pm
ObeliskToucher:
Studies by economists almost uniformly show that stadium subsidies create no net economic benefit for cities, but are instead a pure transfer of wealth from taxpayers to owners and players. The latter, to put it mildly, are not exactly needy. Public subsidies for stadium construction might even leave cities worse off by diverting valuable land and public funds from more productive uses.

Did those economists attempt to quantify the intangible benefits of having professional sports teams in a city? Or the (possibly tangible) negative consequences of losing a team? I'd guess that they didn't...

After the Houston Oilers announced that they'd be moving to Nashville (Nov 1995), it took less than two years (September 1997) to set up the Houston Sports Authority with the task of creating a set of new sports venues for our pro sports teams. The approval process included a city-wide referendum, a revision to state law to authorize it, and votes by the City Council and Harris County Court to create the authorized entity. We now have Minute Maid Park, Toyota Center, and Reliant Stadium to enjoy (not going to say anything about the current state of the DisAstros, though)...

If the citizenry of New York (state and city) want to support the building of a stadium (or continue to support politicians who do), it's their money to spend/invest as they please...
7.15.2008 7:43pm
Zed:
The state and city of New York are not the ones subsidizing the tax-exempt municipal bonds. The exemption is (mostly*) from federal income taxes, so it's Congress that is subsidizing the Yankee stadiums by not taxing the interest on that billion dollars of bonds.

As you can tell, this is a great deal for the state and city, because they are essentially indirectly forcing everyone else in the US to subsidize the Yankee stadium.
States and municipalities would love to finance all development with municipal bonds, if only they could get away with it.

* The bonds are also state- and local- tax exempt, but that is a tiny and ignorable revenue loss.
7.15.2008 7:47pm
Waldensian (mail):
I always get a kick out of the "conservative" Republicans I know who suddenly become New Dealers when the topic turns to subsidizing baseball stadiums.

I've finally given up -- I tell them go ahead, make me PAY for baseball against my will, just don't make me WATCH the damn stuff.
7.15.2008 7:47pm
LM (mail):
Malthus:

I do hope you're kidding.
7.15.2008 8:03pm
limaxray:
This is obvious bias from a Boston fan. While I don't agree with public subsidy of the new Yankee's Stadium or any private entertainment venue for that matter, this doesn't come close to the public funding of the new Nationals Stadium. The city of Washington DC straight up paid for the majority of its $611 million cost. No subsidies, no bond funny business, they just plain out paid for it. Sure, the government still owns it, but let be honest here; it's primary purpose is for use by the MLB and the Washington Nationals. It couldn't possibly be worth the upkeep for any other purpose. Not that it makes the whole Yankee's Stadium issue any better, but I'm merely pointing out it's not the worst offender.

But hey, maybe they'll demolish that horrid excuse for a stadium Fenway and build you guys a modern ballpark sometime in the next century. :)
7.15.2008 8:27pm
hattio1:
Gordo,
So, what catastrophe befalls a city if it has no professional sports team? Heck, the city could probably give everyone free cable for what they pay, and everybody could get an even better view of the games. Frankly, even those economists projections I doubt cover all the true costs. I know that in Anchorage, the semi-pro hockey team has Anchorage police and Alaska State Troopers directing traffic. That right there has to save them several thousand per game.
7.15.2008 8:43pm
John (mail):
PatHMV--

I'm not sure why these "other" businesses suffer. If the city didn't do the stadium deal they would not be better off. The fact that the government favors X rather than Y may or may not be "fair," but doesn't necessarily hurt Y.

Moreover, if the new Stadium does bring in new business (hah), then other establishments would benefit.
7.15.2008 8:44pm
Smokey:
Zed is absolutely correct. Every honest taxpayer across the U.S. is paying for these federally tax exempt bonds. It's an organized racket.

