by Neil deMause
When Cleveland Indians outfielder Albert Belle left the team, and the city, for a huge contract with the rival Chicago White Sox in the spring of 1997, Cleveland fans were outraged. (They showed it by greeting him with a chorus of boos and obscene gestures when he returned to Jacobs Field to play as a member of the visiting team.) It was as if, in leaving the Indians, Belle had betrayed his citywide extended family—a family that had been extorted by its own parents to fork over hard-earned dollars to keep the team in town by paying for a new stadium.
If They Don’t Win, It’s a Shame
For generations, the special emotional presence of the local team has been played up—by sports promoters, by the local media, by fans themselves. These are home teams: unique, regional representations of a city’s heart and soul. The intensity of the connection between local fan and hometown team has divided family loyalties, driven real-estate decisions, and dominated debate at countless dinner tables.
Decades later, there are still New Yorkers who have never recovered from the awful day in 1957 when Walter O’Malley abruptly yanked the Brooklyn Dodgers out of Ebbets Field and moved them three thousand miles to Los Angeles. There are grown men and women who walked away from baseball fandom that day and never looked back, others who switched allegiance to the crosstown Yankees or Giants, still others who raised their children on Brooklyn lore—reminiscing about a long-gone franchise. The Dodgers were a neighborhood team, they represented a proud if increasingly struggling urban community, and they were as much a part of daily life as the local churches or recreation centers. The bond was a real one—at least from the point of view of the fans.
How important is that relationship? When major league baseball was hit by financial disputes and labor unrest in the early and mid-1990s, one of the great fears heard among sports marketers and commentators alike was about the alienation of fans. What would happen to the sport’s popularity, it was wondered, when fans thought of the ballclubs as collections of free-agent millionaire athletes looking out for their own financial best interests before the good of their team—thus willing to leave Americans without their beloved baseball in the interest of higher salaries? And what would happen when fans thought of professional owners as similarly self-interested billionaires—willing to shut down America’s pastime before agreeing to player demands, willing to search for more-hospitable climes when local municipalities couldn’t produce sparkling new diamonds? It’s a concern that pops up periodically, among sports journalists and bottom-line network presidents, among professional sports leagues and hot-stove league fans. What would happen, in other words, when the myth of home teams’ belonging, emotionally, morally even, to home cities was exploded in the face of faithful fans?
What happened, apparently, was a great deal of sound and fury without any clear significance. Major league baseball attendance dropped, but it had already been on a downward trend. For years, league officials have bemoaned the difficulties of bringing America’s youth back to the game. Of course, that occasional disinterest on the part of the country’s future consumers may have just as much to do with overpriced seats and concession items, fancy new stadiums with distant views, and the increasing popularity of other sports as with a realization that there isn’t any guaranteed “home” in your hometown baseball club. But still, the warning was out—beware the alienation of the fan, beware the cynicism of the consumer. The myth of public participation in local professional sports needed to be as strong as ever, in order to prevent further declines in fan interest and avoid threats to franchise profits.
Out of the Mouths of Legislators
But what are concerned citizens supposed to do if their sports team is threatening to leave town unless it gets a publicly funded new stadium? Sympathetic to the plight of sports fans who don’t want to lose their team or shell out large amounts of tax dollars, some legislators have tried to find a solution through the law. Unfortunately, these approaches do not offer a readily apparent way out of the problem.
The main focus of legislative efforts to put the brakes on stadium subsidies thus far has been a bill sponsored by New York senator Daniel Patrick Moynihan. Nearly all activists spoke of it with some hope, and perhaps not surprisingly, nearly everyone at the Sports Facilities Finance Conference spoke with some apprehension about the Moynihan bill.
Picking up from where the 1986 Tax Reform Act fell short, the Moynihan-sponsored Stop Tax-exempt Arena Debt Issuance Act (STADIA) would essentially rule out altogether the use of federally tax-exempt bonds for any pro sports facilities.
However, by late 1997 the bill had few sponsors. And even if it were to somehow pass, it was likely to have exemptions tacked on by members of Congress seeking special projects in their districts.
Furthermore, the Moynihan bill wouldn’t stop stadium construction, just raise the cost of capital. Cities would be under pressure to sell taxable, rather than tax-exempt, bonds. Since they carry higher interest rates, these bonds end up costing much more. An extra 2 percent a year—the standard difference in rates—on $400 million in bonds would amount to $8 million per year in extra costs to the local government issuing the bonds. The problem is that that 2 percent extra interest is a lot of money because these bonds usually have a long maturity. If they mature in twenty years, the extra interest would amount to $160 million. The Moynihan bill could easily end up just shifting this part of the subsidy from the federal government to local governments.
There have been other attempts at federal legislation. Oregon representative Earl Blumenauer has proposed a bill saying that in order to keep congressionally granted monopoly privileges, leagues would have to allow municipal ownership and would have to give current cities first dibs on buying teams before the owners can move them. Ohio representative Martin Hoke introduced a similar bill in 1996, only to have it “lobbied to death by the NFL’s hired guns,” a Hoke staffer told U.S. News and World Report.
