March 18, 2015

Obama Proposal Could End Taxpayer-Subsidized Pro Sports Stadiums: Some interesting news from USA Today: "An obscure item in the president's new budget would put an end to the long-standing practice of states and cities using tax-exempt bonds to finance professional sports arenas, a practice that costs the U.S. Treasury $146 million, according to a 2012 Bloomberg analysis."

posted by rcade to general at 09:14 AM - 24 comments

Fearing it could lose the Rams or its designation as an NFL city, St. Louis is looking for a new facility that would meet the requirements the National Football League expects of stadiums its teams play in.

Dave Peacock, a former Anheuser Busch executive who is spearheading the drive to keep St. Louis an NFL city, regardless of whether the Rams stay, told a Missouri House committee earlier this month that building a new stadium is the key....

Missouri Gov. Jay Nixon, a Democrat, has said losing the Rams would cost the state at least $10 million a year.

The Edward Jones Dome is not quite 20 years old and cost $280 million at the time to build. Sounds like the state could let the Rams go and save $4M a year.

posted by Etrigan at 10:30 AM on March 18

Love the Niners model. Get a new stadium, then force restart.

Closing programs still running may cause loss of unsaved work in progress.

Force Restart? Cancel?

Start Windows normally?

Disable C:/program files/tomsula.exe?

After the growing mob of torchbearers finishes restructuring the NCAA against its will, pro stadium financing needs to be the next jihad.

posted by beaverboard at 11:41 AM on March 18

Missouri Gov. Jay Nixon, a Democrat, has said losing the Rams would cost the state at least $10 million a year.

No - they gross $10m a year in revenue. They cost the state in terms of infrastructure (stadium capital costs; busses and roads/tax breaks on land that might net higher property tax/etc.) - costs that will likely escalate if it takes a new stadium to keep them.

Considering most people spend every cent of their pay cheque anyways, the argument it stimulates activity in the local economy is bogus. People eating out on Sunday instead of Tuesday doesn't generate any new money. People shopping at this Wal Mart near the stadium vs. that Target in a business park doesn't do anything for the economy. The exceptions are:

a) Keeping dollars that would otherwise be spent out of Missouri in Missouri; or
b) Attracting dollars from other states for gamedays/sales tax on merch.

To which, as far as I can tell, the Rams are unlikely to be massive movers in either category.

I don't know why guys with control over these massive public budgets can't fucking figure out that gross revenue =/= net revenue. If you spend $12m/year on a capital project for whom there are next to no other possible tenants (therefore meaning it's Rams rent or bust for this huge, expensive stadium), and it nets you $10m a year in direct revenue, it's a god damned cost to taxpayers.

posted by dfleming at 12:19 PM on March 18

They understand that it is a cost, they just don't say it. Keep in mind that campaigns are very expensive and the people who make them possible also tend to be the ones with lots of money for things like, oh sports teams. I agree, it's incredibly frustrating when politicians say stuff like that, I just don't believe that they are that dumb for the most part, just that corrupt.

posted by Mothball at 03:50 PM on March 18

Yes there's a lot of funny math used by government officials to justify these boondoggles.

But I don't see how you can claim there's no increased economic activity on the 10 days a year when the Rams are hosting a game. Any time you bring tens of thousands of people to an event there are going to be increased business for grocery stores for tailgate supplies, gas stations, restaurants, bars, parking lots and stadium concessions, all of which help those businesses and their employees and generate sales taxes. Local newspapers, radio and TV stations also benefit because the team draws more eyeballs and they can sell them to advertisers.

Though some fans will go without on other days to afford game day expenditures, others will increase their spending.

If the Rams leave St. Louis and no NFL team takes their place, there will be negative effects on the local economy. It might not be anywhere near what the officials claim, but it'll be something a lot of businesses in that city miss.

posted by rcade at 08:32 AM on March 19

But I don't see how you can claim there's no increased economic activity on the 10 days a year when the Rams are hosting a game.

He's claiming it moves the activity to those days instead of creating new spending. It depends on whether you buy the assertion that "most people spend every cent of their pay cheque anyways". You can see US Personal Savings Rate data here. If we grant that a bunch of that savings happens among the extremely wealthy then dfleming's assertion becomes really interesting: what if instead of generating new spending they're just taking it away from other entertainment options? Do sports complexes create a black hole in the outlying areas? It would be interesting to see how Patriots Place has fared compared to retailers right around Foxboro.

posted by yerfatma at 09:16 AM on March 19

Any time you bring tens of thousands of people to an event there are going to be increased business for grocery stores for tailgate supplies, gas stations, restaurants, bars, parking lots and stadium concessions, all of which help those businesses and their employees and generate sales taxes. Local newspapers, radio and TV stations also benefit because the team draws more eyeballs and they can sell them to advertisers.

