How to end stadium subsidies
How to end stadium subsidies
Part III of the Progressive's Guide to Stadium Development
We walked through Petco Park’s outfield gate and into a sun-baked carnival of baseball. Children shrieked in new play areas and adults sipped beer on the rebuilt viewing deck, biding time before the Padres’ first pitch against the Philadelphia Phillies. One friend was amazed. For my money—and it’s a lot of it, considering the $17 Bud Lights—Petco Park is the best modern stadium in America. Another friend lamented the $300 million from taxpayers that made the ballpark possible in the first place.
It’s an old debate, and one still happening in cities across the country. Virginia governor Glenn Youngkin tried to pry the Wizards and Capitals from Washington, D.C. with a $2 billion financing package. Voters in Kansas City recently rejected a tax for a new Royals ballpark. Nevada lawmakers pledged almost $400 million to build a ballpark in Las Vegas to attract the Sacramento (née Oakland) Athletics. The only thing preventing the A’s John Fisher from being the worst owner in American sports is the existence of Jerry Reinsdorf, who is seeking $1.7 billion in public subsidies for his pathetic Chicago White Sox.
Both can be true at the same time: professional sports and their venues are fun and great, and the subsidies they receive are dumb and bad. As we wage localized battles between the two ideas, billionaire sports owners laugh their way to their institutional investment firms. We’re fighting over the wrong thing, for stadium subsidies are enabled by America’s penchant for monopoly, which hurts us all.
Subsidies in and of themselves don’t mean anything. They just are, reflecting the society that puts them to use. We Americans subsidize fossil fuel production but also electric vehicles, freeways but also public transit, private health insurance but also public health systems. Ours is a young and wealthy country that doesn’t know what to spend its money on so we spend it on everything.
We didn't always pay for ballparks. They used to be financed and built by team owners, but Cleveland city manager William R. Hopkins changed that in the 1920s by having the city build the 80,000-seat Municipal Stadium on Lake Erie. “Hopkins’s belief that there would be public benefit to the city in constructing a major league stadium itself would unwittingly set the tone for an entire generation of future ballparks, sometimes with troubling results,” wrote Paul Goldberger in his book Ballpark: Baseball in the American City.
Municipal Stadium was a boondoggle from the start. The Guardians hated it and played there only on weekends. (They preferred their dilapidated but traditional and charming League Park during the week.) Municipal Stadium rarely sold out, and the playing conditions were as poor as the fan experience. “Cleveland, seeking to outdo every other city’s baseball park, succeeded mainly in spending enormous amounts of public money to violate almost every tradition of the urban baseball park,” Goldberger added. In other words, the city plopped an overbuilt multipurpose stadium outside of the urban core that became a drain on public resources. Sound familiar?
According to Barstool Sports, we’ve solved the problem. “Apparently America is All Done With Picking Up the Tab for New Stadiums for Billionaires, Proving We're Capable of Getting Something Right,” the website stated on May 2. The issue with that claim is it’s based on nothing, but why let facts get in the way of clickbait. In addition to the A’s stadium subsidy in Las Vegas, the following have occurred in the last couple years:
The Milwaukee Brewers received $500 million to renovate American Family Field, a subsidy they won by threatening relocation.
The Tampa Bay Rays won preliminary approval of $600 million in public funds for a new ballpark.
The Buffalo Bills coaxed $850 million out of state and local governments for a new stadium.
The Jacksonville Jaguars may rely on loans backed by Jacksonville’s public pension fund to advance a $1.4 billion stadium renovation deal.
The Tennessee Titans are getting a new stadium that will cost taxpayers $2.3 billion when all is said and done.
The total number of championships among these teams: zero.
It’s true that voters often reject stadium subsidies when they get the chance, as they did in Kansas City, and a few privately financed projects have come to fruition, highlighted by SoFi Stadium in Inglewood, California, and the Chase Center in San Francisco. But stadium construction is essentially a state-owned industry, as public financing is a prerequisite for all but the richest owners in the biggest markets. Even then, it’s not a guarantee that taxpayers will be left alone.
The New York Yankees, one of the world’s most valuable sports franchises in the country’s largest media market, received over $1 billion in subsidies to build the new Yankee Stadium. Now, minor league teams are seeking subsidies, The New York Times reported in April. We hate socialism in America, except when it benefits the rich and is obscured by complex financial arrangements.
