Cities: March 2022 Archives

A friend posted an item on Facebook celebrating 14 years of Oklahoma City being a "big league city," praising those who voted to tax the Oklahoma City citizens on the necessities of life for the benefit of billionaire team owners and their millionaire employees.

It was so nice of the voters to help out so that the millionaires and billionaires didn't have to cut into their profit margin to have a place for their entertainment business.

The friend who posted this is a conservative and someone I agree with on 90%+ of issues. He likened the subsidy for Oklahoma City's basketball arena ("infrastructure investments") to tax cuts as having positive, trickle-down economic impact.

Emotions seem to overwhelm logic, data, and common sense when it comes to professional sports subsidies. I believe in limited government that does what government only can do. Tax cuts let people keep the money they've earned and use it for their own priorities. Subsidized sports facilities take money away from people (using a regressive sales tax) to funnel it into a small number of already stuffed pockets in the name of civic pride. It's the sort of subsidy conservatives condemn were it going to any other industry.

The original big-league cities became big-league by having a sufficiently large and prosperous population to provide a market for team owners to hire the most talented players and coaches and to build great places to watch an entertaining spectacle. Ballgames were just another entertainment option alongside amusement parks, dances, concerts, plays, and movies, and the promoters in all of those entertainment fields were responsible for the cost of building and operating their facilities.

Private businessmen built magnificent stadia and arenas for their sports entertainment businesses -- Fenway Park, old Yankee Stadium, Ebbets Field, the Forum in Inglewood, Wrigley Field, Tiger Stadium, to name just a few -- until cities showed a willingness to throw money at them for the ego boost of having a team. That launched an taxpayer-funded, ever-escalating spiral where teams play off sucker cities against each other, threatening to move as a way of extorting more taxpayer subsidies rather than reinvesting their own profits into their entertainment businesses.

Sports-team owners and the consultants they hire argue that the taxpayer funds invested in sports venues produce a return on investment by economic development and resulting growth in tax revenues. But economic analyses have shown again and again that taxpayers never recoup their "investment." The teams don't generate enough new economic activity to generate additional tax revenue to match the tax dollars that were spent to build, renovated, and operate the venue. If cities want to increase the amount of money available to pave streets and fight crime, they'd do better to put their tax dollars directly to those purposes rather than spend it on sports venues.

The Field of Schemes website maintains a chronicle of the intercity arms race over stadium subsidies and regularly highlights retrospective studies of actual economic impact vs. forecasts. Neil deMause, the site's publisher and author of a book by the same title, recently called attention to a study of the economic impact of the new Atlanta Braves stadium in Cobb County, Georgia.

J.C. Bradbury, the Kennesaw State University sports economist who was appointed to the Cobb County Development Authority in 2019, has written several studies of the Atlanta Braves stadium that have been noted here, including one on how commercial property values around the stadium went down relative to nearby areas, one on how sales-tax receipts for Cobb County went up less after the stadium opened than did sales-tax receipts in neighboring counties, and one on how property values overall in Cobb County did not rise relative to neighboring counties following the stadium's opening. Now, for the fifth anniversary of the stadium's opening, Bradbury has done a comprehensive study of the development history of the Braves stadium and its costs and benefits, and let's cut to the big takeaway:

The fiscal benefits of Cobb funding Truist Park fall well short of its cost to taxpayers, who are left to fund an annual revenue shortfall of nearly $15 million, which translates to approximately $50 per Cobb household per year.

I didn't copy the many links that are embedded in that text -- click through to the article and you'll find links to data backing up each of those statements. Here's a direct link to the latest study by Kennesaw State.

Another recent article shows that the absence of Major League Baseball spring training doesn't seem to harm spring training cities in Arizona and Florida. Spring training in 1995, affected by the ongoing 1994 baseball strike, saw dramatic declines in attendance but no corresponding effect on sales tax and hotel tax revenues. It seems that plenty of people want to go to Arizona and Florida in late February and March, baseball or no baseball -- something to do with the weather.

Oklahoma Sen. James Lankford has twice filed a bill, co-sponsored by Democrat New Jersey Sen. Cory Booker, in 2017 and 2019, to close the loophole that provides a federal tax break for government bonds that finance sports venues, and another bill on the same subject (but with different sponsors) was filed last month. DeMause notes that closing the bonds loophole would have an impact, but it still wouldn't end the sports subsidy arms race. The best way to kill that, he says, is to make all subsidies benefiting private corporations taxable income, an idea that was proposed in Congress in 1999:

SUMMARY: Distorting Subsidies Limitation Act of 1999 - Amends the Internal Revenue Code to impose an excise tax on any person engaged in a trade or business who derives any benefit from any targeted subsidy provided by a State or local government. Defines such a subsidy as one which is designed to encourage a business to locate or remain in a particular jurisdiction. Denies a tax exemption for any interest earned on bonds which provide such subsidies. Prohibits the use of Federal funds to provide such a subsidy.

This goes well beyond sports, and it would benefit all cities and states if they no longer felt compelled to provide direct subsidies -- rather than good infrastructure, public safety, competent and efficient government, and low taxes -- to lure businesses to relocate.

It also seems strange for conservatives to celebrate subsidizing a team in the NBA -- a league that couldn't back away fast enough from a mild criticism by a team general manager of the Chinese Communist Party's repression of Hong Kong. The NBA's online store wouldn't allow fans to order custom gear with the phrase Free Hong Kong on it, classifying it as a "hateful message." Megan Kelly's interview with NBA owner Marc Cuban laid bare the league's callous and unprincipled pursuit of CCP cash. ESPN exposed abuse occurring in the NBA's Chinese training camps. The NBA also uses its cultural clout to promote sexual confusion and perversion and other destructive leftist causes. Why would any Oklahoma conservative want to put more money in the NBA's pockets?

I guess OKC got an ego boost out of having a team in one major league sport, but the rest of the world looks at the Thunder as an odd case of a major league team ending up in a minor league city, sort of like the Green Bay Packers.