This only works if you're enticing people to spend money they aren't spending already in the area - either by attracting people to the area, convincing them not to leave the area, or convincing them to cut their spending rate and to spend more money. The area, in the case of the Governor, is the state of Missouri.

It's the same argument that is used when a Wal-Mart opens up - that it creates jobs and tons of economic impact. Lots of economic analysis (this one is on a Lowe's where 115 jobs were created, and as many as 163 jobs were destroyed) suggests all it does is shave it from other businesses and centralize it in this one place, and very little (if any) new money is created, and often times, jobs are destroyed. In the case of big entertainment - it's money that might've been distributed at a variety of other places.

So - my point is that, while there is a centralized and clustered spending pattern that occurs in places in and around the stadium, if the Rams weren't playing that Sunday, it would be spread out at other retailers, restaurants, etc. throughout the week. The 5.5% saving number that yerfatma cites is not a normally-distributed dataset (I have a couple of local Canadian studies behind a university paywall that are similarly-focused) - it's a small number of people saving a lot, and a lot of people servicing debt like mortgages, student loans, and credit card debts, and spending the rest on survival and luxuries with nothing left over.

Similarly - if you're in a market where the governments spend all, if not more, than they earn - the capital spending on the project also is not new money. We typically shave from other budgets to accommodate a stadium build, which means that money was already cycling through the economy at status quo.

The majority people aren't spending new money at the stadium, but instead cutting back on other spending to compensate for their day out. I've made this argument to deaf ears at the local and provincial level as an economist in Canada.

posted by dfleming at 10:41 AM on March 19

shave it from other businesses and centralize it in this one place

And consider those businesses tend to be publicly-held so the money flows right out of town. Think Stan Kroenke really cares about money staying in the city he happened to buy a team in?

posted by yerfatma at 11:25 AM on March 19

Heart rules the head, dfleming, as an economist I'm sure you understand that better than me. Add in the politicos' fundraising requirements and there's just no contest, sadly.

The real way to contest government spending on sports facilities is to find a way to make a similar emotional/pocketbook connection for that same money. Viral videos of cute babies who seamlessly transition to little kids sitting in, say, messed up classrooms, or the like. Who knows, I'm an engineer.

posted by billsaysthis at 11:31 AM on March 19

I wish we were able to nail the "investing in long-term benefits is sexy" narrative bill, but sadly, the collective "we" really love shiny new things. If we were, maybe the water and sewer infrastructure throughout North America wouldn't be crumbling daily.

posted by dfleming at 01:39 PM on March 19

When I attend sporting events, I don't usually think about whether I've refrained from other spending to make up for it. I question the premise that the average NFL fan who attends a game -- paying $30 to $300 a ticket, $10 to $30 for parking and $10 to $100 on concessions -- is living paycheck to paycheck. At current costs the working class fan is mostly priced out of the sport. It seems like a lot of fans have discretionary income, so having a team could put money into the local economy that might be saved instead.

If the Jaguars ever leave Jacksonville, there will be zero places for the pro sports fan to spend any dollars in this town. I don't think all that money will still be spent on the same businesses I mentioned earlier for other attractions. Some people will hang onto it because none of the alternatives are enough to motivate them to part with the money they used to spend on a NFL team.

So I definitely see an adverse negative impact to a team leaving, though I won't go as far as to conclude that this makes publicly funded stadiums justifiable. I think they're a racket that makes rich people richer and politicians more powerful at the expense of the taxpayer.

posted by rcade at 09:03 AM on March 20

When I attend sporting events, I don't usually think about whether I've refrained from other spending to make up for it.

You don't consider what your current Visa balance is at when deciding on future purchases? You've not once thought that a particular month's expenses were high, and you might rein it in for a little bit to compensate?

It's not a direct "this, therefore not that" thought process that most people use as their decision-making mechanism. It's either hitting their credit card limit (therefore I can't buy other things), a review of their bank balance, or a desire to not be perpetually in deficit that causes people to decide not to eat out that week, not to drop by the pub after work, not to grab Starbucks, etc.

The things we've bought absolutely help to dictate what it is we buy in the future.

Some people will hang onto it because none of the alternatives are enough to motivate them to part with the money they used to spend on a NFL team.

If you actually look at the data on what people do with their money, this is categorically untrue for all but a small percentage of the population.

Most people spend how much money they have, and very few look at the variety of other consumption options (including housing expenses and upgrades, electronics, food and beverage, cars, and servicing other debt) and think "well, there are literally no other options other than Jags tickets that will satisfy me. I guess I will bank that $500."

