Every now and again, you hear a politician or sports announcer who objects to the “corporate welfare” which is found throughout the United States, in the form of municipalities paying hundreds of millions of dollars to build sports arenas for the specific use of certain private, professional sports teams. Their opposition usually amounts to nothing more than lip service, however. They object to the practice; very good. So do I. So do a lot of people. But what is the actual remedy?
First of all, let’s discuss why this is a problem. Sports teams can be good. They provide an enjoyable form of entertainment. Successful baseball teams can sell as many as four million tickets a year, and they have many more fans who keep track of the games on television and radio. Other sports teams are fan favorites as well. Stadiums attract a certain amount of economic development, and in general contribute to the life and enjoyment of a city.
And in fact, they are so successful in doing this that market forces are entirely sufficient to provide for them. Yankee stadium draws more than fifty thousand fans per game. And the average fan, between ticket prices and concessions, spends nearly fifty dollars at a game. That comes to $2.5 million per game. This is why there are baseball players who have signed contracts in excess of $100 million. This is a very wealthy business. As long as there are schools that are holding classes in trailers and decaying roads, bridges, and tunnels, building stadiums for millionaires who can afford to build them themselves is bad governance.
So why does this happen? It happens because every mayor would like a multi-billion dollar industry in his municipality, but the supply is limited. Why is this? The answer is the federal government. The sports leagues are legally enforced monopolies with special federal charters that restrict competition and regulate their number. The result is that when George Steinbrenner threatens to move out of Yankee Stadium, there isn’t another team to take its place, which is what would happen otherwise. So there is an unnaturally limited supply. This empowers the owners, who can threaten to move to who knows where in order to make municipalities build them stadiums.
Now, I don’t object to the fact that sports leagues are monopolies. This is what creates the possibility of good competition – a limited number of teams which concentrate talent. But once the federal government gets involved, it puts everything out of balance. It needs to finish what it started.
So how does it do this? By passing further federal legislation regulating sports teams. First of all, it should be illegal to use public money to fund stadiums used by any team with federal monopoly status. This should be true across the country, so teams can’t use an offer from one municipality to extort money from another. Second, all stadiums in which these teams play should be on the tax rolls, just like any other business. Currently, teams not only have municipalities build them their own exclusive-use stadiums, but they declare them parkland and retire them from the tax rolls. These properties should be evaluated and taxed just like any other.
This is the kind of thing that a presidential candidate should take up. It has to be done at the federal level. It’s no use for New York City to pass such a law; all our sports teams will end up in New Jersey. If Minneapolis passes a law like this, the teams will end up in Saint Paul. It has to be a federal law. This is exactly the kind of regulation of interstate commerce which the federal government was formed to provide.