When I can float tax exempt bonds for my pinocle tournament, maybe I'll see it their way.
7.15.2008 8:46pm
Bad (mail) (www):
"癌症 乳腺癌 肺癌 肺癌 胃癌 胃癌 肝癌 肝癌 食管癌 肿瘤 直肠癌 结肠癌 宫颈癌 脑瘤 甲状腺肿瘤 胆囊癌 胆管癌 前列腺癌 白血病 鼻咽癌 肾癌 恶性淋巴瘤 皮肤癌 喉癌 舌癌 胰腺癌 膀胱癌"

Oh yeah? Well, same to you, buddy.
7.15.2008 9:23pm
Bill Poser (mail) (www):
Well, if its any consolation, there is an even bigger sports scam than public funding of baseball stadiums: the Olympics.
They money is many times larger than a single stadium and the city always ends up on the hook. There's little long-term local benefit, much less than the investment.
7.15.2008 9:34pm
Charles Strouss (mail):
A few years ago, Microsoft co-founder Paul Allen was trying to get taxpayers to finance a new stadium for one of his Seattle sports teams. In a rather unusual move, he paid for a special election with his own money, seeking voter approval. He spent a bundle on advertising.

I went to a fund-raiser for the anti-stadium group. I sat across a luncheon table from Ralph Nader and Brian Derdowski (whose name probably means nothing to you, but he is a politician who has PERSONALLY done me great harm). Politics makes strange bedfellows.

Brian &Ralph and the others, with a shoestring budget, managed to defeat Paul Allen Inc. at the ballot box. Of course, the state legislature turned around and gave him everything he wanted anyway.

You know what Dr. Zoidberg says. "Sure they've got the Braves... but they've got a 3rd rate symphony!"
7.15.2008 9:35pm
Edward A. Hoffman (mail):
Los Angeles refuses to subsidize a new football stadium and isn't terribly interested in paying to upgrade the Coliseum, either. Ever since the Rams and Raiders left in the mid-'90s the city has told the NFL it's welcome to come back if it privately finances the venue, but so far nothing much has come of it. This is what happens when teams and leagues come to expect hefty public subsidies.

I wouldn't object to subsidies if they really benefited the public, but they don't. L.A. has been just fine without the NFL.

The Yankees can afford to either build a new stadium or renovate the existing one with their own money. They wouldn't get such a nice facility, but that would be because they can't afford one. It's hard to imagine them moving out of the city, but even if they left I think the money saved would justify the loss.

(Disclaimer: I'm a Red Sox fan. My analysis would be the same even if I weren't, or even if it were some other team getting such a big subsidy. I'd see things the same way even for the Red Sox, though I'd probably be less vocal about it.)
7.15.2008 9:35pm
Bill Poser (mail) (www):
ObeliskToucher,

Uh, what intangible benefits? I've read various reverential pieces about baseball, but in practice, having a stadium doesn't seem to make everybody happy and prevent crime.
7.15.2008 9:37pm
Bruce Hayden (mail) (www):
Don't follow baseball, but I do find it funny that the richest club in that sport needs public financing to pay for its new stadium. This is the club that has a payroll several times that of many of the other clubs in the two leagues. Just what baseball needs now - the Yankees with even more money to buy the best players around away from the other teams.
7.15.2008 10:01pm
ObeliskToucher:
Uh, what intangible benefits? I've read various reverential pieces about baseball, but in practice, having a stadium doesn't seem to make everybody happy and prevent crime.


Having a stadium doesn't need to make *everybody* happy or prevent *all* crime, of course, in either theory or practice. In a perfect theoretical world, all it has to do is make 50% + 1 of the people happy, and there's no additional requirement for crime reduction.

Intangible benefits include civic pride, bragging rights -- even the benefit of being able to curse the stupidity of the team owner or color of their uniforms. They are the sort of things that make sports talk radio so popular and the Super Bowl one of the highest rated television shows every year.
7.15.2008 10:17pm
David Chesler (mail) (www):
All this talk about how this is the last All Star game in the House that Ruth Built, has everyone forgotten that the current stadium was built while the City was going broke in the early 1970s, and, on-topic, IIRC, the City paid quite a bit to build Steinbrenner's stadium then.
7.15.2008 10:25pm
Edward A. Hoffman (mail):
David Chesler wrote:
All this talk about how this is the last All Star game in the House that Ruth Built, has everyone forgotten that the current stadium was built while the City was going broke in the early 1970s, and, on-topic, IIRC, the City paid quite a bit to build Steinbrenner's stadium then.
That was just a major renovation. The former stadium was changed quite a bit but was not demolished. The new project will involve building a new stadium and tearing down the old one.
7.15.2008 10:32pm
The Ace:
Do you oppose it on principle or pragmatic grounds? If the stadium was cheaper,, the state subsidy less, and economists could show that the state's investment in Yankee stadium would pay for itself in tax revenue (food, drink, neighboring pubs, souvenirs and the like), would you support the subsidy for Yankee stadium?
7.15.2008 10:43pm
PatHMV (mail) (www):
Can't speak for Ilya, Ace, but I would still oppose it, on both principle and pragmatic grounds. One, those studies are all highly speculative, frankly. But even assuming you could have solid knowledge that what you say was the case, I would oppose it. Other businesses bring in such additional tax revenue as well. For example, in the small town my parents are from, there's one massive paper mill which provides the fundamental economic input into the town. The amount of revenue which the town takes in from other businesses as a result of the mill's presence undoubtedly exceeds the amount of taxes paid by the mill. It would thus be easy to make the argument you make in order to cut the mill's taxes. But the city tax revenue would still fall in that case.

