Cue Peter Paul and Mary …
“Oh, when will they ever learn,
When will they ever learn?”
State and local politicians are so often bamboozled by the owners of sports franchises and by pro sports leagues that it almost ceases to be news when owners/leagues get their pockets lined with taxpayers’ cash. In a sense, these politicians are playing a perverted version of “The Greater Fool Game” – - which is the explanation given to why people buy and bid up the price of speculative stocks that have no real intrinsic value anywhere near their market capitalization. The reason speculators buy those shares is that they anticipate selling them at a higher price to a “Greater Fool” sometime in the near future.
Politicians hand over taxpayer money to billionaire team owners and to leagues to prevent other politicians in other cities from becoming “Greater Fools” and handing over their money to these owners/leagues thereby “stealing a team away” from where it is located. However, remember that for a politician only one thing matters:
Getting elected – - or preferably re-elected.
Therefore, the pols need to convince the local taxpayers that there is a good and sufficient reason to take their tax money and hand it to team owners or leagues instead of using those same dollars to do other things – - like fix the roads or improve the schools or provide unemployment benefits or maintain competent police and fire departments or …you get the idea. And so these politicos fall back onto the economic benefits that will accrue to the locality because the sports franchise is there; the idea is that somehow the presence of the sports franchise and its arena will somehow generate revenues from outside the taxpaying area that will make this investment wind up in the black. If you have not heard this argument in one of its many forms, you just have not been paying attention.
I was having a discussion of this “shell game” with a friend and he told me that it was even more perverse than stated above. With a little checking on two of the situations he mentioned, I found the following:
1. In Kansas City, the local braintrust spent between $270M and $310M on the Sprint Center. It is an arena poised to be the home of a pro basketball or pro hockey franchise. Built in 2007, it was – - and probably still is – - a state of the art facility with one omission. There is no basketball franchise or hockey team playing there. The Sprint Center was to be the “anchor” for an entertainment/retail section of town known as the Power and Light District. However, without a franchise, the arena will only host the circus, an exhibition NBA game, “So You Think You Can Dance – 2010”, Carrie Underwood and an X-Games event in the next couple of months.
Guess what? The Power and Light District is not working out and generating tons of tax revenue with those draws at the Sprint Center and now the KC braintrust is staring at a need to subsidize the entire Power and Light District enterprise to the tune of $10-20M just to keep it alive.
2. In Indianapolis, the city has a pro basketball franchise and an arena – Conseco Fieldhouse – opened in 1999. The Pacers said the arena needed upgrades if the city wanted them to sign a long term lease; the city said the team had to sign the long term lease in order to get the upgrades. So how did the final package come together?
The Pacers signed a short-term lease in which they stay in Conseco Fieldhouse and they get $10M per year from the city/state as an “operating subsidy” plus they get some money each year to spend on improvements that they want. If they want more improvements than they can get from the city/state money, then it is on the Pacers’ nickel. However, at the end of that short-term lease, the wheel of fortune will spin again…
In one case here, the city has to subsidize the arena itself and its occupants about 10 years after opening the doors; in the other case, the city has to subsidize the enterprise around the arena that was supposed to generate the revenue to pay off the bonds and the interest that comprise the cost of building the arena in the first place. That is not the way the outcomes were portrayed by the pols or by the consultants that the pols hired to give them the answer they wanted back when the funding question was up for a decision, was it?
Therefore, if the politicians in your area begin to engage in “The Greater Fool Game”, listen to what they say but do not assume that all of the projections for future economic gravy are based in fact.
“Oh, when will they ever learn,
When will they ever learn?”
Stephen Strasburg is supposed to undergo Tommy John surgery on his right elbow this week. The Washington Nationals’ announcer, Rob Dibble, belittled Strasburg for a lack of toughness when he came out of a game with pain in his forearm. Living in the DC area, I get to hear Dibble far too often doing Nats’ games; perhaps the silver lining in all of this is that the Nats’ owners will find a new color commentator at the end of this season. A random selection from the Washington homeless population would not be that much worse.
Scott Ostler had these two comments in the SF Chronicle on the Nats/Strasburg situation:
“The Nationals signed 17-year-old hitting phenom Bryce Harper, whose contract calls for him to donate one of his right-elbow ligaments to Stephen Strasburg.”
“Rob Dibble, a member of the Nationals’ radio/TV team, ridiculed Strasburg on the air for not pitching through a little discomfort. The Nasty Boy turned Nutsy Boy called Strasburg a major wussy with no heart and no team spirit. While Strasburg undergoes Tommy John surgery, Dibble will undergo Bozo the Clown surgery to have a huge comic shoe removed from his mouth.”
Finally, here is something from Dwight Perry in the Seattle Times that should make Cubs’ fans feel really good:
“Bill Gates, Warren Buffett and 38 other U.S. billionaires have pledged to give half their fortunes to charity.
“Sort of like the Cubs do with their $146 million payroll.”
But don’t get me wrong, I love sports…