Take housing as an example. The mortgage interest deduction (MID) cost the federal government about $70 billion annually before the 2017 Trump tax package pared back its benefits. What didn’t change is its regressive nature.
According to the Brookings Institute, 17% of the MID’s benefits went to the top 1% of households in 2018. Eighty percent of the benefits went to the top 20%. There is also a myriad of down payment assistance and first-time homeowner programs. The Federal Housing Administration, the U.S. Department of Agriculture, and the Department of Veterans Affairs offer government-backed mortgages. The more expansive MID will return in 2026 if Congress doesn’t extend the current version. (For comparison, the Department of Housing and Urban Development’s public housing budget this year is $8 billion.) Thanks to subsidies, single-family homes in America are public housing, yet we’re not running the next door neighbors out of town or rejecting them at the ballot box like we are sports team owners.
This is not to defend those owners. Blinded by his billions, David Tepper thought he could run an NFL franchise, bought the Carolina Panthers in 2018, and drove the team into the ground. They’re 31-68 during his tenure and are on their seventh head coach in that time. He has thrown drinks on fans and recently harassed staff at a Charlotte restaurant that poked fun at him. By all accounts, he is an awful human being and is the last person I’d want to give taxpayer dollars to.
But ideological purity and narrowly opposing sports stadium subsidies don’t get us very far. If one city or state doesn’t capitulate to a team’s demand for a new or renovated stadium, then the next one will. There are also many ways governments can subsidize a private business—tax increment financing, payments in lieu of taxes, bond financing, tax credits, technical assistance, and so on. Some require voter approval, some don’t. Should all subsidies go before the voters? Does improving transit or roads near a business count as a subsidy? How about the staff time for public agencies to review designs and run permits? Do we want to ban this kind of support? Or means test them?
I want to fight billionaires and end stadium subsidies as much as the next progressive, but answering these questions stadium-by-stadium and city-by-city won’t solve the structural problem. The solution lies at the national level, in the very nature of American sports.
Real Madrid is close to completing major renovations to its Santiago Bernebeu stadium. The $1.9 billion cost, paid for by a series of loans, will be borne by the club.
In London, Tottenham Hotspur opened its eponymous new stadium in 2019. The $1.5 billion price tag, covered almost entirely by the club, resulted in what’s arguably the best stadium in world football.
In 2006, Spurs’ archrival Arsenal opened Emirates Stadium, a modern monument to soccer. The all-in cost was $760 million in today’s dollars. “Unlike American teams that threaten to move until their home city ponies up hundreds of millions of taxpayer dollars to build them a new stadium, Arsenal was on the hook for all of it,” wrote Joshua Robinson and Jonathan Clegg in The Club.
What these traditional powerhouses have in common, besides receiving fewer subsidies than the Miami Marlins, is that they play in open leagues.
The possibility of relegation and the presence of multiple teams in one area serve as a deterrent to public subsidies. Why would a local government build a stadium for a team that could drop to the second division, imperiling the public’s investment? And how would that government go about deciding which club is worthy of such investment? London currently has seven teams in the Premier League and dozens across the professional levels of the English football pyramid. Their each getting subsidies is as fiscally infeasible as it is politically unrealistic. Civil war would have broken out in North London had the government paid for Spurs’ stadium after leaving Arsenal to its own devices.
Here in the States, professional sports teams are closed, allowing owners to hold legislators hostage and play cities off one another. It’s a construct pointed out in a blog post by Andrew Zimbalist, the preeminent scholar on stadium subsidies:
The success of professional teams in obtaining public subsidies for stadiums rests in part on the fact that the entry of new teams is restricted… The growth in the number of sports teams in each league has lagged considerably the growth in population and income. For example, at the beginning of the modern era in baseball, there were 16 teams. There remained only 16 teams until 1961. In the interim, the U.S. population grew 2.4 times and real GDP per capita grew approximately 2.8 times. Thus, the demand for hosting teams increased exponentially but the number of teams stayed the same. In contrast, in European soccer, where the leagues are open and market forces dictate how many teams there are in each city, it is very difficult for teams to induce the cities to compete against each other to host a team. The outcome is that, with few exceptions, new facilities or renovations of existing ones in Europe receive no or very little public financing.
