Never Give a Sucker an Even Break

Why sports teams get away with blackmailing cities.

There's been a blizzard of stadium proposals, a ton of talk, and more than a fair share of posturing. Yet, after many months and multimillion-dollar scenarios, Twin Cities residents have precious little context or useful information on what, if any, return can be expected from investing in ballparks or hockey arenas.

One of the few independent sources of such information is Mark Rosentraub, the author of Major League Losers: The Real Cost of Sports and Who's Paying For It (Basic Books). Rosentraub is associate dean of the School of Public and Environmental Affairs at Indiana University in Indianapolis. He is also a lifelong sports fan and season-ticket holder to Indiana Pacers basketball games. His 513-page tome reveals, among other things, that while pro sports account for less than 0.5 percent of the total jobs and payroll revenues in a community, governments have shelled out hundreds of millions of dollars to secure those jobs. Even when "indirect" job gains are included, Rosentraub's data show that massive public stadium investments are bad business.

On that score, his research simply confirms what voters all across the country already suspect, if last week's election defeats for stadium proposals from Pittsburgh to San Diego and Minneapolis are any guide. The time, Rosentraub argues, may have finally come for a solution that "protects the fans and the taxpayers." And it's not what you might think.

CITY PAGES: Have there been any sports deals you've favored?

ROSENTRAUB: Oh, absolutely. The city of Los Angeles came to an agreement with the Lakers and the Kings, and believe it or not, Los Angeles is going to make money on the deal. The city of Philadelphia has an excellent deal on a new facility, which is home to the Flyers and the Sixers. There are a number out there that are good. There are a number that are horrific. The issue is this welfare system that has been developed, where cities are providing incentives for the different teams because the teams are bidding one city against the other.

CP: How did we get to this point?

ROSENTRAUB: Sports has been a protected cartel in this country for as long as the professional sports leagues have existed. We've allowed it to specify, for example, how many teams will exist, what cities will get teams, and how many teams will exist in the very large markets.

To sum this up pretty quickly, I'd point out that the Indiana Pacers play in one of the smallest markets in the NBA, a market of about 1.5 million. If that is what it takes to build a successful NBA team, then the city of New York should have about two teams per borough, given the population size. But the NBA says there can only be two teams in New York, so you have the Knicks and the Nets splitting a market of 19.8 million people. This is not rocket science. The Yankees and the Mets split a market of 19.8 million, and the Minnesota Twins play in a market of about 3.5 to 4 million people. The Yankees are going to have a decided advantage.

CP: Is this media-driven? Is it that the people who operate the sports figure that if there are six New York/New Jersey teams, the television watcher in, say, Wisconsin won't be able to tell them apart?

ROSENTRAUB: No. Look at sports in other countries. The major cities in Europe all have multiple teams at the first level. We're the only country where we actually regulate it so tightly and allow the sports leagues to set the rules.

CP: What about scheduling problems?

ROSENTRAUB: We can schedule 1,000 airline flights a day, but we can't schedule teams? The NCAA pulls off a tournament with 64 teams in a span of three weeks, but the NFL couldn't expand their schedule? That's just a totally ludicrous argument.

CP: So under your scenario, more teams lessen the demand, which means that the owners can't blackmail communities.

ROSENTRAUB: Yes. And the second issue is revenue-sharing. If we are to allow sports leagues to have this cartel structure, then it is incumbent upon them to talk about revenue-sharing, so the small markets can survive. Major League Baseball, for example, has come up with a woefully inadequate program. The total amount of money into it now is $10 million, that's all the money shared between the haves and have-nots. Well, $10 million divided among all the have-nots is...

CP: ...a fraction of one team's payroll.

ROSENTRAUB: This is the issue we have to confront. It has nothing to do with being anti-sports, it has to do with protecting the sports fan. If we're not careful, the championship will essentially be divided between Chicago, New York, Los Angeles, Houston, and a handful of other cities that periodically have a good team until those players go on to free agency. The major metropolitan markets are the teams that have the revenue, and over time that's where the players drift.

CP: In terms of bidding cities against each other, where have the biggest boondoggles occurred?

ROSENTRAUB: Certainly the deal between the city and county of St. Louis, with the participation of the state of Missouri and the Los Angeles Rams, now the St. Louis Rams, would rank up there. You have a $300-million facility totally run by the public sector, with all the revenue from the facility turned over to the team. Cuyahoga County is investing almost $700 million in professional sports in an area where more than half the people live at or below the poverty line. King County--Seattle--is now closing in rapidly on about $700 million in public investment in sports, despite the fact that the owner of the Seattle Seahawks is one of the 15 richest people on the planet. When they were voting there, he was asking the state of Washington for $300 million in welfare during the same time his wealth increased by $975 million. What he made in one year was three times what he was asking the state of Washington for. Does anybody seriously want to argue that Paul Allen needs that money to operate the Seattle Seahawks?

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