If they did, the savings rate would create significantly more stable retirement funds for all but the wealthy than exist now. Most people's net worth is the equity in their house - they aren't building it through monthly cash flow or savings theory, which is why we have to do things like incentivize 401k contributions and other things to get them to.

posted by dfleming at 09:15 AM on March 20

If the Jaguars ever leave Jacksonville, there will be zero places for the pro sports fan to spend any dollars in this town.

If you actually look at the data on what people do with their money, this is categorically untrue for all but a small percentage of the population.

There's a question comes down to: does attending an NFL game have 0 price elasticity and I'd say it does not: college & high school football would replace it for all but the most hard-core fan and other entertainment options (movies, clubs, etc) would replace it for others. It's unlikely even the most hard-core NFL-only football fan is going to sit home and swim in their saved dollars Scrooge McDuck-style. Maybe they'll play Madden instead. Or splurge on a new TV and DirectTV.

posted by yerfatma at 10:02 AM on March 20

You don't consider what your current Visa balance is at when deciding on future purchases? You've not once thought that a particular month's expenses were high, and you might rein it in for a little bit to compensate?

Those questions are about vague spending decisions. The premise put forward in this discussion is more specific: that a person who would have spent $200 attending a Rams game would have spent $200 anyway in that same time period without the Rams around, so there's zero impact to the local economy in having the team.

"well, there are literally no other options other than Jags tickets that will satisfy me. I guess I will bank that $500."

Why do you find it hard to believe that a person who likes a specific form of entertainment will spend money on that when it is available, and keep the money when it isn't?

There are only four sporting events reasonably close by I'll shell out money to attend: Jaguars games, the Player's Championship and the occasional Orlando City SC game and spring training game in Viera, If any of those go away -- the Nats are leaving Viera after 2016 -- I'm not going to reflexively put the money into comparable entertainment.

It seems irrational to me to conclude that a person who spends $2,000 a year attending local pro sporting events will always spend $2,000 even if the teams he likes move away. I don't see sports as an interchangeable form of entertainment. They're better at separating me from my money than other forms of entertainment have proven to be. I've lived in this area 18 years while almost never attending any other live events that would put money into the local economy.

posted by rcade at 10:11 AM on March 20

college & high school football would replace it for all but the most hard-core fan and other entertainment options (movies, clubs, etc) would replace it for others.

There's no college football to attend here, aside from the Florida/Georgia game, and I'm not an alumnus of any local schools so my interest is extremely casual. As for high school football, it held zero interest for me in high school and has less today. But even if I cared, I'd find it impossible to spend $30 to $300 a ticket, $10 to $30 for parking and $10 to $100 on concessions to see St. Augustine play Nease.

As for movies and clubs, my interest in being entertained is limited to -- wait for it -- things that entertain me. If pro sports go away there will be less things that cross my "is it worth the money?" threshold.

What you're saying sounds to me like the idea that if all the good burger joints close I'll spend the same amount of money at McDonald's.

I might buy a better TV, though, but that's a one-time expense that likely would put bupkiss into the local economy.

posted by rcade at 10:25 AM on March 20

I have relatives who live in Arlington, can't afford to attend Cowboys games but are funding the city's JerryWorld loans even as the facility is already turning a profit for him.

There should be a per-ticket tax imposed on fans who attend events at that facility that goes completely towards erasing the public debt incurred on it. The idea that local residents are shouldering any of the costs now is obscene.

posted by rcade at 11:04 AM on March 20

Why do you find it hard to believe that a person who likes a specific form of entertainment will spend money on that when it is available, and keep the money when it isn't?

Because I've looked at the data on saving and spending habits. Those questions are vague because we're not talking about all the spending on one Sunday, but the spending of citizens over a year in their cities. Do they spend the same amount of money they make each year, regardless of what it's on? Yes - primarily they do.

I'm also not inventing this out of belief - I'm saying the majority of people don't do what it is that you're suggesting, no matter how irrational it is. People in towns spend almost all of their money every month regardless of whether or not it's on sports teams.

What you seem to be envisioning if the Jags leave is 50,000 people in Jacksonville who just sit at home quietly in a room on Sunday afternoons and don't consider anything else they might do with their time and money. They don't go to sports bars to watch games, or watch other sports live, or take their partners on dates, or take their families to the movies or to an amusement park, or do anything else.

And what I'm suggesting is, based on all economic data and trends I have seen to date, people have not one thing they wish to do with their money, but many things, and when one preference is unavailable, they find others that maximize the happiness of their lives in the present. People who used to go to LA Rams games do other things today than they did then.

posted by dfleming at 12:28 PM on March 20

rcade, I think he's saying you're more the exception than the rule. Not a bad thing in this case.

posted by Mothball at 12:53 PM on March 20

if all the good burger joints close I'll spend the same amount of money at McDonald's.

