Tuesday, August 2, 2011

Public vs. Private Funding For Sports Stadiums

I had a somewhat bizarre exchange last night on Twitter between myself, Keith Law and Jeff Fletcher. Both of whom are well respected sports journalists. Keith is a member of the Baseball Writers Association of America, a former front-office guy for the Toronto Blue Jays, used to write for Baseball Prospectus and is currently a senior writer at ESPN. Jeff Fletcher has covered the A’s & Giants for the Santa Rosa Press Democrat, spent a few years at AOL Fanhouse, has a Baseball Hall of Fame vote and currently writes for both the A’s & Giants official magazines.

The topic of the discussion was public funding of professional sports stadiums. Mr. Law and I both oppose the premise on the grounds that there is no proof of economic benefit to the area’s in which publicly funded stadiums are built (except to the owners of the teams). Further, I object to the practice on the grounds that the Government should not tax the public where the beneficiary of said tax is a private entity.

Jeff Fletcher disagrees and made the following points to support his point of view:


Millions of people benefit by having the opportunity to buy the product, which is limited. Finite amount of MLB teams

I also think fans benefit by merely having a team, which in some cases they wouldn't w/o new park.

Fans benefit from new parks too. Not just the owners.

What about the notion that every public project doesn't have to be profitable? Like a park or a library.

…and finally

I'm not arguing that it's profitable or even good for the economy. I'm saying it's a quality of life thing. You wanna have a team?


So let’s look at two stadiums built in the late 90’s at opposite ends of the Private vs. Public funding spectrum. 

The first, AT&T Park (then SBC) was built entirely with private funds by the ownership group of the San Francisco Giants including former chairman Peter Magowan, Larry Baer & the Burns Family. The Giants used their own money and private financing totaling $266M to build the stadium at 3rd & King and it has been nothing less than an unmitigated success. The stadium has averaged 93% of capacity in attendance while the team has averaged 94 wins per season over the last 10yrs. The Giants have made the playoffs 5 times in the last 20 years. AT&T park is roundly praised as one of the top baseball stadiums in the country it has helped to make the team profitable and by virtue has allowed the team to make profound investments in Major League level talent and in their player development infrastructure. It could be argued that w/o the stadium and the revenue gained from it the Giant’s may not have won the 2010 World Series. Further, the part of town where the stadium was built has been utterly transformed by virtue of having the park in the neighborhood.

In contrast, Turner Field in Atlanta GA, is the home of the Atlanta Braves, once owned by Ted Turner. Completed in 1997 for the Atlanta Olympiad, Turner Field was built with 100% public funds totaling $263M. Despite Ted Turner’s net worth of over $1B (that’s Billion kids!) he contributed none of that figure yet benefited immensely from it. Turner Field has been far less successful. The Braves draw about 61% of capacity and win an average of 98 games per season over the same 10yr period. The Braves have been one of the most consistently successful teams in the National League making the playoffs 15 out of the last 20 years. Turner Field was built a block South of the old Fulton County Stadium. The neighborhood is largely unchanged since the completion of the new facility. In fact, under current debate in Metro Atlanta is the topic of public funding for a new stadium to house the Atlanta Falcons. One of the major sticking points is that the economic impact on the area surrounding Turner Field has been negligible. Atlanta residents are balking at the proposition of adding an additional taxation for little measureable benefit to anyone other than the Falcons owners.

In looking specifically at the attendance over the last 10 years we clearly see that the determining factor is the stadium itself and it's location that drives that metric. The Giants moved from one of the biggest dumps in baseball to one of it's nicest facilities in a place with better weather and a better pre/post game experience. The Braves have a shiny new park (and it's pretty nice) but it's in the same sorta run down part of town that didn't get any better after the project was completed. 


The Braves ability to to be a successful franchise also seems somewhat unchanged. They were a good team at the old park and they remain a good team. The Giants are a much better team over the last 10yrs than the previous 10 and that is due in large part to increased revenue, but a better ownership group is certainly a major factor. The main point though is that the Giants have proven that a team need not unfairly burden their fanbase to build a new facility and become a more successful franchise.