You'd have to make the further proof that the Yankees WOULD leave, and those benefits WOULD disappear in the absence of the subsidy to even justify the subsidy pragmatically.

And it would still be wrong in principle, because it involves the government choosing to favor one business or industry, because it is politically popular, over other benefits. The city is not creating a generally applicable program which says: "For every job your business creates, we'll let you borrow $1,000 via our tax-exempt bond authority." It's not available to businesses which may provide the same amount of economic benefit as the stadium, but are less popular than the stadium and the team.

That's just wrong, to me, and it distorts the market.
7.15.2008 11:07pm
Paul B:
It's interesting that out here in California, the two counties with a national reputation for ideological (but opposite) politics, Orange and San Francisco, refused to subsidize stadiums on the common grounds that this was an inappropriate use of taxpayer funds. The Los Angeles Rams, who were playing in Anaheim, picked up and moved to St. Louis, who gave them whatever they asked for, while the owners of the SF Giants were able to put together a privately funded ball park that I think is the best of all the new parks.

California in general has not been hospitable to subsidies for major league facilities. As someone pointed out earlier, Dodger Stadium was built without public funds, efforts to put together a deal for an NFL team in Los Angeles have struggled, and Sacramento recently defeated a tax increase to build a new arena for the Kings by an almost 4-1 margin.
7.15.2008 11:45pm
Tom875 (mail):
The San Francisco Giants a lot of credit for going ahead and financing their own stadium. They've definitely paid the price, as they've been unable to spend as much money on their roster because of the large mortgage payments (Also, there was wide speculation that MLB and Bud Selig punished the Giants for financing their own stadium by refusing to give San Francisco an all star game until 7 years after the new stadium was opened and was the last of the new park to host an all star game)
7.16.2008 12:29am
Larry Fafarman (mail) (www):
In the television age, we don't even need stadiums. The games can be played in a studio and broadcast.

The "skyboxes" and "luxury suites" are particularly ridiculous. They might as well be off-site. The occupants have to fight traffic to get to the games.

I don't even know why people still go to watch pro sports at stadiums and arenas. Before movies, TV, and radio, there wasn't much to do for entertainment other than to go to a ball game. I sometimes have the feeling that going to a ball game is sort of a nostalgic thing for some people.

Blll Poser said,
Well, if its any consolation, there is an even bigger sports scam than public funding of baseball stadiums: the Olympics.

They money is many times larger than a single stadium and the city always ends up on the hook. There's little long-term local benefit, much less than the investment.

That's not necessarily true -- the 1984 Los Angeles Olympics generated a surplus. The Games were paid for by corporate donations, ticket sales, etc.. And Olympic Games organizers do not have to pay big player salaries.

Edward A. Hoffman said,
I wouldn't object to subsidies if they really benefited the public, but they don't. L.A. has been just fine without the NFL.

One reason why there is no big push to bring pro football back to L.A. is that there is plenty of great college football there.
7.16.2008 5:03am
common sense (www):
As far as DC goes, the Verizon center really helped to revitalize a dangerous part of town. To date, Nationals Stadium seems to be helping the area of town it was placed in, as there are numerous construction projects for high end condos and stores, as well as restoration of historic buildings that were falling apart. I'm not a big fan of subsidization (and federal money should not be involved at all) but as a means to reclaim land from urban blight, its a much more effective method than some that DC has tried in the past--see all of SW.
7.16.2008 7:47am
Joe Gator (mail):
Not to hijack the thread, but did anyone else hear Peter Gammons' senseless attack on Nancy Reagan during Josh Hamilton's HR derby performance?
7.16.2008 9:02am
T.J.:
I wonder how many of those criticizing public funding of sports stadia also oppose public funding of the arts. You couldn't drag me to the ballet, but yet I'm still helping to fund it. Sports, like the arts, are simply a benefit that the city helps to subsidize in order to benefit the populace.