The key phrase in that passage is market forces. Wealthy Americans love socialism because it protects them from competition, from having to spend their own money to be successful. It’s true Real Madrid and Tottenham incurred mountains of debt to fund their stadiums, which has led to higher costs for its fans and a corporate, globalized sheen to clubs once embedded in the working class. And since the Emirates opened, Arsenal has walked a tightrope in servicing its debt and fielding competitive teams, as Robinson and Clegg noted. The Gunners haven’t won the top flight since moving into their new home.
But that’s business. If a private company will reap the rewards of an investment, then it should also carry the risk. It should be a business decision, not a governmental one, on whether the revenues of a new stadium justify higher costs for both the club and its fans. Soccer clubs go bankrupt more often overseas, but they also rarely relocate. With clubs owning their stadiums, relocating would mean walking away from a primary revenue source, one that they wholly control and is often used to pay down long-term debt. It would be financial suicide for a team to move, to speak nothing of cultural and political considerations.
American teams are often tenants. While long lease terms are common and provide a modicum of certainty, the financial arrangements inherently favor the club because it is the public, not the team, responsible for paying off stadium debt. For all intents and purposes, teams can leave whenever they want, which is to say whenever another city is willing to subsidize them more. The cartel monopolies in American sports not only drive up costs for fans, but under the threat of relocation they also force taxpayers to foot many of the bills. All the while team values increase thanks solely to closed leagues constricting the supply of sports.
Peter Angelos bought the Baltimore Orioles in 1993 with an initial $40 million investment. Thirty years later, his family sold the club to private equity magnate David Rubenstein for $1.725 billion, marking an investment return exceeding 4,000%. What’s more, they constructed the deal so that it wouldn’t be finalized until Peter’s death, a maneuver that allowed the family to avoid capital gains taxes. They also secured $600 million of the public’s money for renovations to Camden Yards on their way out the door. Under the Angelos’ ownership, the team played to a .467 winning percentage and never won a pennant, let alone a World Series. Ownership was notoriously stingy when it came to player payroll. In effect, the Angelos family was rewarded for losing. It’s an extortionary racket that should be disincentivized, if not prohibited, for its harm to consumers.
I’m not holding my breath for this Congress to do anything, let alone ban closed leagues on antitrust grounds, so the responsibility of reform falls on the executive branch. To that end, the Federal Trade Commission has been more active under the Biden administration than it has been in decades, suing the likes of Google, Amazon, Meta, and Ring in recent years over anticompetitive business practices. It’s action that follows Europe’s lead.
Apple is changing all its charging devices to the USB-C standard, for example, not because of corporate beneficence or technological advantages, but because the European Union ordered them to. For years, Apple forced its customers to buy its proprietary chargers, filling our junk drawers with so many wires that they barely opened, then the government acted to protect consumer choice and drive down costs. What a concept.
The FTC could harness today’s anti-corporate sentiment as political cover and argue that it endeavors to take back professional sports from craven billionaires. Congress has opened countless inquiries into MLB’s antitrust exemption, but they’re political theater. No sane congressperson would meaningfully threaten the league with legislation. If their district or state has a team, then the relevant owner would help fund an opposition candidate and whip fans/constituents into a frenzy, claiming their stupid representative is driving the team out of town. If they don’t have a team back home, then the league would ensure they never get one. Action within the executive branch diffuses this political pressure point and could create momentum for a Congressional bloc to latch onto.
At the same time, it’s sort of pathetic that we’re squabbling over iPhone chargers and software applications and begging the feds to stop billionaires from taking our tax dollars. Theodore Roosevelt pulled America out of the Gilded Age in the early 20th century by using the law to break up the entire railroad industry, bring Standard Oil to heel, and reform everything from food safety to education. They were monumental advancements preceded by decades of resistance and organizing by working people.
The modern era, with its growing inequality, is often referred to as the Second Gilded Age. Underneath the surface of stark economic data is a growing labor movement, one that I think would be partial to a platform of breaking up Big Sports, thereby lowering beer and ticket prices, ending team relocation threats, and allowing cities to invest public resources in real public needs. In persisting through a half-century of stagnation, working people (i.e. ordinary sports fans) have been cranking out a bunch of singles, to use a baseball metaphor. It’s time the federal government swung for the fences.