Field of Schemes

by Neil deMause

  When it comes to delivering messages, team owners are increasingly likely to call on a local politician like Smith—or even more commonly, a friendly newspaper sports columnist. After all, getting stadium funds out of a wary public requires leveraging the goodwill that’s been built toward “their” team, and it’s hard to convince people to open their wallets when they’re busy hanging you in effigy. As Minnesota Vikings stadium lobbyist Lester Bagley explained to a group of local sports editors: “We try to get our ownership not to talk about other markets. It’s not helpful in a public-relations sense.”

  For billionaire oil baron Jerry Jones, owner of the Dallas Cowboys, the most valuable franchise in football, it was Fort Worth Star-Telegram columnist O. K. Carter who rode to the aid of their demand for tax dollars to pay for half the cost of a new $650 million stadium. Carter wrote that although Jones “should pay totally for any stadium,” he “doesn’t have to. Any of a half-dozen franchise-hungry cities in the country will happily cough up a big chunk of the tab for the Cowboys.”

  Carter’s words might have been more convincing if not for another column he’d written just three months earlier. In that one he’d insisted that the Cowboys “simply can’t use the old ‘give us a new stadium or we’ll leave’ threat. They’ve become one of the most valuable sports franchises on the planet because of that ‘Dallas’ in front of their name. Even if they left, the thunder we’d hear would be the sound of air crashing into the empty space left by a half-dozen other franchises trying to be the first to fill the Cowboys’ vacuum. No, the Cowboys are stuck here, no matter what.”

  The undisputed prize for service to his team, though, has to go to Minneapolis Star Tribune columnist Sid Hartman, a self-proclaimed “close personal friend” of Bud Selig who spent more than a decade insisting that without a new stadium, and pronto, the Twins had one foot out the door. A review of the past decade’s Hartmanisms by the Minneapolis City Pages in 2005 revealed a time line of doom-filled prognostications that made up in melodrama what they lacked in accuracy. In January 1997, as the team geared up for its first big stadium push, Hartman predicted that “the Twins will be in Charlotte, North Carolina, by the year 2000 if a new stadium is not built.” That April, Hartman wrote: “You can write this in stone: The Twins will not be here after 1998, when Pohlad can escape his Metrodome lease, if a new stadium isn’t approved during this legislative session.” In May: “My prediction: This franchise will wind up in Mexico City in 2000 if a new stadium isn’t built.” A new stadium wasn’t built, and the Twins didn’t leave, but Hartman was undeterred, predicting that 2002 would be “the last season of Major League Baseball in Minnesota.”

  By May 2005 the Twins were still in place and still seeking stadium funds. Wrote Hartman, “Believe me, if this stadium plan falls through, the Twins are done fighting for a stadium and the owners will either cut the payroll to $25 million from the present $56 million or sell the team to somebody who might move it.” The next year, the Twins payroll had risen to $63 million—and the team was back in the state legislature, stumping for the exact same plan.

  Even once the Twins had won, old habits died hard. On the day that the legislature approved the stadium, Hartman ran a column citing Selig as saying the team had been about to move: “We were coming close to the end. And if anybody thinks that was an idle threat, they were kidding themselves.”

  Leveling the Playing Field

  In October 2004, as the city of Washington DC considered spending more than $400 million dollars on a new stadium to lure the Montreal Expos down from Canada, Washington Post columnist Steven Pearlstein wrote: “The economics of baseball are such that there simply is no way to have a viable team without some form of public subsidy. The amount of subsidy already in the system has generated player salaries and franchise prices so high that there’s not enough money left over to pay market rent for a stadium.”

  It’s certainly a familiar claim: that old, unsubsidized facilities may have been fine in your grandfather’s day, but they simply don’t allow teams to compete in the modern era. But is it true?

  There’s certainly plenty of circumstantial evidence to the contrary. The Boston Red Sox, playing in ninety-two-year-old Fenway Park, won the World Series in 2004; the year before, the Florida Marlins took the crown, despite being then in their sixth year of insisting that a new stadium was necessary for their team to compete. In the NBA, the Houston Rockets, San Antonio Spurs, and Chicago Bulls all won championships in buildings they were looking to leave, as did the NHL’s New Jersey Devils. Clearly, a taxpayer-funded new home isn’t a requirement for on-field (or on-court or on-ice) success.

