The Biggest Corporate Welfare

Scott Walker — supposed conservative — has become just the latest politician to dole out a few hundred million in corporate welfare:

Last year, two New York City hedge fund owners purchased the Milwaukee Bucks, a down-at-the-heels N.B.A. team. The new owners smiled, took a victory lap around this handsome lakeside city and laid down their terms.

We’ll keep the Bucks in Milwaukee, the owners said, if the public foots half the cost of a $500 million arena. (The owners spoke of their “moral obligation” to the city and pledged $100 million toward their arena, with the remainder coming from other private funds.) N.B.A. officials acted as muscle for the owners and warned that if Wisconsin did not cough up this money within a year’s time, the league would move the team to Las Vegas or Seattle.

These opening feints were right out of the professional sports owner handbook. From start to desultory end, Milwaukee offered a case study in all that is wrong with our arena-shakedown age.

Gov. Scott Walker signed a bill Wednesday to subsidize the arena, which could cost the public twice as much as originally projected. Echoing the owners’ arguments, the governor proclaimed that the arena, a practice complex and a promised “entertainment district” would spur a renaissance for downtown Milwaukee and attract tourists. Income taxes paid by the pro athletes, the governor said, would fill local coffers.

The governor is repeating the standard mantra of stadium extortionists everywhere. It is categorical nonsense. Twenty years of economic research has shown that the economic benefits of stadiums are somewhere between non-existent and slightly negative. Sports teams mostly affect how people spend their money, not if. It is true that that taxes paid by the athletes would pay for a stadium … in a century.

The ability of extremely rich men who own extremely successful business to extract hundreds of millions in public welfare from cash-strapped cities and states is baffling. The lack of benefits of stadium building has been known for years, but sports teams, including my Braves, are still able to work this scam to perfection.

In reality, the power should flow the other way. Sports teams benefit from being in big cities way more than the big cities benefit from having sports teams. Do you think the Yankees would be making hundreds of millions of dollars if they moved to Louisville? They still got a billion dollars in subsidies for their stadium. Would the Milwaukee Bucks, sans subsidies, make more money in Vegas or Seattle than they do in Milwaukee? I doubt it. Seattle just gave up a basketball team and Las Vegas has … um … a lot more than a sports team going for it.

The most recent baseball team that moved was the Montreal Expos. That move benefited the Expos way way more than it benefited Washington. They went from an empty stadium and minimal revenue to a full stadium and overflowing coffers. Sports teams should be begging to play in the big markets, not holding them for ransom.

There are two problems that underlay the subsidies to sports. The first is plain ordinary corruption. It’s not just sports stadiums; cities invest tens of millions into “big projects” that are going “stimulate the economy” and “revitalize downtown”. When I was growing up in Atlanta, we heard those same arguments dragged out for Underground Atlanta, World of Coca Cola and the Olympics. Yet, somehow, it didn’t work. The area around the Olympic Stadium (later Turner Field) was still a dump. Sports teams have an advantage in terms of visibility and the ability to give guaranteed luxury seats to powerful politicians. But fundamentally, this shakedown goes on every day. And sports teams have become very skilled in doling out cash to local community groups and working lobbyists so that they can ride that well-greased track.

The problem that is more specific to sports teams is a basic prisoner’s dilemma. Everyone knows that cities would be better off not caving into the demands of sports teams. But the cities and states are afraid of losing their teams to other cities and states that give in. They could say “no” but it only works if everyone else does too. What you would need is for state and city governments to sign onto a compact: no city or state will subsidize a sports stadium … ever.

That won’t happen, of course, because politicians love this. Scott Walker is far, far from the only politician doling out this particular brand of corporate welfare. The political class love it because they get to claim credit for keeping a sports team in town and building a huge stadium. They love it because it sounds good to say your going to stimulate the economy, even if the stimulus never happens (see Obama, Barack). They get wined and dined by rich team owners and corporate sponsors.

It’s a win-win. The only people who lose are the taxpayers and, really, who cares what those plebs think?

Comments are closed.

  1. InsipiD

    It is true that that taxes paid by the athletes would pay for a stadium … in a century.

    During which time they will have “needed” 4.  I’m shocked today at how quickly these sports venues are replaced.  Now that Yankee Stadium has been replaced, I doubt that any of them could be considered irreplaceable.  Some of them are being replaced when I still think of them as “new (Turner Field is still less than 20).” This extortion is pointless because there are so few places to take one anyway.  Move the Bucks to Seattle?  Won’t that just be like the Sonics never left?  If the team’s history means nothing and its attachment to the city is nothing to the owners, why bribe them to stay?

    Thumb up 0

  2. Seattle Outcast

    Uggh.  The last thing Seattle needs is to dole out tax dollars for another stadium.  Politicians forced the baseball stadium on us when it was voted down (as was the Seahawks stadium), and the Mariners promptly went back to sucking so bad that the Cubs look like champs.

    The Sonics left because,quite honestly, nobody in Seattle really gave a crap about basketball (ditto baseball, soccer has more of a following), and the arena was mostly empty during games.

    At least the Seahawks ramped it up to awesome.

    Thumb up 0