Socialized Sports: Your Money at Work

0:00The New York Yankees are opening a brand new stadium in New York this year, a $1.2 billion Yankee Stadium, which was built with $400 million in taxpayer money. Just by a show of hands, what do you think would be a legitimate rental value on such a stadium? A million dollars a month? Maybe $10 million? Try $10 a year. That's how out of control we are with with Public Financing of stadiums today. Now just to give you a little bit of background on where this idea came to me. I grew up in St. Louis, Missouri. And ever since I was younger, I can remember going to St. Louis Cardinals games at Bush Stadium. And outside one of the main gates, there was an older gentleman who stood there, never said a word, never asked for any money.

0:48When I was younger, I had no idea what that said. And as I got older, it started to make sense to me what it said, but it wasn't until college and I started studying economics that I really grasped what that meant. So that made me think, if we're going to be taxed, and it's almost inevitable that we will be, is this a good way to use our money? And so, just to give you a little history with my first slide, I looked at two of the major sports in the United States. I looked at baseball and I also looked at football. And this just gives you just a diagram of history. I broke it up in each part of the 50 years of the 20th century on the relocations or the moves that have taken place.

1:36Football. And this just gives you just a diagram history, and I broke it up in each part of the 50 years of the 20th century on the relocations or the moves that have taken place in the major sports. Now for the first 50 years you can see that there was only two moves in Major League Baseball. Now from 51 to 2000 we have 10. Now granted some of these moves are predominantly westward which would make sense with the migration of the U.S. The Browns went from St. Louis back to Baltimore, back east. The Braves went down to Atlanta, and we also have a team relocated from Seattle to Milwaukee. The first move was in 1952, which was 50 years after the previous move.

2:23Now this move was spearheaded when the city of Milwaukee built County Stadium entirely out of public funds and they used that stadium to lure the Braves from Boston to Milwaukee. I don't know if you want to call it karma but in 1965 the Braves left Milwaukee for Fulton County Stadium in Atlanta which was also Now, in the NFL there was four moves, but technically three. I don't know if I really count Decatur, Illinois to Chicago, a major move since it was in basically the same region. And then in the final 50 years of the 20th century we have eight. And if you notice in the statistics here, the last about 25 years is when most of these shifts have really picked up speed in the NFL.

3:15and what these two graphs of the second half of the 20th century show is that as taxpayer spending to pick up the tab on these private stadiums has picked up you see that these professional sports franchises are essentially bidding cities against each other almost using it as an extortion measure if you don't fund our stadium we're going to find another city that will. Now developers and politicians and proponents of a new stadium, they have mainly four main arguments that they make, and then they always keep an ace in the hole, you know how politicians are, they keep an ace in the hole, which I'll reference later, but these are the four main benefits that stadiums create for a city, they create jobs, they pump money into an economy, the big argument is if you want to be one of these world class, elite, major league cities like New York or Chicago, you have to have professional sports franchises, and the last one is that arenas and stadiums,

4:15is spurred development. If the taxpayers throw in $100 million, you're going to get that back tenfold with private development as bars, restaurants, hotels, etc. They fill up around the sports venue. All four of these can be pretty easily refuted if you just consider the unseen part of the equation because politicians and developers, you know, they never tell you the whole story. But the fifth issue, the ace in the hole, that's kind of the key and I'll get to that one later. Now the jobs that are created on the benefits, true they create jobs, but there's a little bit more to these jobs created. You have to keep in mind that out of the high-end front-office jobs that they advertise, while those jobs are created in the new economy, they're more or less a shift from the old economy because these positions are already filled. The officers, the directors, the professional athletes, they already have jobs and they're simply So the actual new jobs, quote-unquote, that the city is going to receive are more or less low-skilled, low-pay seasonal jobs, ushers, concessionaires, ticket vendors, or you're going to see an increase, the major increase, the majority of the jobs, probably about 50 to, I'd say about half to two-thirds of jobs created by a stadium, are actually construction jobs, which are temporary. They're there for 18 months.

5:44The next argument is that it's going to increase spending in the region. Now there's basically two sides to this equation. On the one side you have the locals and on the other side you have tourists. Now the locals aren't going to increase spending. They're going to shift spending. They're not going to, just because a new stadium comes in, a new franchise, they're not just going to increase the amount of money that they spend on consumption spending.

