Carpe Diem

Should America’s favorite sport really be one whose economic structure is based on inequality and greed?

steelersFrom Greg Easterbrook’s article in the October issue of The Atlantic, “How the NFL Fleeces Taxpayers“:

Taxpayers fund the NFL stadiums, antitrust law doesn’t apply to broadcast deals, the league enjoys nonprofit status, and Commissioner Roger Goodell makes $30 million a year. It’s time to stop the public giveaways to America’s richest sports league—and to the feudal lords who own its teams.

Here’s one example:

In Minnesota, the Vikings wanted a new stadium, and were vaguely threatening to decamp to another state if they didn’t get it. The Minnesota legislature, facing a $1.1 billion budget deficit, extracted $506 million from taxpayers as a gift to the team, covering roughly half the cost of the new facility. Some legislators argued that the Vikings should reveal their finances: privately held, the team is not required to disclose operating data, despite the public subsidies it receives. In the end, the Minnesota legislature folded, giving away public money without the Vikings’ disclosing information in return. The team’s principal owner, Zygmunt Wilf, had a 2011 net worth estimated at $322 million; with the new stadium deal, the Vikings’ value rose about $200 million, by Forbes’s estimate, further enriching Wilf and his family. They will make a token annual payment of $13 million to use the stadium, keeping the lion’s share of all NFL ticket, concession, parking, and, most important, television revenues.

After approving the $506 million handout, Minnesota Governor Mark Dayton said, “I’m not one to defend the economics of professional sports … Any deal you make in that world doesn’t make sense from the way the rest of us look at it.” Even by the standards of political pandering, Dayton’s irresponsibility was breathtaking.

Here’s more:

Judith Grant Long, a Harvard University professor of urban planning, calculates that league-wide, 70% of the capital cost of NFL stadiums has been provided by taxpayers, not NFL owners. Many cities, counties, and states also pay the stadiums’ ongoing costs, by providing power, sewer services, other infrastructure, and stadium improvements. When ongoing costs are added, Long’s research finds, the Buffalo Bills, Cincinnati Bengals, Cleveland Browns, Houston Texans, Indianapolis Colts, Jacksonville Jaguars, Kansas City Chiefs, New Orleans Saints, San Diego Chargers, St. Louis Rams, Tampa Bay Buccaneers, and Tennessee Titans have turned a profit on stadium subsidies alone—receiving more money from the public than they needed to build their facilities. Only three NFL franchises—the New England Patriots, New York Giants, and New York Jets—have paid three-quarters or more of their stadium capital costs.

And because of the NFL’s non-profit status, we all pay higher taxes:

The insertion of professional football leagues into the definition of not-for-profit organizations was a transparent sellout of public interest. This decision has saved the NFL uncounted millions in tax obligations, which means that ordinary people must pay higher taxes, public spending must decline, or the national debt must increase to make up for the shortfall. Nonprofit status applies to the NFL’s headquarters, which administers the league and its all-important television contracts. Individual teams are for-profit and presumably pay income taxes—though because all except the Green Bay Packers are privately held and do not disclose their finances, it’s impossible to be sure.

And here’s Easterbrook’s conclusion:

Until public attitudes change, those at the top of the pro-football pyramid will keep getting away with whatever they can. This is troubling not just because ordinary people are taxed so a small number of NFL owners and officers can live as modern feudal lords and ladies. It is troubling because athletics are supposed to set an example—and the example being set by the NFL is one of selfishness. Football is the king of sports. Should the favorite sport of the greatest nation really be one whose economic structure is based on inequality and greed?

22 thoughts on “Should America’s favorite sport really be one whose economic structure is based on inequality and greed?

  1. In the 1990s, Denver built three new pro stadiums, for football, baseball, and basketball/hockey, all in lower downtown. The result was a huge economic boom, which attracted affluent people from the suburbs back to downtown.

    Lower downtown was almost completely renovated, new businesses started, streets were repaved, sidewalks repaired, a light rail system was built, a new central library (where the G-8 meeting was held one year), a new convention center, etc..

    Moreover, outside of Denver, a new international airport was built.

    Although ticket prices were raised, fans, i.e. fanatics, paid the higher prices.

    • I’m not sure how DIA funding fits in with this story on publicly funded stadiums solely for the benefit of private ownership. The move from Stapelton to DIA preceded the stadium plans;it began in the early 80′s and the DIA site was acquired and annexed in the late 80′s.

      While one might argue against the specifics of how DIA is funded, it provides us access to a public good;airspace. No matter how much I enjoy watching sports at the various venues, I do not believe that gifting public funds to build stadiums, for private ownership benefit, rises the level of value received by the general public with the funding of DIA;providing access to a public good.

      • Jay S

        While one might argue against the specifics of how DIA is funded, it provides us access to a public good;airspace.

        While that argument sounds better than one for sports stadiums, it really isn’t. Some people who get very little, if any, benefit from DIA or any other airport are required to pay for it anyway through their taxes.

        There is no particular reason for airports to be publicly owned. The users – airlines and cargo carriers – are, after all, the ones served by airports, and only indirectly is the public served. Let users pay, and their customers will pay indirectly through fees charged for service.