While it is true that most economic studies have shown that publicly funded stadia do not generate sufficient wealth, in and of themselves, to warrant the investment, that does not speak to all of the intangible benefits that a city derives from housing a team. Even citizens that do not attend games at a stadia still may benefit from having the team in the region by watching games on TV, listening on the radio, or even just following their success through the papers.

Moreover, the distinction of being a "major league" city can have an effect, albeit probably intangible, on the number and caliber of potential employers and employees attracted to a city.

Too many of the critics here are mixing their hatred of all things athletic in with funding of stadia. Just because some find baseball or sports to be boring, and choose not to attend them, does not mean that the same is true for the vast majority of the populace. Of course, most commenters here are too caught up in basking in their own perceived brillance to recognize this.
7.16.2008 10:01am
Uh_Clem (mail):
Of all the things that might be considered for public subsidization, major league professional sports has to rank just about dead last on the list.
7.16.2008 10:17am
Uh_Clem (mail):
T.J.,

One major difference between sports and the arts is that ballerinas and cellists aren't being paid $60,000,000.

There's plenty of money for professional sports to pay it's own way. The reason they don't is because there's a willing sucker who'll do it for them.
7.16.2008 10:23am
T.J.:
Uh_Clem,

If the public doesn't value the arts enough for it to be economically self-sufficient, then it seems to be that the policy justification for public financing is even lower than that for professional sports, which are clearly highly popular with the citizenry.
7.16.2008 10:28am
Joe Gator (mail):
That's because people (by and large) like sports, they don't like the ballet.
7.16.2008 10:28am
A.S.:
I criticized Prof. Somin's 2006 post, and I'll repeat the criticsm here: the subsidization of baseball fans' entertainment preferences is no different than the subsidization of the entertainment preferences of any other New Yorker. The government subsidizes many, many entertainment preferences. Some people like to go to the beach, some like to go to museums, some like to go to concerts, and some like to go to baseball games. The government subsidizes all of those activities. To single out the subsidization of baseball seems extremely narrow-minded.

And the argument that the subsidization involves a private business (the Yankees) also doesn't hold water. Many types of subsidization of entertainment preferences involve private business. New York City subsidizes Coney Island beaches - thereby subsidizing every business that operates along the boardwalk. Why single out the subsidy for the Yankees business but not Nathans Hot Dogs for their subsidy? The federal government subsidizes the Statute of Liberty, thereby subsidizing the Circle Line. Why single out the Yankess business but not Circle Line for their subsidy?

Prof Somin presents no argument as to why he prefers to subsidize some entertainment preferences and not others (indeed, he doesn't even acknowledge whether he supports subsidizing other entertainment preferences, like parks and beaches). It's a democracy, so everyone is entitled a say in what subsidies they support, including Prof. Somin. But a more thoughtful post would explain why subsidizing other entertainment preferences is better than subsidizing baseball fans' entertainment preference (or would explain why Prof. Somin is singling out the Yankees).

I'm a Mets fan (and Yankees hater), so I have no reason to defend the Yankees (although the post could have been about Citi Field just as easily, I'm sure). But I don't find the post persuasive in the least.
7.16.2008 10:30am
J. F. Thomas (mail):
If the public doesn't value the arts enough for it to be economically self-sufficient, then it seems to be that the policy justification for public financing is even lower than that for professional sports, which are clearly highly popular with the citizenry.

