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Contents
Many of these franchises are enticed to change location based on who gives them the best deal. This could be construed as accepting what the market offers or accepting corporate welfare. Most of these deals involve the city building a new stadium using tax-free municipal bonds as well as giving most of the team-related revenue from the stadium and the concessions to the franchise. Generally, city governments justify these deals by predicting an increase in entertainment spending related to the new club in town. They typically argue that people attending sporting events will come early and stay late, taking in the nightlife and restaurants in the area of the event and spending more money. However, this is an economically dubious concept since generally consumers have a fixed amount of demand for entertainment based on their income and would be merely substituting one type of entertainment for another.
With the current renaissance of single-purpose stadiums, the economics are even more questionable. How do you generate revenue for a football stadium that will be used only eight to twelve times per year by the team, including the regular season, pre-season, and a Super Bowl championship run? The other sources of revenue possible are college football, both regular-season and bowl games, the Super Bowl, stadium concerts (becoming rarer every day), political conventions for domed stadiums, and religious revivals. In a good year you might find events to cover thirty dates total. If a multipurpose stadium was built for baseball and football, you would add 81 baseball home games and the economics might actually justify the public expense. The same applies to basketball and hockey arenas that are generally suited for both purposes and easily booked for other events such as ice shows, truck shows, conventions, etc.
Not all franchise owners are seeking this type of aid, though. Chicago Bulls owner Jerry Reinsdorf and Chicago Blackhawks owner Bill Wirtz joined together and privately financed the United Center on their own, using advance sales of luxury boxes as equity. They currently have 82 combined regular season games plus playoff games, ice shows, college basketball games and tournaments, and other events scheduled. In addition, they hosted the Democratic National Convention this year.
When the flap erupted about the Cleveland Browns moving to Baltimore, the owner of the Canadian Football League’s now defunct Baltimore Stampede (who had just won the CFL Grey Cup championship game) offered to build his own stadium in Baltimore with his own money if the NFL would grant him a franchise.
In January, Sen. Daniel Patrick Moynihan (D-N.Y.) introduced a bill in the Senate that would close the tax loophole allowing tax-free financing of stadiums. This will not only raise the cost of sports stadiums, but cause cities to more closely examine the economics behind the deals teams are requesting. Below are some additional opinions on the topic of franchise free agency.
The Solutions Heartland InstituteThe Heartland Institute has done a lot of work attempting to question the estimates that are used to prove the economic viability of building new sports facilities.
In the cover story of the March/April 1996 issue of their magazine, Intellectual Ammunition, Robert Baade and Alan Sanderson discuss the economics surrounding the Chicago Bears' demand for a new facility.
Heartland has also released congressional testimony on the subject from various points of view.
Should Congress Stop the Bidding War for Sports Franchises?
Volume 1: Federal Policy Makers
Volume 2: League Commissioners
Volume 3: Municipal Authorities
Volume 4: Academics
In a Heartland Perspective released just after the testimony took place, Melvin L. Burstein and Arthur J. Rolnick of the Federal Reserve Bank of Minneapolis discuss the issue of competition for sports franchises.
Many other groups have made their opinions on corporate welfare known; listed below is a small sample of what is out there
Small Business Survival Committee
The SBSC is the fastest growing small business free-market advocacy group. In NY Baseball and the Stench of Corporate Welfare, Matthew Carolan and Raymond J. Keating examine the questionable economics behind building new stadiums for the New York Yankees and Mets.
Citizens for Leaders with Ethics and Accountability Now
CLEAN is fighting against taxpayer-financed stadiums for the Seattle Mariners and Seahawks
State Rep. Tim Sheldon questions a letter he received from a certain Seahawks owner and Microsoft billionaire asking for help in securing a better stadium deal.
ESPN anchor Keith Olberman has spoken out against franchise free agency a number of times on the air and in his weekly column on the Sportszone. Below are a number of columns he has written on this subject.
In December 2004 this page was modified significantly from its original form for archiving purposes.
, founded in 1995, is now a part of ISIL.
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