        • ” Let users pay, and their customers will pay indirectly through fees charged for service.”

          one of the key advantages of this strategy is that you avoid boondoggles.

          if i can vote to use your money for something that benefits me, i have no incentive to be sure what i get is worth the price.

          after all, i pay zero. why would i mind spending $100k of your money to buy $10k worth of light rail?

          it is only when you spend your own money that you are properly incentivized to make sure you get your money’s worth.

          • Exactly. Which is why private enterprise will always outperform public enterprise. Incentives matter. I can’t think of any government service that wouldn’t be better provided by competitive private businesses. Yes, that includes national defense.

            I don’t accept the common argument that some public goods are under-provided by private enterprise. That assumes that someone knows what the correct level of a public good is.

  2. Problem is every analysis attacking taxpayer support for stadiums is based on the same two faulty premises – that alternatives would generate equal revenue, and that other uses of tax dollars are somehow legitimate (see the continuation of failed entitlement programs , which eat up by far the highest amount of tax dollars). The fact is pro sports generate revenue other activities can never approach.

    • Mike

      Problem is every analysis attacking taxpayer support for stadiums is based on the same two faulty premises…

      Nonsense. The only premise is that taxpayers shouldn’t be forced to finance private enterprises. If you support building a new stadium downtown, feel free to contribute your own money. Don’t force other people to pay for something against their will, that they may never use.

      • I think, most taxpayers would’ve concluded the huge amount of economic development in Denver, over a decade, was worth the $5.75 city tax taken out of paychecks.

      • ” The fact is pro sports generate revenue other activities can never approach.”

        which seem to me to be an excellent argument that they should pay for their own stadiums.

        it worked for the sf giants.

        the notion that i, who will never go, should pay to fund a stadium i will never use and aid in development and revenues that do not accrue to me is indefensible.

        these are not poor folks trying to eat, these are the richest of the rich picketing pockets through political nepotism.

        • Exactly. And those poor folks trying to eat and the small businesses that previously existed downtown have been pushed out by that “economic development”. I wonder how they feel about the “improvement”?

  3. The NFL may be non-profit at the corporate level, but not at the team level. Proceeds from those big TV contracts get funneled back to the teams, which must pay taxes on it. This is no different from other national organizations.

    Those stadiums that are ‘built for football’ are used for other purposes, and teams must rent time from the municipalities. They are not free in most cases. If an NFL team would leave a city, they would have to either do without a stadium or operate them at a loss.

    Also, NFL teams bring revenue into a city and add jobs indirectly.

  4. This will never , ever ,change . Everyone of these stadium deals is an enormous opportunity for every architect every lawyer every consultant to kick up to the pols who control these projects . Buy a table at my reelection dinner and you get the parking lot deal . And it goes all the way down , you gotta believe ,right down to picks up the locker room towels and kicks up to get the work . Forget all the highfalutin macro numbers this is graft , plain and simple ,graft . And the people/voters love it .

  5. Here in Los Angeles, we have refused to subsidize the NFL …and we have not had an NFL team since the Bush Administration…Bush Sr. that is.
    The NFL is too strong…if your only choices are rape or no sex for life…learn to enjoy rape and get an NFL team back into Los Angeles…

  6. We have “prevailing wage” laws, cities owned by unions, huge corporate taxes and myriad regulations, then get outraged when a business (the NFL) uses every possible tactic to lower their costs? I don’t blame them one bit.

    • It’s not so much the trying as the succeeding. Those who provide those special favors using taxpayer money are the real scoundrels.

  7. Here is the financing for Century Link Field, home of the Seattle Seahawks:

    $75,000,000 hotel and car rental taxes;
    $75,000,000 15 year naming rights(Century Link);
    $91,000,000 proceeds from 6 lottery games;
    $100,000,000 Paul Allen private investment.

    Century Link is also home to the Major League Soccer Seattle Sounders.

    Lottery funds were originally to have gone to state education but they are a honey pot for state politicos.

    Century Link is not fancy but it is an attractive venue for television broadcasts of sporting events.

    Paul Allen has put up a lot of his own dough, much of the other financing is guaranteed unlike most other business ventures.

  8. A huge amount of the tickets sold for these games are for ‘business entertainment’ purposes and are tax deductible. We tax payers are subsidizing the ticket sales, probably to the tune of 35% to 50% of the cost.

    • No, we are subsidizing the cost of government services provided to everyone whether they want them or not, if we pay taxes and others don’t.

      would you eliminate deductions for business expenses?

  9. It humors me when these arguments are targeted negatively towards the businesses, or in this case the NFL. Sounds like the beef is at the government for stealing from taxpayers, not the business. It should be targeted at the governments, but some how everyone finds a way to blame the companies. I see it all too much.

    • I’m actually from Oklahoma City, where our government placed a vote to hike the sales tax 1% to pay for our NBA Thunder practice facilities. What’s sad, is we now can’t get rid of the 1% tax, because they have made it concrete now to pay for ridiculous pet projects around the city now. You give them an inch, and they’ll take it a mile.

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