But if the sports teams are claiming poverty (i.e., they can make ends meet without massive subsidies from the government), then how does the public funding of the arts (which is much less than the hundreds of millions of dollars cities and states spend on sports) prove that it is less economically viable? If anything, the arts (museums, fine arts programs, ballets, symphonies) are more economically viable because they take less money from the public coffers. Also, they have higher attendance figures than sporting events (e.g., museums are open every day of the year and orchestras perform more often than sports teams have home games. So the contention that they are less popular with the public is dubious at best.
7.16.2008 11:13am
T.J.:
If the arts were more popular with the public than professional sports, then one would reasonably expect to see private businesses operating in a multi-billion industry. While there are certainly some privately-run museums or ballet troops, in my experience the majority of the arts are publicly financed. Thus, it is logical to conclude that in most communities the demand for ballet does not justify the cost for private investors.

I'd also be curious to see any data showing individual orchestras or ballet troops drawing higher attendance figures than an average MLB team. Museums may, but they are also largely free (or any entrance cost is minimal). I'm highly skeptical museums would draw well charging $40/person.
7.16.2008 11:27am
J. F. Thomas (mail):
If the arts were more popular with the public than professional sports, then one would reasonably expect to see private businesses operating in a multi-billion industry.

Well of course the arts are a multi-billion dollar industry--ever heard of Sotheby's or seen what a Picasso or Van Gogh goes for nowadays? And have you looked into what a ticket to the Met or a Broadway play costs (well over $100)?

You obviously don't go to museums much, but I was at the American Museum of Natural History in New York a couple weeks ago and admission was over $20--it was packed. The major museums in Chicago (the Field, the Art Institute, The Shedd Aquarium) are in the $15--20 range. The Metropolitan Museum of Art in New York attracts 4.5 million visitors a year.
7.16.2008 11:43am
T.J.:
Well of course the arts are a multi-billion dollar industry—ever heard of Sotheby's or seen what a Picasso or Van Gogh goes for nowadays? And have you looked into what a ticket to the Met or a Broadway play costs (well over $100)?

I should have said "publicly-funded arts."

The Metropolitan Museum of Art in New York attracts 4.5 million visitors a year.

And the Yankees drew 4.2 million in 81 days last year (not including the playoffs), compared to 362 days for the Metropolitican Museum of Art. Moreover, the average ticket price for the the Yankees is 50% higher than the Museum's highest priced ticket.

And that doesn't take into account the tens of millions of eyeballs that sat at home watching a Yankees game on YES. The Yankees' 4.6 average TV rating in 2007 equates to well over 4.1 million households watching per game.
7.16.2008 12:00pm
MartyA:
Politicians generously fund local sports projects that benefit the private owners of professional sport franchises and NOT local arts facilities because the arts facilities don't have private luxury suites where the politicians can be wined and dined and whatever, in private.
7.16.2008 1:08pm
J. F. Thomas (mail):
I should have said "publicly-funded arts."

The statement of yours I was responding to was

If the arts were more popular with the public than professional sports, then one would reasonably expect to see private businesses operating in a multi-billion industry.


if you qualified that statement with "publicly-funded arts" it would have been nonsensical.

My point is that the Yankees, by abandoning their privately owned stadium for a publicly funded one are now just another of the wide variety of publicly-funded entertainment choices New Yorkers have. If they were economically viable, they wouldn't need to feed at the public trough. The fact that they need to go hat in hand to the city, state and federal government to fund their new stadium should shock the conscience of good libertarians and capitalists anywhere.

You are claiming with dubious statistics that sports are more popular than the arts. Yet, as I have demonstrated and you admit, the Yankees draw about the same number of people out of their homes as MOMA. I would daresay that MOMA draws more people from out of town than the Yankees. Also, MOMA is only one of many world-class museums and cultural attractions in New York. New York also hosts two first rate ballet companies, a symphony, an opera and a couple publicly funded theater troops (all of whom share Lincoln Center). They all play to sold-out houses 8 times a week during their seasons. I doubt their subsidies even approach the hundreds of millions the government is throwing at the Yankees and the Mets (and I am sure the Jets and Giants will come begging soon).

Your reverse elitism--let the arts patrons pay for their own crappy museums while George Steinbrenner gets hundreds of millions so he can pay A-Rod hundreds of millions--is touching.
7.16.2008 1:08pm
T.J.:
It wouldn't have been non-sensical. Clearly the point was "[i]f the traditionally publicly-funded arts were more popular with the public than professional sports, then one would reasonably expect to see private businesses operating in a multi-billion industry." Yet, the last I checked, professional ballet hasn't exactly taken the world by storm.