7:14You're basically going to come up with a push, at best, maybe a marginal increase. And then for the claim that you need to have major league teams to be a major league city, I just have some quick examples of things that kind of refute that. Green Bay has had the Green Bay Packers since 1921, and I wouldn't exactly call Green Bay and the Thriving Metropolis. Raleigh, North Carolina, their first major professional team was the Carolina Hurricanes, which moved from Hartford in 1997, and Raleigh is obviously part of the research triangle, according to the 2000 U.S. Census, has a metro population of about 1.2 million people. Obviously, with that much development, it's one of the fastest growing regions of the U.S., and they've been able to do this, and they've only had professional sports for about a dozen years. Now Detroit, Michigan, on the flip side, according to the U.S. Census, about 5.5 million people. The city itself has lost about 50 percent of its population

8:25since 1950. The metropolitan area has double-digit unemployment rate. The city itself has unemployment rate pushing about 13 percent. And they've had all four major professional franchises, Detroit Red Rings of the NHL, Detroit Pistons of the NBA, the Detroit Lions of the NFL and the Detroit Tigers of Major League Baseball. They've had all four since 1948, continuously. Again, Los Angeles, California hasn't had pro football for almost 15 years, second largest market in the United States. And last but not least, Las Vegas, Nevada, which most likely will never have a major professional franchise because of the ties with gambling and most The argument that sports facilities spur development is another one that's pretty easy to refute.

9:31Researchers do everything in their power to internalize their profits and externalize their costs. They use taxpayer dollars to build the stadium and then they internalize everything. For example, they'll buy up neighboring land to build parking garages, they'll attach restaurants to the stadium, they'll attach bars, they'll attach clubs, anything they can do to keep you inside the stadium spending money. They will prohibit attendees from entering with goods, can't enter with alcohol, can't enter with food, can't enter with drinks, and they've also eliminated the reentry policy. I can remember going to games when I was younger and the ticket stub that they gave you was your proof of admission.

10:17You could leave, go out to your car, get something to drink, go to a bar, walk down the street, things like that, because I remember I used to do this with my dad. And you could use the ticket stub as proof to get back in. Now you can't do that anymore, so what does that instantly create? A monopoly. I'm from St. Louis, home of Anheuser-Busch. The brewery is less than a mile from Busch Stadium. The delivery costs of getting the beer from the brewery to the stadium are basically zero. You could probably do it with a pipeline. Now if you go to a bar across the street, you're going to pay $2 for a draft, yet you When you walk into the stadium, you're going to pay $8, $10. They do that on purpose to internalize all their profits. They know exactly what they're doing. I mean, t-shirts, buy a t-shirt at the game, it's going to cost you $25 or $30. You go to Walmart, you get

11:06one for $5 or $10. And one of the new things is with all these new gimmicks that they're adding, and I'm going to have to excuse me for reading. I have a few listed here. I mean, we're all aware of the stadium club seats, the blow-up in luxury boxes, bars and restaurants, Some of the sillier gimmicks I have come across are AT&T Park in San Francisco, home of the San Francisco Giants, has two slides and a giant Coke bottle that sits over left center field and the stadium also has 122 wireless access points in case you wanted to get any work done while you were watching the ballgame. Bush Stadium in St. Louis, home of the St. Louis Cardinals, has batting cages and pitching Cages for the Kids, Minute Maid Park in Houston, home of the Astros, has a giant home run train that goes back and forth along railroad tracks in left center field whenever an Astros player hits a home run, Chase Field in Arizona, home to the Arizona Diamondbacks, it's actually

12:06in Scottsdale I believe, has a swimming pool in center field, and the newly renovated Coffin A miniature golf course, a carousel and a video game arcade. Now here's just, I'm going to go through some pictures because I've always been convinced that a picture is worth a thousand words. This is an aerial shot of the Truman Sports Complex in Kansas City, built in 1973. Now it was touted as an economic development for the eastern end of the Kansas City metropolitan in the metropolitan area. Up front you can see the sports complex in the foreground. On the left is Arrowhead Stadium where the Kansas City Chiefs play and on the right is Kauffman Stadium where the Kansas City Royals play. On the right hand side you can see that's Interstate 70 and about 15-20 miles into the background is downtown Kansas City. This complex has been completed for about 35 years and I would say it's been a complete failure for Economic Development in the eastern part of the Kansas City metropolitan area.

13:15Here's an aerial view of Gillette Stadium in Foxboro, Massachusetts, home of the New England Patriots, built in 2002. As you can see, it's surrounded by a sea of parking. There's been no economic development essentially at all. It's interesting to note that Gillette Stadium is so far outside Boston, Massachusetts that it's 10 miles closer to Providence, Here is an aerial view of Dodgers Stadium, finished in 1962, which is home of the Los Angeles Dodgers. Again, you can see we have an excellent example of a suburban ballpark surrounded by parking, and in the background you can see downtown Los Angeles. An interesting side note with the decommission of Shea Stadium in New York and Yankee Stadium in New York, This suburban ballpark is now the third oldest ballpark in all of Major League Baseball.

