$84 million is quite a bit of money. When the Charlotte Hornets recently announced that it was willing to stake this not insubstantial chunk of change on one Larry Johnson's ability to put an orange orb through a hoop, I, like many others, shook my head in dismay. After all, I've seen dogs who have been trained to do the same trick with their snouts, and their contracts only call for the occasional extra can of Alpo. And this Larry Johnson fellow, isn't he best known for dressing up as his own grandmother to somehow prove the superiority of a certain brand of basketball shoe?
But pretty soon I reminded myself that I am a free marketer down to the seat of my soul, and if Charlotte decided that it could pay a cross-dressing shoe salesman $84 million and still come out ahead, that was its decision.
The recent frenetic scramble for the promised NFL expansion franchises has made me think again. Those $84 million dollar salaries are not as wholly a result of free enterprise as one might think. With Hartford, Jacksonville, and a number of other cities offering outlays of nearly a quarter of a billion (yes, billion) dollars to snag a team, it becomes eminently clear that $84 million dollar contracts are the direct result of outrageous municipal subsidies to professional sports.
Cities will fall all over themselves to serve up tax abatements, new stadiums, and bond issues in order to attract or retain professional sports teams. All these expensive goodies must come out of the cities' purses and hence out of the taxpayers' pockets. Their direct beneficiaries are wealthy franchise owners and overcompensated freaks-of-nature.
Of course, the liberal use of these expensive lures is nothing new; municipalities are often willing to offer everything but the mayor's office to keep businesses, often quite healthy ones at that, in a given city (or state, as the case may be). This if often a shrewd manuever on the part of government officials. Bargaining away certain financial incentives brings greater returns as long as the following assumption holds true: the business in question will bring (or keep) significant economic activity to the city that the city otherwise would not enjoy.
In the case of professional sports, two problems become apparent upon any close examination. First, the subsidies are on an altogether unparalleled scale; and second, the above assumption rarely holds true.
Professional sports teams may be a great source of civic pride, but they are by no means a great source of civic prosperity. Construction of new stadiums create jobs like any construction project.
Yet the permanent jobs created are largely low-paying, low-skill, and seasonal. The money spent by fans on tickets and refreshments is generally money that citizens would have spent on other recreation.
The thousands of dollars spent at a baseball game would probably have been spent at a scattered variety of other leisure activities--movie theaters, bowling allies, and the like.
Sports franchises are like sponges which soak up disposable income from all parts of a city and collect in all in a very small area, often hurting small business from other parts of the city.
Small business generally reinvest in their home city, while sports teams deliver concentrate income in star athletes salaries--and the athletes, more often than not live somewhere else for most of the year. Professional sports do not bring additional money to a city.
Take a look at what it costs to attract a team these days, and it becomes even clearer what a boondoggle these deals really are. In Boston's mayoral primary, the candidates vied to see which one could compose the most enthusiastic paean to the proposed megaplex which would not only keep the Patriots in New England, but also cure all the city's economic woes. Constructing the megaplex (which, in fairness, would be more than just a stadium for the Pats), would run up a tab in the hundreds of millions of dollars. For the honor of attaching the city's name to football's losingest team, Hartford has convinced the state of Connecticut to authorize a 250 million dollar bond issue for a domed stadium.
Hartford is so broke that it nearly went into receivership. Its horrendously underfunded educational system has been the subject of a lawsuit challenging unfair state educational aid formulas. The state was willing to resist calls to invest more in Hartford's crumbling educational infrastructure, but now is all too happy to jump in with a blank check to attract a football team. Is this prudent government, or just sports mania addling the already small brains of public officials?
Perhaps the opposition of a social goal with possible economic effects with the economic goal of attracting a sports team obfuscates the issue. The totally irrational behavior of Jacksonville, Florida, however, leaves no doubt that officials forget the basics of public policy at the mere suggestion of the arrival of a professional sports team.
Jacksonville has mounted a fabulously expensive campaign to get an NFL expansion team. The city government has made the campaign its first priority, promising that a football team (with the few hundred part-time jobs it will create) will dispel Jacksonville's backwater image and make it a "first-tier city."
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