My point is that the Yankees, by abandoning their privately owned stadium for a publicly funded one are now just another of the wide variety of publicly-funded entertainment choices New Yorkers have. If they were economically viable, they wouldn't need to feed at the public trough.

I've never argued that the Yankees need public financing. Indeed, they likely could have built the stadium on their own if necessary. The question is whether the public should nevertheless fund it. My argument is that as long as the public is going to be funding beaches, orchestras, ballet performances, and museums, then there isn't anything inherently objectionable to also funding sports facilities.

You are claiming with dubious statistics that sports are more popular than the arts. Yet, as I have demonstrated and you admit, the Yankees draw about the same number of people out of their homes as MOMA. I would daresay that MOMA draws more people from out of town than the Yankees.

Perhaps, perhaps not; unfortunately, much like the rest of your posts this is nothing but conjecture on your part. Regardless, who cares? My argument is that publicly-funded stadia benefit the taxpayers of the municipality by virtue of giving them greater entertainment options. In terms of pure utility for the citizenry, devoting tax funds to museums disproportionately drawing more out of towners than city residents would be a poor policy decision.

Your reverse elitism--let the arts patrons pay for their own crappy museums while George Steinbrenner gets hundreds of millions so he can pay A-Rod hundreds of millions--is touching.

Again, you clearly misunderstand my argument. I've never said the arts should be left to their own fund-raising. I'm simply noting that consistency dictates that those who bemoan publicly-funded stadia should also oppose public-funding of the arts.
7.16.2008 1:28pm
T.J.:
Yet, as I have demonstrated and you admit, the Yankees draw about the same number of people out of their homes as MOMA.

You conveniently gloss over the fact that MOMA draws its attendance over the course of 362 days, while the Yankees do so in 81. If you look at average attendance by day of operation, the Yankees draw 4 times as many people as MOMA, despite charges over 50% more per ticket. Plus, as I've noted, the average Yankees game is also watched in over 4.1 million households in the NYC market.

While you note that MOMA is only one of many cultural opportunities in NYC, the Yankees are only one of many athletic opportunities. The Mets, Giants, Jets, Knicks, Nets, Devils, Islanders, and Rangers all also draw significant attendance figures and television ratings.

If you seriously contend that the fine arts have a significantly greater following in this country than professional athletics, you really need to get out more often.
7.16.2008 1:46pm
hattio1:
I'm just going to note that you can't compare "the arts" as a traditionally public funded entity to sports generally. Yes, millions of people see Yankees every year....and Millions of people go to see Britney or Nickelback. It's true that ballet generally gets some type of public funding (though much less than you seem to assume, it's mostly funded by donations by private entities). But, ballet is not the baseball of the arts world. Nickelback is. And Nickelback doesn't need any public funding. Baseball does, and so does LaCrosse, or curling, or fencing...which are the ballets and operas of the sports world.
7.16.2008 2:13pm
T.J.:
Nickelback certainly takes advantage of publicly-funded stadia and concert venues. I suspect they've even played a show in a publicly-funded baseball stadium.
7.16.2008 2:17pm
hattio1:
TJ,
The post was focused on economic feasibility and ability to generate income of various public subsidies. Given that, it doesn't matter if "fine arts" is less popular, just whether it's more economically feasible. And it is. A top notch cellist would love to work for $250,000 a year. That's the minimum yearly salary for the NFL (I think baseball is lower, but you get the drift). As to ability to generate income, the fact that the fine arts draw out of towners to New York to spend money cuts in favor of fine arts. True, if you assume that the government should be publicly funding entertainment, then what NYer's want more matters. But if you assume that the government is funding entertainment in the hopes that it will draw in more revenue, funding should focus on what will draw the out of town dollar.
7.16.2008 2:20pm
T.J.:
The post was focused on economic feasibility and ability to generate income of various public subsidies. Given that, it doesn't matter if "fine arts" is less popular, just whether it's more economically feasible.

There are an infinite number of activities that aren't economically feasible in the private sector. That, in and of itself, is no basis for government funding. Rather, the government funding is tied to some beneficial effect for the public.
7.16.2008 2:26pm
hattio1:
TJ,
You think playing in the football stadium is free? It's an economic benefit to the city. Hell, things like concerts are the economic benefits that the sports teams like to herald as helping the public stadium pay for itself.
7.16.2008 2:27pm
hattio1:
TJ,
You think drawing out of towners to NY to eat food, rent hotels, and go to shows does not provide a beneficial effect for the public??? Or are you just arguing for the sake of arguing at this point?
7.16.2008 2:29pm
T.J.:
I have no idea which posts of mine you are referring to, hattio1. I'll respond to your two most recent posts, though.