So Mr. Fletcher’s position is essentially that the community benefits economically (proven false by numerous studies) and that they further benefit from having the opportunity to attend games thus improving civic pride and quality of life.

The argument to me is specious at best. Public funding for sports stadiums requires under penalty of law (try not paying the additional tax) citizens to invest in the real estate and facilities that a private entity uses to do business. In return for that investment, they are granted opportunity to pay said private entity for the privilege of entering the facility that they paid for. It is inarguable that a new facility increases the franchise value of the sports team using that facility, but if/when said franchise is sold the community that funded the increased value does not see a dividend on their investment let alone a share in the profit of the sale. Further, the facility offers a venue for the sale of team merchandise, concessions and plays a large part in the value of advertising at the venue and in the broadcast contracts the teams engage in to televise their games. How pray tell do the fans "benefit" from this exchange?

As to the equally specious argument of improving the area around a park one must only look at the change around Turner Field (100% public financing), or around Comerica Park (~40% public funding) in contrast to that around AT&T park  (100% private funding). There is no way to prove benefit to the community in any measurable way. The Atlanta Thrashers used to occupy Phillips Arena. The public funding ($130.75M worth) invested in this arena was sold on the premise of keeping the Atlanta Hawks in town and drawing an expansion NHL team. That "investment" has served only to line the pockets of Michael Geron when he sold the team which has now left Atlanta for Winnepeg.

I don't know about you but my civic pride & quality of life are not improved by getting boned by politicians and billionaires because as shown, where public funding is used to build a stadium the citizens of a community are forced to invest in a stadium and the teams owners profit on tickets, merchandise, concessions, broadcast contracts and eventually on the sale of the team. If your broker handed you an investment prospectus with this sort of model you’d fire him. You should do the same to any politician that tries to encourage you to vote for a stadium funding proposal. 

Ref:  
http://krypton.mnsu.edu/~millep1/papers/Public%20Funding%20and%20Sports%20Franchise%20Values.pdf

5 comments:

  1. For the record, I totally agree that all stadiums, except for one, should be completely financed by privete ownership. The one problem with using Atlanta as an example is that Atlanta itself is a very transient city. This makes it extremely difficult to form a fan base which directly effects revenues generated. I believe the only professional sports stadium in the country that should be publicly funded is Lambeau Field because the Packers are the only non-profit, community-owned major league professional sports team in the United States.

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  2. Bud Selig and his inner circle of cronies, crooks, and chicken-chokers have used anti-trust exemptions, public funding of stadiums, absconded with cable-satellite tv subscription fees from unwilling subscribers by blackmailing cable and satellite providers, killed workmen in the process of rushing(Miller Park)stadiums to completion, and then the affront of all affronts, have statues of themselves built front and center of said public facilities.

    Jeff Fletcher is an idiot, was always a front-office fan-boy idiot at the PD, and is yet another example of why I have little to no use for the MLB HOF admissions process. Selig's and his cronies are so corrupt, even the US Government can't touch them. Sickening

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  3. Turner Field is owned by the County & City. It's just named after Ted Turner because he was the owner of the Braves during their trips to the World Series in the early-mid 90's. Ted didn't even want it named after himself; he wanted it to be called Hank Aaron Field. It was built as the Olympic Stadium (privately financed by the Atlanta Committee for the Olympic Games) & given to the County/City as a gift after the games. The Olympic Games in Atlanta actually turned a small profit for the organizers (after paying off the debts) but due to the heavy commercialization required to turn the profit resulted in reforms to the Olympics & a reactionary almost add-free event in Sydney.

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    1. You'll note that I said Turner Field is the home of the Braves owned by Ted Turner. I didn't say the stadium was owned by Ted Turner, I said the Braves were owned by Ted Turner.

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  4. There are few feelings more satisfying than when facts bear out your controversial opinion. Good job, True!

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