San Diego It's a sorry state of affairs when your ace in the hole is a black hole: possible bankruptcy. That's the situation with the City of San Diego: its best defense against another pillaging by the Chargers is the fact that the city is broke. San Diego is already a national laughingstock. Think what it will be if it gives a billion dollars' worth of development rights to the Chargers, then goes bankrupt.
But will penury protect the city? In the past few years, there have been a few hopeful signs that major-league sports teams are no longer as rapacious as they were. Supposedly sensitive to criticism for extorting public funds from education, libraries, infrastructure, affordable housing, and the arts, they are putting up more of their own money for sports facilities.
Alas, it's not much more. Team owners are not sensitive people, except when fingering their pocketbooks. And when you examine sports deals closely, there are a lot of concealed payoffs that the biased mainstream media don't report.
Next year, the Chargers want voters to okay an urban village development plan that, the team claims, will pay for a $450 million stadium. It would include 6000 housing units, retailers, and a hotel. The footballers assert they will even plunk their own money into some of the infrastructure. The city would have to give the team 60 acres at the present Qualcomm site and pay for part of the infrastructure.
The city would be giving up $1 billion in development rights, says former councilmember Bruce Henderson, who fears that once again, the team is fleecing San Diego. First, in the late 1990s, it promised to stay if it got a 60,000-seat guarantee and a refurbishment of the stadium now called Qualcomm. It got both and then reneged on the agreement, wangling a deal that reduces its rent by $6 million a year and permits it to blow town in 2008. In return, it dropped the 60,000-seat guarantee, which was going to expire in two years anyway.
"The bottom line is that the Chargers have set themselves up," says Henderson. "With their rent reduced, they can make lots of money staying at Qualcomm, which is an excellent stadium as is. Or if they get development rights free, they can make billions from the urban village, even after subtracting the cost of a new stadium. Or if they get a deal from Los Angeles, they can move. Don't be surprised if right before the 2006 election, they insult the city so they can lose the election and bolt for L.A."
Rodney Fort, economics professor at Washington State University and author of Sports Economics, says that since 2000, taxpayers have paid on average 63 percent of sports palace costs. "That's better than what it was in the 1970s, when the public was putting in almost 100 percent," he says. "More private money is going in, especially for [hockey and basketball] arenas."
There have been some positive developments. In the late 1990s, Los Angeles was ready to put a heavy subsidy into the Staples Center, which is used for basketball and hockey. But its politicians decided to play hardball. In the end, the city put in only 3 percent. Now it refuses to pay for stadium subsidies, even infrastructure. Of course, it has an enlightened newspaper, the Los Angeles Times, which has been willing to put the city's fiscal health ahead of its own narrow economic interest. Fort explains that newspapers profit from sports pages, special sections, and promotions, while radio and TV stations rake in bucks from game broadcasts, talk shows, and the like.
The San Francisco Giants lost four elections seeking subsidies, finally winning the fifth by promising to pay for everything but infrastructure. Government picked up 8 percent of the tab. Massachusetts kept refusing the pleas of the New England Patriots. Hartford, Connecticut, said it would give the team everything it wanted, but it was a cockamamie scheme that mercifully died. Finally, the Patriots paid 83 percent.
An arena for the Columbus Blue Jackets hockey team was built with zero public funds. The arena for the Dallas Mavericks and Stars was 30 percent taxpayer funded. The St. Louis Cardinal ballpark to open next year will be 22.6 percent funded by taxpayers.
Some governments are putting up stiff resistance. Minnesota and Florida state legislators won't pick up the tabs for the Twins and Marlins, respectively. "The Twin Cities have resisted for a long time," says Rob Baade, professor of economics at Lake Forest College, north of Chicago. "But once cities start kowtowing to team demands, it makes it more difficult for other cities to resist, because of the argument that a team will be less competitive."
There's a wonderful Marlins story. The team pulled out the usual ploy of threatening to move. The brass visited Las Vegas to hear Sin City's pitch. The president of the Florida state senate shut them up: he said he wouldn't "negotiate with terrorists." If only San Diego pols had had such backbone.
There's bad news too. Washington, D.C., wooed a team, owned by Major League Baseball, from Montreal. A taxpayer-financed stadium was part of the package. Suddenly, some politicians and citizens groups got spine: they argued that with schools and infrastructure in horrible shape, the private sector should pay a chunk. Indignantly, Major League Baseball said it was going elsewhere. Washington surrendered. The $600 million-plus stadium will probably be 90 percent funded by the government.
The Indianapolis Colts will get a new $625 million stadium, and the team will put in a mere $100 million. At one point, the public's portion was to be paid off through receipts from a downtown gambling casino. That was scrapped. Earlier, plans to have casinos pay off the cost of a stadium for the Chicago Bears were jettisoned. In the future, however, there will certainly be more financial ties between pro sports and gambling. As Dan Moldea's book Interference shows, the original owners of National Football League teams came from organized crime and the gambling industry. Financial necessity will lead to more marriage vows.
Some recent developments were less promising than advertised. "When a stadium is said to be privately financed, you have to look at the details," says Baade. The Dallas Cowboys advertised that they were putting up half of a proposed $650 million stadium. However, the Heartland Institute points out that while the governments would use new taxes to retire their part of the debt, the Cowboys were permitted to slap a tax on tickets and parking. The team gets 95 percent of the naming rights and also a loan from the league it doesn't have to repay. The team's subsidy could reach $1.2 billion, says Heartland.
A proposed billion-dollar subsidy to the New York Jets was knocked down by two state politicians this year. Polls showed that New York City residents had consistently opposed the proposal, partly because the New York Times editorialized that the billions for owners should go for critical public services. But the Jets will be back, because other teams have their hands out.
The New York Yankees and Mets are claiming they will build their own stadiums, with the government kicking in some things such as parking. But FieldofSchemes.com says that the teams will collectively get more than $900 million from city and state funds, rent rebates, bond subsidies, property tax savings, and the like. If you add in the $451 million that the Nets, a basketball team moving from New Jersey to Brooklyn, want in city and state funds, New York governments could be on the hook for more than $1.3 billion.
Fort is not optimistic that what he calls "the stadium mess" will improve. Politicians can't resist a stadium subsidy: teams, the business establishment, labor unions, and the construction industry lobby heavily. The media (with some exceptions) are generally biased for the public subsidy that is in their economic interest. "There is little hope that direct democracy can curb the stadium mess," he says.
Knowing that the city is broke and services will be slashed and taxes raised, San Diegans may still vote a billion-dollar gift for their beloved Chargers, who will take the money and laugh all the way to the goal line.