First, I don't think playing in the football stadium is free for Nickelback. Nor is it free for the Giants, Jets, or Rams. All (or almost all) teams pay a rent. The point, though, is that Nickelback makes most of its money through touring, but yet would be unable to do so without the benefit of renting out publicly-funded stadia and concert venues. The same is true of the professional sports team.

Second, I do think that drawing out of towners to NYC has an economic benefit for the city. Sports teams do this as well, of course. Any speculation as to whether the "arts" or sports generate more tourism is purely speculation (and that's all J. F. Thomas has offered to date). I suspect that in some cities, perhaps NYC, the arts draw more visitors. In other cities, sports do.

Regardless, I agree that this debate has strayed way off point. My only point in bringing up the arts initially is that public-funding of sports is highly analogous to public funding of other entertainment options. One can argue whether sports or the arts is more popular, and which draws more tourist revenue for a city, but at the end of the day the differences are likely minimal.
7.16.2008 3:44pm
PatHMV (mail) (www):
hattio... a great many things would draw out of towners to NY to eat food, rent hotels, and go to shows. Why doesn't NY pay for all the broadway show theaters? Heck, lots of people go to NY because of all the restaurants there, and the fashion shows and stuff. Why not subsidize them, too?

What's galling about this form of "economic development" is that the government is not establishing any kind of objective criteria for providing tax relief or subsidies (like "create X direct jobs and Y indirect jobs, and you get Z dollars in tax relief). Small businesses, who collectively make all that tourism possible, and without which the city economy would grind to a halt, can't get tax-free financing or other subsidies like the politically popular Yankees do.

If the economic benefits justify the tax relief and special treatment, then that relief and special treatment should be made to ALL businesses which provide such economic benefits, not just those that are powerful and influential, and can afford to hire a multitude of lobbyists and PR flacks to get the politicians to award them special favor.
7.16.2008 3:48pm
hattio1:
PatHMV,
You are preaching to the choir, brother. I was just making the point for TJ that the "fine arts" which he believes receive similar subsidies (which I doubt, but was accepting for the point of argument) are 1) not really equivalent because "fine arts" are to the entire arts scene as fencing or lacrosse is to the entire sports scene and 2) that "fine arts" draws in folks from out of town rather than folks from in town makes economic subsidies MORE rather than LESS defensible from an economic perpsective.


As to point 1, the fact that the most popular sports are asking for the biggest handouts, while fencing and lacrosse (as adult sports, not college or high school) are largely paid by the athletes themselves, makes it seem like sports are a less economically feasible entertainment (as currently configured) than arts generally.

On the other hand, sports generally (and especially adult participation sports like fencing and lacrosse) promote other good things like health of the population.
7.16.2008 4:33pm
Letalis Maximus, Esq. (mail):
Malthus:

Bull. Crap.

Three years ago when I camped at Jacob Lake in the Kaibab National Forest just north of the Grand Canyon National Park, I saw lots of Native Americans who had come to the Forest to camp and cut lodge and tipi polls.

I want Ted Turner and Donal Trump their ilk to own Yellowstone and the Grand Canyon? Yeah, about like I want an ice water enema.
7.16.2008 4:53pm
PatHMV (mail) (www):
Sorry about that, hattio!
7.16.2008 5:07pm
Shameless plugger:
If states and cities are going to spend mega-$$$$ pursuing the "intangible benefits" of having pro sports teams, maybe they should stop building stadiums and start buying teams.
7.16.2008 5:49pm
Larry Fafarman (mail) (www):
What is wrong with the old Yankee Stadium? Why do the Yankees need a new stadium?

hattio1 said,
A top notch cellist would love to work for $250,000 a year. That's the minimum yearly salary for the NFL

But a cellist can keep performing into old age whereas pro football careers are short -- as I remember, the average pro football career is only four years because of injuries. I do agree, though, that a lot of pro athletes' salaries are out of bounds.
7.16.2008 8:18pm