  It’s undeniable, though, that new stadiums do bring in more revenue for their tenants—especially when it’s the public paying the construction bills—and some of this trickles down to spending on players. (Because of the pricey premium seats that typify new sports facilities, owners have a greater incentive to sign high-priced players, knowing that the fannies they put in the seats will be that much more valuable.) An examination of the link between new baseball stadiums and winning percentage for the Baseball Prospectus book Baseball between the Numbers revealed that new stadiums were worth about 5.5 wins a year to their teams. That’s about as much as they could gain by adding one ace starting pitcher—bringing to mind the Minnesota legislator who, a few years back, suggested that instead of spending hundreds of millions of dollars on a new stadium so the Twins could afford to re-sign Brad Radke, it would be cheaper for taxpayers just to pay for his contract.

  If anything, though, new stadiums and the riches they’ve brought to the teams that play in them are driving payroll costs through the roof, making it still harder for low-revenue teams to compete—and making it difficult even for some teams with new homes, since all their competitors have them, too. (The concrete was barely dry on Pittsburgh’s new PNC Park before Pirates owner Kevin McClatchy declared that he still had no intention of raising his payroll above the league average.) As it became clear that plenty of teams were going to finish at the bottom of the standings even with new homes, league officials changed their tune—slightly. “People say, well, new stadiums are not the panacea,” said Selig in June 2004. “They are not the panacea. But there are some cities, for example, take Detroit; they couldn’t continue in Tiger Stadium. At least [the new stadium] gives them a lot more revenue to be competitive.” At the time, the Tigers had spent four years in their new park and were coming off a season in which they lost a league-record 119 games.

  Then there’s Oakland, where A’s owner Steve Schott, often joined by Selig, made “we can’t compete” an annual spring-training refrain—even as his team stubbornly won division titles year after year. Immediately after making the playoffs for the fourth year in a row in 2003, Schott griped, “It’s very frustrating to have to go through this every year and not have a realistic chance of signing guys like [Jason] Giambi and [Miguel] Tejada. I don’t think I have to make my case anymore. It’s pretty clear why I can’t. I look at other teams rolling back their payrolls and they have new stadiums.”

  In the land of sports-owner logic, even when teams have new stadiums built for them and fail, it’s a reason to build more stadiums.

  Playing the Numbers

  In 2004 the city of Arlington, Texas, hired the consulting firm Economic Research Associates (ERA) to measure the likely impact of the $650 million football stadium the Dallas Cowboys were looking to build there—with $325 million in sales, hotel, and car-rental taxes. Their findings: a new stadium would create $238 million a year in “economic impact,” more than repaying Arlington for its investment.

  “Economic impact” is a favored statistic of consultants, because it dramatically inflates a project’s effect by including all money spent at or around a facility, whether or not it benefits the public. If a team doubles its ticket prices, for example, that counts as double the economic activity, even if the resulting revenue goes directly into the owner’s pocket.

  A more accurate
way of looking at the costs and benefits of a project is to examine how much actual new tax revenue it would bring into a city’s coffers: “fiscal impact,” in public-policy lingo. ERA included those numbers as well, predicting $2.9 million a year in increased tax revenues—while Arlington would be handing out more than $20 million a year in subsidies. And if that wasn’t bad enough, ERA touted the creation of 807 long-term jobs—which would come to more than $400,000 in expense per job created, one of the worst ratios in economic-development history.

  Nonetheless, the ERA report enabled Arlington mayor Robert Cluck to declare the project an economic boon, saying, “You have to spend money in order to make money.” Shortly thereafter, following a $5 million ad blitz by Jones, Arlington voters approved the stadium project.

  Lukas Herbert, a city planner in New York’s Westchester County who, as a member of the community board in his Bronx neighborhood, voted against a Yankees stadium project backed by a similar ERA report, said these studies are typical of the sort of rosy economic projections that come across his desk to justify dubious projects. If you’re a developer, said Herbert, “you hire a firm like ERA and say, ‘Here, put in some numbers and make us look good.’ They can make any project seem like an economic-development dream come true.”

