Peter Callaghan: There's enough money in pro sports to end stadium tax subsidies

Staff WriterJune 3, 2014 

The reaction to former Microsoftie Steve Ballmer’s purchase of the Los Angeles Clippers focused mostly on two questions — did he overpay and what does it mean for bringing the National Basketball League back to Seattle.

The answers are yes and who knows.

Of course Ballmer overpaid. As sportswriter Art Thiel told KPLU last week: “This is what happens when you have unemployed people on the street with $20 billion in their pocket.”

But even if he hadn’t put his bid on the table, the next-highest bidder offered $1.6 billion. Even relatively weak teams in much smaller markets — Milwaukee and Sacramento — sold in the $550 million range over the past two years. Major league sports franchises always sell for more than the owner paid for them — usually a lot more.

What wasn’t talked about nearly enough is how the purchase proves again that there is plenty of money flowing through professional sports in America that the owners can afford their own arenas and stadiums. Yet while these big dollar amounts should prove that no tax subsidies are needed, it doesn’t change the politics of stadium extortion.

It should, but it won’t. That’s because the people who own sports teams, who often brag about their accomplishments in capitalism, have created a highly profitable form of socialism.

Sports leagues artificially limit the supply of product and then let demand raise the price. As long as there are other cities that want the “Big League” imprimatur that teams can provide, owners can trigger auctions. Sometimes, as in Atlanta, a team doesn’t even have to threaten to leave the area but rather lets a suburb offer a better deal than the host city does.

Oddly, at least for pro sports, the owners of the Atlanta Braves baseball team didn’t let the city of Atlanta bid to keep the team in its apparently ancient 17-year-old Turner Field. Instead it cut a secret deal with neighboring Cobb County.

Last week, Braves owner John Schuerholz revealed why. Had the team’s desire to move to ’burbs been known before it was sealed, public opposition might have killed the plan.

“If it had gotten out, more people would have started taking the position of, ‘We don’t want that to happen,’” Schuerholz said in a speech to the Atlanta Press Club. He needn’t have worried, though. At the meeting to approve the deal last week, the Cobb County commissioners limited public comment to 12 slots. Stadium proponents got to the meeting room five hours early and captured all 12. When opponents stood and demanded to be heard, they were removed by police officers.

Although on the far edge of a lack of public process, Atlanta’s isn’t that different from what happens everywhere. Opponents are marginalized and the establishment — from the chamber of commerce to the editorial pages — lines up in support.

In the abstract, most people likely agree that having taxpayers pick up the largest share of a stadium or arena is ludicrous. This is true not just because of the market value and profitability of franchises, but because of the salaries paid. Surely if the Seattle Mariners can pay Robinson Cano $24 million a year, the team could have found the $33 million a year in taxes that were used to pay off stadium bonds until they were retired in 2011.

But they don’t, not because they can’t afford it but because they don’t have to. They don’t have to because these deals aren’t debated in the abstract, they are debated one city at a time with the threat of losing a team as a constant threat.

Then, each new deal negotiated at gunpoint creates the new high-water mark that the next city in line will have to meet in order to keep its team in town or at least keep it “competitive.”

When emotions are involved, economics don’t matter.

Peter Callaghan: 253-597-8657 peter.callaghan@ @CallaghanPeter

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