No, what price elasticity says is if all the good burger joins close you'll seek out a decent steak place. Or if you're really inelastic and only want a burger, maybe you buy a new grill and cooking classes.

There are only four sporting events reasonably close by I'll shell out money to attend

Sure, but if those aren't available and you're stuck for something to do for the weekend, maybe you go to the movies or a concert or buy a DVD or whatever. Treating this cash as "Money a Person Spends on Sports" is putting too tight a fence around it. It's entertainment dollars or disposable income or whatever you like to call it.

posted by yerfatma at 01:15 PM on March 20

Same thing happens when people get a raise. It would make sense to take all of the money from that raise and put it in a retirement account, or college savings account, since it is money you've never seen before. However, most people just absorb that "new" money into their annual expenses. Not really seeing much difference in the long run.

posted by opel70 at 02:57 PM on March 20

For what it's worth in relation to the arguments over public funding of sports venues, I offer the following. The emotional attachment to a team in your city can be quite strong, even if you never go to one of their games. Walk around anywhere in New England and look at the number of Patriots, Bruins, Red Sox, and Celtics hats, shirts, and jackets. I would bet that fewer than 25% of those who sport the gear have been to a game of that team in the past season, or perhaps even the past 5 seasons.

I have just renewed my Boston Celtics season tickets. It's something of a luxury, although the cost for the 2 seats is not a budget buster for me. I have tried to make it to at least one Patriots game per season, but did not this year. I don't think I will try for the coming season, either. The seats are expensive, getting to and from the games from southern NH is a real pain, and the seats that are usually available are located "somewhere in the Town of Foxborough". While I am a baseball and hockey fan, I will not go to Fenway Park, and I probably won't go to TD Garden for a Bruins game. I can get my baseball fix with a collegiate level wooden bat game at the local park. College hockey is readily available, with 3 teams within less than an hour's drive and 4 more in Boston.

So why did I choose the Celtics for season tickets rather than one of the other teams? First of all, I go back to the 1952-53 season with the team. I lived in the town of Winthrop, MA, which by public transportation was less than 30 minutes away (if connections were good). The cost for a game was affordable for a kid of 11 or 12 who was in the process of getting filthy rich by delivering newspapers. The best bet was to get my dad interested in the team and talk him into going to a game. The Celtics became the only championship winning team in Boston, and continued a winning tradition throughout the 1960s and well into the 1970s. I was absent from the area for most of those years, but I still followed the team.

I know I will not attend all 43 of the games in the coming season (ticket plan includes 2 exhibition games), so why renew? I will use a number of the tickets as prizes for fund raisers at my church or for the PTO at the school where my wife works. I will sell a few to a couple of people I know who want to go to the occasional game but don't want the hassle of buying tickets through the team and having to figure out whether the seats are any good. Still, I'll eat a few, but I really don't worry about it. In short, while the money I spend could be used for something else, it isn't that I'm taking food out of my wife's mouth. I'm not wealthy, but I am certainly comfortable. Thus, I can afford a few luxuries, and the Celtics are one of them.

posted by Howard_T at 11:47 PM on March 20

Even if you believe that locals will spend the same amount of money in their community if a sports franchise leaves, pro sports bring in people from the surrounding region who go to games and spend money in that community.

I spend money in Viera each year for one reason only: I go to Washington Nationals spring training games, make a pilgrimage to the World of Beer, eat at a local restaurant and go to a few stores I like.

The same is true in Orlando now that Orlando City SC is playing.

As for Jacksonville, it is rare in pro sports as a one-team town. So there are some of us who spend money on the Jaguars because we like pro sports and others who come in from other cities in Florida and Georgia. Their money might not be making the trip to Jacksonville without the team.

posted by rcade at 11:40 AM on March 21

I mentioned that as one of the two conditions where it creates economic impact in my first comment - people travelling from one market to another.

But you spending money in other cities in Florida doesn't do anything for the state budget (sales tax in Viera or Orlando or Jacksonville all go to the same state, minus any local surtaxes, but those don't go to the state either), which was the whole thing that I started with - the governor of the state claiming it would cost the state $10m is a patently ridiculous statement.

With teams bordering around them in Kansas City, Tennessee, Indianapolis, and Chicago all in close proximity, and the Rams having been so lousy for the last decade, it's pretty unlikely that they are drawing thousands of out-of-state fans to the state for Rams home games. They may be drawing folks from local counties in, but that does nothing for the state budget.

posted by dfleming at 09:35 PM on March 22

The Rams draw from southwest Illinois and eastern Missouri on the fan map. I don't think there's any doubt they're drawing thousands of fans from Illinois.

When I lived in Peoria for a year, it felt like the border between Bears fandom and Rams fandom. There was a lot more support for St. Louis teams in that area than I expected.

posted by rcade at 07:32 PM on March 23

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