14:09And last I have Turner Field, completed in 1996 in Atlanta, Georgia, home of the Atlanta Braves. Turner Field was the site of the opening and closing ceremonies for the 1996 Atlanta Olympics and then it was restructured into the baseball stadium. Again you can see it's surrounded essentially all by parking. On the left hand side you can see the I-75, I think it's I-75, I-85 interchange and in the background you can see downtown Atlanta. Now you might notice the baseball diamond kind of in the middle of the picture. That is actually painted onto the parking lot black top and that's to symbolize a recreation of where the original home field sat on Atlanta Fulton County Stadium which was demolished to Build a Parking Lot. That is the same stadium that was used to lure the Braves from Milwaukee originally back in 1965. So earlier I mentioned that there's this ace in the hole concept.

15:10Politicians, developers, they know, they have this ace card that they'll play because even if you go through this and refute all their arguments and say, look, you're not doing anything for me, you're just wasting my money. They understand that teams, they create an an unmeasurable utility for cities. You can't measure it. It's impossible. It's this intrinsic value. It's impossible to measure the utility created for one person, let alone a metropolitan area of 1 million, 10 million people. And that's what they prey on. They take advantage of it. All these things, they generate civic pride, they make people happy, they bring the community together. I mean, just look at what people do for the Red Sox and the Chicago Cubs and the Dodgers and things like that. But this is the ace in the hole that that they love. This is their trump card. No politician wants to be the person that was in office when a team leaves. You don't want to be that guy. You could do every great

16:04economic reform for the city. You could bring in every, you could relocate multiple Fortune 500 companies, but it doesn't matter. I first gave this presentation last spring, and at the time I had done, I'm from St. Louis, so I did a research on the post-dispatch, St. St. Louis Post-Dispatch. And I just did a quick search into their browser and I typed in Bush Stadium. And I came back with about 35 entries of different articles in the last month that had been written about Bush Stadium or cited Bush Stadium. I then typed in Energizer Corporation, which is headquartered in St. Louis. I typed in Playtex. I typed in Ralston.

16:51I'm sorry, I typed in Post, Serial and I typed in Ralston Purina. All four of those companies have ties to St. Louis. Energizer and Ralston purchased Post and Playtex. Now all four of those companies are on the Fortune 1000 list. I didn't find one article for an entire month talking about these corporations relocating their headquarters The Federal Reserve, fiat money and credit This forum was promised to the Grizzlies to lure their franchise from Vancouver, British Columbia to Memphis, Tennessee. It was completed in 2004 and it's now the home to the Memphis Grizzlies and then also the Memphis Tigers NCAA men's basketball team. It's financed with $250 million in debt securities, public bonds, and it was naturally touted as an economic boost for downtown Memphis. However, there's a pyramid arena which was built in 1991 and is less than 1.5 miles away, which sits completely vacant. The Pyramid Arena has no long-term tenants, hasn't hosted an event in probably four or five years, and a friend of mine told

18:34me that the only thing they do there anymore are high school graduations. Last I had read, there was talks of turning it into the world's largest Bass Pro Shop. And then the Sprint The Sprint Center in Kansas City was completed in 2007 as part of an $850 million development project in downtown Kansas City known as the Kansas City Power and Light District. 80% of the project was publicly funded, which is $680 million. The Sprint Center was a completely speculative development. There are no basketball teams or NHL teams that are currently in Kansas City. This whole stadium was built to try to lure, specifically to lure a franchise from another city. And to date, no current or expansion NHL or NBA team has any plans of relocating to Kansas City.

19:26So Kansas City obviously is grasping at straws. They've tried to convince the Big 12 to move the NCAA men's basketball tournament to Kansas City and have it there every year, which has obviously created disputes among other Big Lower than projected retail sales per square foot and later than expected openings in non-restaurant retail means sales tax revenue from the project will fall short of what is needed to cover The City expects to have to cover a $4 million budget gap on the project's debt service by April 30. So they have about two months to shore up $4 million or the taxpayers are going to be on the hook for another $4 million on top of the $680 million they've already spent on this project.

20:30So just in conclusion, if you're going to tax me, granted I would rather not be taxed, I'd rather have my money to spend as I wish, but if you're going to tax me, there are far better things to do with our money than to keep throwing it into these stadiums. It's such a complete waste of money to use public funds to build a private stadium, and then as we watch athletes walk away with millions of dollars, developers, owners walk away with millions of dollars, and the rest of us are left footing the bill. And then, to make matters worse, when everything finally hits the fan, all the franchise does is they bid away their services to the next highest bidder, relocate to another city, and just impose their wants and destruction on the next forceps.

21:19What we need to do is get this idea out there that what we're wasting our money on, what we're spending our money on, is not helping our cities. It's actually hurting every one of us. Thank you.