Other activists have tried devising various means of stopping corporate welfare in general. Corporate welfare activists like Greg LeRoy have proposed various “clawback” provisions (where states get money back if the promised jobs aren’t created), and multi-state commissions to develop regional no-competition pacts among states. They sound promising enough, but some other corporate-welfare opponents (notably Arthur Rolnick of the Minneapolis Federal Reserve) don’t see them going anywhere—clawbacks are only as good as the will to enforce them. (For example, a clawback law was in place with Northwest Airlines, but the state of Minnesota later renegotiated it to avoid alienating the airline company.) Additionally, every attempt at a regional commission so far has fallen apart when one of the parties gets the opportunity to steal a plum business from another locality.
Rolnick instead has a proposal that, he insists, would stop corporate welfare in its tracks: Have the IRS tax corporate welfare as imputed income. In other words, if your state builds you a $400-million stadium, you have to declare $400 million income on your taxes. Needless to say, this would greatly reduce the incentive for companies to seek corporate welfare.
Rolnick says he’s had numerous legal experts look into the possibility of such a law, and he is certain it’s constitutional. He thinks it compares favorably with interstate agreements to stop corporate welfare, since, as he says, the Compact Clause of the Constitution “really doesn’t allow states to make contracts like this—that’s what you’ve got Congress for.”
Whether this is politically feasible is another story. One would think that Congress would have no interest in maintaining local corporations—why should the federal government care where in the United States a company is located—but, of course, Congress itself is made up of locally elected politicians, who have the same ties to corporations and dependence on their campaign contributions and the like as local politicians do. In 1997 Minnesota representative David Minge introduced a federal bill to levy a 35 percent excise tax on local-government subsidies, but it likely faces an uphill battle in Congress.1
Bringing
’em Home
There is one other solution that has been suggested for stadium subsidies. It’s one that would tap into the very mythology that pro owners use when trying to persuade local populaces to build them new stadiums. It’s always about “our” team, after all, at least according to the owners’ public relations flacks—about our town and our pride. In the spring of 1985, when the Cleveland Indians were facing yet another ignominious season on the playing field and the city itself was being asked to build a new stadium to keep the team in town, someone in the club’s public relations office came up with an appropriate catchphrase to drum up support for the new baseball season. “Tribe ’85,” went the saying, printed on bumper stickers and pins, home game giveaway items and local advertising, “This Is My Team!”
But what if it really were our team?
When the world champion Chicago Bulls basketball team takes the court before each sold-out game at the United Center, they are often presented by the dramatic public address announcer as “your Chicago Bulls.” But what if they really were?
When Clevelanders heard Art Modell was pulling the Browns out of town, they were stunned. These were the Cleveland Browns; they weren’t Art Modell’s to pick up and scatter whichever way the financial windfalls blew. They belonged to the town as much as Lake Erie and pierogis, battles over school desegregation and deindustrialization, didn’t they?
Amid the demands for petition drives and rallies were few calls for one obvious solution. They were the Cleveland Browns, after all. Why not have the city buy the team? One group, at least, saw it as an easy choice: “The state, county, or city of Berea, where the Browns Corp. is located, can legally take over the team. Modell can be paid off later but the team will stay,” read an Ohio Communist Party flyer handed out at local rallies. “You, the greatest fans in the world, can make this happen.… Get your union, church, or community group to speak out in favor of public takeover of the Browns through eminent domain.”
And really, the demand seemed fairly straightforward. If they belonged to the city, the Browns would still be packing ‘em in at Municipal Stadium. Winter Sunday afternoons would still mean big crowds at corner taverns, paper dog bones pasted into store windows, “Go Browns” spelled out across corporate vistas. Why shouldn’t the team belong to the city?
After all, hasn’t it worked for the Green Bay Packers for nearly fifty years?
Well, yes and no. The Packers, though often cited as a “publicly owned” team by the media, are not actually owned by the municipality of Green Bay, but neither are they run by a single private owner. In 1950, when the Green Bay Packers football team was on the verge of bankruptcy, the team went public as a non-profit corporation, with about five thousand shares of stock at $25 apiece. The team now has 1,915 stockholders (mostly Wisconsin residents, but also citizens from every state and three foreign countries)—none of whom have ever received dividends. Instead, profits are directed back into the franchise. Ownership bylaws prohibit any individual from holding more than two hundred shares; if stockholders want to sell, they must first go to the board of directors’ executive committee. That committee decides if it will buy the shares back or reissue them. And so for decades the team and its unique ownership group have wrestled with the big issues in modern sports—the executive committee spurned the chance to build a dome over hallowed Lambeau Field but authorized the addition of luxury boxes. The wait for season tickets is in the tens of thousands, and the city has long been renowned for its enthusiastic embrace of the team.2
Public Is as Public Does
Like corporate heads recognizing the public relations value in striking “partnerships” with employees who would otherwise unionize, team owners have risen to the challenge in recent years and talked about putting teams more in “public” hands. Their recent method of choice? Team owners have mimicked the situation in Green Bay, but only in the most superficial sense, by making public offerings of millions of shares of stock in the ballclubs—but only as much as 49 percent of the club, leaving the team firmly in private control. Given that public is so often a dirty word in the contemporary U.S. corporate lexicon, and that its authentic meaning would challenge the fundamental interests of the very private owners of sports teams, the only acceptable role for the public is as Wall Street traders.
