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City Sports Teams Are Selling More Than Tickets

The quest for taxpayer dollars has become a business within a business. No longer are franchises content to sell tickets, snacks, jerseys and television time. The other side of the professional sports industry is procuring sweetheart deals from local governments.

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After a long and sorry struggle with the city of Seattle, the NBA’s Supersonics left Seattle in the dust for Oklahoma City this month. For sports fans in the Northwest the Sonics were a Seattle institution, so for them team owner Clay Bennett might as well have bought and shipped the Space Needle. Instead, he pulled a basketball coup and left the city in exchange for a settlement package that included $45 million and the right to keep the team’s name and history. That was a loss Bennett could live with after not getting a big enough treasure trove in subsidies for a new arena. Though it seems like the basketball world just tilted on its axis, this was just the latest in the long running effort by major sports franchises to procure billions of dollars in public funds.

The quest for taxpayer dollars has become a business within a business. No longer are franchises content to sell tickets, snacks, jerseys and television time. The other side of the professional sports industry is procuring sweetheart deals from local governments. NBA Commissioner David Stern makes no secret about this. Calling the Sonics’ relocation an “inevitability” in February, Stern made clear to the press why: “There’s not going to be a new arena.There’s not going to be a public contribution, and that’s everyone’s right.”

The local and state governments in Washington have actually been generous with public dollars for Seattle sports teams. The city and state doled out close to $600 million for new venues for the Seattle Mariners and Seahawks in the 1990s. But voters’ generosity had ebbed by the time the Sonics’ turn came. In 2006, Seattle voters approved an initiative to reign in tax subsidies for professional sports teams and last year the Washington legislature rejected a $500 million plan for a new arena in the nearby suburb of Renton.
The Seattle scenario leaves small and mid-size cities with two basic options. Either they can fork over exorbitant amounts of subsidies or say goodbye to their major sports franchises. In Sacramento, where the city seems locked in perpetual negotiation over an arena deal for the Kings basketball franchise, the owners’ demands have verged on absurd. They asked for all the revenue 8,000 downtown parking spaces and a final say over what businesses and restaurants could open nearby. The team actually rejected a deal with city leaders that would have provided $500 million (and paid for any cost overruns) for a downtown arena over the city’s abandoned rail yard. Another deal went to the ballot box in 2006, with a set of initiatives that would have raised $1.2 billion in new taxes and pledged half of that to a new arena. They were predictably annihilated by voters. The NBA characteristically offered veiled threats of a basketball exodus from Sacramento and blamed local officials for failing to work out a deal.

Nearly three-quarters of major sports franchises have replaced their venues or dramatically renovated them over the past two decades in a building bonanza that totals billions of dollars. The majority of funding for these projects comes from public sources. Prominent sports economist Andrew Zimbalist contends that professional sports leagues are able to get favorable terms from cities by keeping the number of teams smaller than the number of cities capable of hosting them. This keeps cities in a perpetual bidding war and forces them to take seriously teams’ threats to relocate if they don’t get their way. This is especially true in smaller markets like Sacramento and Seattle, where teams net less television revenue. But even Los Angeles saw the exodus of both of its NFL franchises.

Studies repeatedly show that sports stadiums are terrible investments for city economies, and are at best a financial wash but usually result in enormous losses for cities. They attract local money away from other businesses, can force up nearby rents, and offer little year round employment. The only indisputable benefit is what sports economists call the “feel good” factor, the sense of pride cities get from having a major sports team. They also provide thrilling entertainment, though skyrocket ticket prices, luxury boxes and club seating are putting that out of reach for working class budgets. In short, the loss of the Sonics must feel like a punch in the stomach for Seattle sports fans, but the city is better off without them.

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Tags: seattleoklahoma city

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