Cagan & Neil deMause

Courage Press, Maine, 1998


Review by Tom Gallagher

1991 through the first half of 1996, the value of public bonds issued for
construction of sports complexes exceeded that dedicated to new libraries and

In 1996, Cleveland, Ohio
committed itself to building a $220 million football-only facility the day
after its school system “cut $52 million over two years, laying off up to
160 teachers and eliminating interscholastic athletics.” The stadium will
house the new Cleveland Browns franchise; the old one—renamed the Ravens—
moved to Baltimore when the owner decided that upcoming publicly funded
repairs to the current stadium were too little, too late. Baltimore offered a
$200 million new stadium with no rent for 30 years, plus a $50 million
relocation fee.

Baltimore was abandoned in
1984 when Indianapolis offered the Baltimore Colts a low-rent deal in the
domed stadium it had built in the hope of finding a team to fill it. Since the
Ravens have replaced the Colts, the owners of the baseball Orioles now want
free rent in Camden Yards, the park the state had built for them at a cost of
nearly $500 million. It seems there’s something in the fine print of their
contract that guarantees them a deal as good as anyone else gets in Baltimore.

Cagan and deMause show how
this Tale of Two Inner Cities is repeated across the nation. Economist
Robert Baade compares the situation to Pascal’s Wager: “The idea was
somebody asked if [French philosopher Blaise Pascal] believed in God, and he
said, ‘Yes, I believe in God because I can’t take a chance that there
isn’t one’ … I think that people who make decisions about these things
say to themselves that we believe there is an economic impact because we
can’t really take the chance that there isn’t one.” Of course, some
politicians have gone way beyond Pascal. According to Chicago White Sox owner
Jerry Reinsdorf, Illinois Governor Jim Thompson once told him, “It’ll
never happen unless people think you are going to leave.” Reinsdorf obliged
by very publicly flirting with St. Petersburg, Florida, in order to force a
new publicly funded stadium in Chicago.

Maryland anti-public funding
activist Bill Marker believes things have now moved even beyond the control of
any individual team: “If it’s not a personal toy of yours, if you are an
owner and you have any fiduciary responsibility to anybody, and you don’t
demand a new facility, you’re probably violating your fiduciary duty, given
the way this stuff goes.” Not that there’s any reason to worry about
owners like the New York Yankees’ George Steinbrenner, said to have paid
himself a $25 million fee for negotiating the team’s cable TV contract, or
Minnesota Twins owner Carl Pohlad, whose family wealth exceeds $800 million, a
nest egg that hasn’t stopped him from arguing that the (admittedly hideous)
20-year-old Minneapolis Metrodome must be replaced at public expense. His
threats to leave were only stopped by a recent North Carolina referendum
decisively rejecting public funding.

On the low end, the managing
partner of the Montreal Expos, with baseball’s lowest payroll of $9,162,000
(the average player makes only $352,385 a season) states flatly, “We can’t
take on any debt service. This thing (a $180 million stadium to replace the
Expodome built for the 1976 Olympics) has to be completely financed by the
community.” On the upper end, the New York Yankees, whose $63,460,567
payroll ($2,440,791 a head) is second highest, are looking for a mid-
Manhattan stadium with cost estimates running as high as $1 billion. A
spokesperson said the team would contribute “Cash and other financial
techniques,” part of which would come in the form of the right to name the
stadium, an asset estimated to be worth $7 million to $10 million a year.

While it’s not clear how
the Yankees would hold naming rights to a primarily publicly funded stadium,
it is clear that stadium- naming has become big business. A fan touring
baseball’s National League West Division could attend a game at Colorado’s
Coors Stadium (the brewing company owns the team), San Diego’s Qualcomm
Stadium, Arizona’s Bank One Ballpark or San Francisco’s 3Com Stadium.
(This is actually the name of a software company rather than a typographical
error. The former Candlestick Park will be replaced in a few years by Pacific
Bell Stadium now under construction.) In fact, the only stadium with a normal
name is Los Angeles’ Dodger Stadium. But since Rupert Murdoch recently
bought that team it could soon be playing in Fox Stadium.

(Universities have recently
gotten into the act as well. Arizona State University has the Wells Fargo
Arena; University of Washington, the Seafirst Arena; and the Value City Arena
is home to Ohio State basketball. A West Palm Beach, Florida high school
recently named its football stadium after a health care corporation, undaunted
by the company’s federal indictment for Medicare fraud.)

Then there’s the luxury
boxes that now figure so prominently in the financial calculations surrounding
sports stadium construction. With 50 percent of their purchase price
deductible as a business expense for the (mostly) corporations that buy them,
the authors estimate that the roughly 7,000 or so luxury boxes currently in
use reduce federal revenues by about $80 million annually. So, if you’ve
been wondering who pays for those things, it’s you. (Luxury boxes at
university facilities carry even greater potential tax advantage as
contributions to college athletic programs.)

In some ways “incentives”
to professional sports teams merely represent an extension of the general
trend of competitive city and state giveaways that has resulted in 21 states
now footing part of the wage bill for new private sector jobs in their state.
But sports economics has also broken new ground. Microsoft co-founder Paul
Allen recently bought the Seattle Seahawks football team. Insisting that a
$400 million new stadium was needed to replace the 20-year-old Kingdome, he
asked the state to pick up $300 million of it. To smooth the way Allen paid
the entire $4.2 million cost of the statewide referendum required to approve
the taxes proposed for the project. Not only did he become the first private
individual to literally buy an election, he bought it metaphorically as
well—spending $5 million in a 6 week period in a successful effort for a
“Yes” vote.

But the authors would not
have us think that all is hopeless. While most of the campaigns against
stadium giveaways that the book describes were not successful, there seems
little question that they are having a cumulative effect of hardening the
public’s attitude and prompting federal proposals like Senator Daniel
Moynihan’s (D-NY) bill prohibiting the use of tax-exempt bonds for
professional sports facilities.

Then there’s municipal
ownership. Currently four minor league baseball teams and the National
Football League’s Green Bay Packers are owned by large groups of local
stockholders, making them effectively immune to threats to move. In the case
of Green Bay, if a majority of shareholders were ever to agree to a sale the
proceeds would go to the local American Legion Post. But in 1989 actual
municipal ownership became a possibility when Joan Kroc, widow of McDonald’s
founder Ray Kroc and owner of the San Diego Padres baseball team, offered to
give the team to the city along with a $100 million trust fund only to have
the plan nixed by Major League Baseball’s owners committee. As a
spokesperson said at one point, “The consensus of the owners was that we
were more comfortable with keeping the teams in the hands of smaller
groups.” This was probably less a statement of class solidarity than a
reaction to the fact that municipal ownership would bring public access to the
game’s books, possibly cramping the style of some poor-mouthing owners.

Fans who think that their
city’s team actually ought to be their city’s team might wish to find out
if their representative in Congress supports the bill filed by Earl Blumenauer
(D-OR) that would remove the monopoly privileges that professional sports
teams have enjoyed unless they both allow municipal ownership and grant the
current city first rights to purchase a team before it can be moved.

If you want to know more
about what the team owners are doing to you and what you might be able to do
to them, this little volume is a fine place to start.   Z


Tom Gallagher is an activist and freelance
writer living in California.