Both the Boston Celtics, the historic basketball team, and the Florida Panthers, an expansion hockey franchise, sold stock to the public. Panthers owner Wayne Huizenga apparently decided to make the public offering, in November 1996, to bring in even more money for his billion-dollar coffers. Huizenga, the former Blockbuster Video owner whose holdings also included the Florida Marlins baseball team, maintains control of the team, making the public offering a purely symbolic—and potentially fruitful—gesture. (He sold 49 percent of the common stock but retains other, non-trading, stock for himself.) “I don’t think the institutionals will touch this,” David Menlow, the president of IPO Financial Network, told the Fort Lauderdale Sun-Sentinel at the time. “This is a nostalgia buy rather than an investment.” But with a minimum $1,000 investment, Huizenga stands to profit off that nostalgic gesture. And the fans themselves, those who think they’re buying a true stake in their hometown team’s fortunes, are in for a rude surprise. “If the pattern of previous publicly traded teams holds,” according to the Wall Street Journal, “most Panthers certificates will end up hanging on barroom walls, given as birthday presents or the like.”
The Celtics, which became the first team to go public when they did so in 1986, have seen below-average stock performance since that move. But that initial offering also gave the team’s owners a windfall profit of some $48 million. “On the one hand, you can say [the Celtics are] the exception,” says sports economist Rodney Fort. “On the other hand, you can say, so what if they’re publicly traded? Nothing is really different about the Celtics than any other team. Because, after all, if you issue lots of stock in little bitty bunches, and you maintain the majority of the stock, then who cares?”
The most recent attempt to ease public concerns by offering publicly traded shares came from the Minnesota Twins. And though Twins owner Carl Pohlad’s offer of 49 percent stock in the team caused the local press to declare it would be “essentially creating a partnership between the Pohlad family, who owns the Twins, and the state of Minnesota,” apparently nobody else in the state was fooled enough to drum up support. When it became clear that the locals weren’t going to be taken in, Pohlad withdrew the offer.
But what about actual municipal ownership? Some cities, when confronted with jittery owners threatening to skip town, have attempted to utilize their right to eminent domain—the governmental right to take over private property (including land) for public use. They tried it in Oakland, when the Raiders football team announced it was fleeing to Los Angeles in 1980. The California Supreme Court rejected the case on the grounds that the seizure would “impermissibly burden interstate commerce.” Public officials had even less luck in Baltimore when the city tried to prevent the Colts from leaving town; that team’s middle-of-the-night flight to Indianapolis occurred before the city could make its case in court.
But what if a city had a chance to buy or own a professional sports team, without having to claim it through eminent domain? It’s been done at the minor-league level with baseball teams in New York and Ohio, and in the Canadian Football League. And it almost happened in major league baseball with the San Diego Padres.
When Joan Kroc inherited ownership of the San Diego Padres baseball team in 1984 from her husband, the late McDonald’s founder Ray Kroc, she had little interest in baseball as a sport or in the team as a franchise. But the multimillionaire’s mind was changed when she saw how the Southern California community supported its local ball club, and she became convinced that the Padres should truly belong to their hometown.
So the philanthropic heiress, who would in 1997 make headlines by giving out thousands of dollars apiece to flood victims in the Midwest, made the city of San Di
ego an offer it truly couldn’t refuse: She wanted to give the team to the city, and include a $100-million trust fund for the city to operate it. San Diego Mayor Maureen O’Connor greeted the offer with delight and enthusiasm, as did other city officials. It would have kept the team in San Diego, rid it forever of ugly ownership battles, and provided the capital to attempt a management structure.
It seemed too good to be true, and it was. Because when Kroc took her suggestion to the owners committee of Major League Baseball, they refused to even consider it. A truly publicly owned team apparently would have meant a huge headache—if nothing else, by opening up the heavily guarded major league financial books to public scrutiny.
“If the city owned it, we would have it in perpetuity, and that is obviously the best of all worlds,” O’Connor told the San Diego Union-Tribune. “I was sick, personally, when it didn’t come off, because with a $100 million trust fund,… it would have been great.… I can tell you I was very sad when they turned her down.”
The events in San Diego—and in Montreal, where the Expos ownership had wanted to sell the team to a public–private interest that included the province of Quebec—were a harsh reminder that professional sports teams do not exist to foster the public good. They might have the names of cities on them (at least for now, although a more honest approach might follow the lead of Japanese baseball teams and call them the Steinbrenner Yankees, the Turner Braves, and so on) but, despite owners’ claims to the contrary, they are profit-making machines like few others—and no right-thinking for-profit owner would want anything to tamper with his or her setup. “Think about the way owners deal with cities now, with an artificial maintenance of scarcity of teams,” says Rodney Fort. “You can’t lose in that situation: ‘Give me what I want, or I’ll split.’ Well now, if the city decided to keep a marginally valuable franchise hanging around, to keep a minority of potential voters happy, then the value of your league goes down. They’ll never do it in ten thousand years.”