Politics & Policy

Socialism for Sports Team Owners

Oakland Raiders players at Oakland Coliseum (Photo: Kirby Lee/USA Today Sports/Reuters)
The NFL’s failed effort to shake down Oakland and its success in Las Vegas illustrate the worst kind of crony capitalism.

The people of Oakland went into mourning this week while those in Las Vegas celebrated the news that the National Football League’s Raiders were abandoning the East Bay and heading to Sin City. But while any sports fan understands the sadness felt in Oakland and the happiness in Las Vegas, the reaction from taxpayers in the two places should be quite different. Those of Oakland should be cheering their government’s refusal to be shaken down by the NFL, while the people of Nevada ought to be up in arms about the way they are about to be fleeced by billionaires.

The iconic franchise was lured to Nevada by the state legislature’s approval of $750 million in financing toward the building of a $1.9 billion domed stadium where the team would play. While the city of Oakland offered to donate 55 acres to be used for building a new stadium for the Raiders as well as infrastructure improvements that would benefit the team, the NFL preferred the more lucrative bribe from Las Vegas. That means the Raiders will be lame ducks in Oakland for the next two seasons until their current lease expires and they can fly to the desert where by 2020 they will be playing in what will presumably be a state-of-the-art stadium designed to produce far more revenue for the team than their current abode, which was renovated by the city for their benefit in the 1990s.

Teams do provide cities and regions with an almost tribal identity that provides an intangible boost to morale when they win and a sense of shared grief and solidarity when they don’t. The tragedy here isn’t the decision of the Davis family that owns the Raiders to pull up stakes and move their property someplace they can make more money. In theory, that’s capitalism and the fans can always find other forms of entertainment. But the process by which the Raiders and many other professional teams have extorted tax breaks and public financing for their private businesses isn’t free enterprise at work. It’s crony capitalism at its worst.

Sports leagues argue that new stadiums boost local economies and that the money showered on their owners is a good investment since games provide employment and tax revenue that would go elsewhere if teams were to move. But economists from those at the left-leaning Brookings Institution to the libertarian Cato Institute have consistently debunked these claims for decades. The money most fans spend attending games — both at the stadiums and the surrounding neighborhoods — has been shown to be merely transferred from other leisure activities. There is also no net uptick in employment, and most of the jobs that are created by ballparks tend to be part-time and low-paying. As for tax revenue, studies have shown that even the most successful examples of new stadiums built with public money that are intended to anchor neighborhood development — such as the Camden Yards ballpark’s positive effect on Baltimore’s Inner Harbor — haven’t earned enough to justify the investment of public money. Almost all have failed to be self-financing and require substantial ongoing subsidies.

Los Angeles will soon have two new NFL teams (the Rams, who returned last year from St. Louis and the Chargers who are fleeing San Diego), but does anyone think the city’s economy was substantially worsened because it functioned without a pro football team for two decades? There is also is no reason to believe Nevada’s problems will be erased by the arrival of the Raiders. Las Vegas was the focus of a foreclosure crisis in recent years and Clark County — where the city is located — voted to increase class sizes and close a school for at-risk students because of budget shortfalls. Yet the state still found three quarters of a billion to spend on a stadium that will increase the profits of a private business.

While the people of Nevada may feel a certain pride about Las Vegas becoming a “big league” city with the addition of an NFL franchise as well as the one the National Hockey League has awarded it for the 2017–18 season, that’s all they will get out of the transaction. By contrast, Raiders owner Mark Davis and his fellow NFL franchise holders will make a fortune out of a stadium whose design will be geared toward generating increased income from luxury boxes, restaurants, and other bells and whistles that the team’s current home lacks. Taxpayers pay the bill for the stadiums, while almost all the benefits go to private interests. This is a Robin Hood in reverse system that amounts to nothing less than socialism for sports team owners.

Why do cities and states consistently do something that is not in their financial interests?

One can trace the political advantages of governments providing their people with bread and circuses back to ancient Rome. The appeal of team sports in our own day is also undeniable. No mayor or governor wants to be remembered as the person who “lost” a beloved team the way New York City let Major League Baseball’s Giants and Dodgers depart for the West Coast in 1957, leaving behind legions of disillusioned fans. By contrast, politicians who agree to even the most egregious deals in which teams are provided new stadiums virtually free of charge (as, for example, was the case in Pennsylvania when the state agreed to finance two new parks for baseball and football in both Pittsburgh and Philadelphia at the start of the new century) that will make them incomparably richer are lionized even if the net impact on taxpayers is overwhelmingly negative.

At a time when Oakland faces a variety of devastating economic and social problems with limited resources, Mayor Libby Schaaf deserves credit for refusing to be intimidated by the NFL’s shakedown. The NFL is a $14 billion business with television contracts that ensure that even their most poorly run teams are immensely profitable, while impoverished Oakland still owes $83 million on a deal that lured the team back from Los Angeles two decades ago.

Schaaf’s example should also inspire other state and municipal leaders who will face the same kind of blackmail in the future to stand firm. The real villains here are the politicians — like the Nevada legislators — who mortgage the future to build stadiums. As for the team owners who happily accept bribes from states that amount to public subsidies for successful private businesses, if they want new stadiums that will help make them more money, they should pay for them on their own.

— Jonathan S. Tobin is opinion editor of JNS.org and a contributor to National Review Online. Follow him on Twitter at: jonathans_tobin.

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