  That was certainly the finding of the New Orleans Times-Picayune when it investigated economic-impact projections in Louisiana. The numbers provided, the paper found, were seldom reliable, especially when the beneficiaries of the development deals were the ones conducting the studies. In one case, when organizers of a festival in Texas were unhappy with an economist’s projection of $16.1 million in economic impact, they sent him back to the drawing board. His new calculation: $321.6 million. “I’ve had people tell me that: ‘I want the biggest number I can get,’” University of New Orleans economist Timothy Ryan told the newspaper.

  One problem, says economist Rod Fort, is that economic-impact consultants rely on computer models that are only as good as the assumptions you feed into them. “It’s the worst kind of analytical dodgeball,” says Fort. He recalls asking a Washington State University colleague with expertise in these models, “If you want to answer the question, should we spend $200 million more to upgrade KeyArena here in Seattle, how do you find out how much new stuff is coming out of the existence of the team?’ And he said: ‘Oh, you tell it.’”

  The studies also tend to overlook or downplay the two major pitfalls of economic-development claims. The first is the substitution effect, which measures how much spending is just cannibalized from somewhere else in town, as when fans spend their disposable income on stadium hot dogs instead of at the local pizzeria. The second, leakage, is a measure of the degree to which stadium spending is taken out of the local economy before it can be recirculated—whereas that pizzeria owner would likely have spent much of his income at local stores, the same isn’t true for the team owners and players who reap the bulk of the proceeds from sports spending.

  For example, after its successful report for the Dallas Cowboys, ERA was hired by New York City to study its plans to build a new stadium for the Yankees. Its findings: the new stadium would bring in enough new fans to generate $225 million in new tax revenues for the city and state. Yet its analysis overestimated economic impact in several obvious ways: It accounted for leakage in ticket sales but not substitution, even though every dollar spent on baseball tickets is one less dollar that fans have to spend elsewhere. For concessions, meanwhile, it accounted for substitution but not leakage, even though much of the new revenues would go directly to the Tampa-residing George Steinbrenner through increased fees from concessionaires.

  “The things that make for good economic growth are not very sexy to write about,” explained University of Chicago economist Allen Sanderson. “It’s easy to go to Yankee Stadium and take pictures of the fifty thousand who are there, but it’s harder to go to a mall or a restaurant and interview some guy who says, ‘Yeah, my business was off by 3 percent tonight.’ And yet in dollar amounts, the winners and losers are just the same.”

  The Two-Minute Warning

  Setting arbitrary “deadlines” remains a popular sports-owner pastime, in part because neither elected officials nor local journalists ever seem to notice when drop-dead dates pass and the sky doesn’t fall. In late 2000, after a year in which the St. Louis Cardinals drew 3.34 million fans, the second-best turnout in baseball, the team’s owners declared that if no stadium plan was in place by the following May, they would start to look out of state for a new home. The date came and went without incident, and it would take until December 2002 before a stadium plan would be agreed upon. The Dallas Cowboys—another team immensely popular in its current location, and unlikely to move—were even more bald-faced in their public statements. Team spokesman Brett Daniels told reporters: “June 30—that’s our target goal. Part of it is to create a sense of urgency.”

  The undisputed reigning king of the phony deadline, though, has to be Florida Marlins president David Samson. Samson came to Florida when his stepdad Jeffrey Loria got the team in a three-way swap that ended up with former Marlins owner John Henry landing the Boston Red Sox, and Major League Baseball itself taking over Loria’s Montreal Expos. Loria and Samson’s first move—after removing all the computers from the Expos offices and lugging them south to Florida, leaving the league-owned franchise with no scouting data on opposing teams—was to set out in search of the stadium subsidies that had eluded two previous owners, Henry and Wayne Huizenga.

  Samson’s first line in the sand was March 15, 2004, a date by which he said the Florida legislature needed to approve an additional $30 million worth of stadium subsidies, on top of $198 million plus free land already approved by the city and county, or else. “It’s my experience that without a deadline, nothing ever gets done,” Samson told the Associated Press. “The deadline is firm. It’s not flaccid.” When March 15 came and went and the legislature was no closer to approving stadium funds, Samson promptly moved the drop-dead date to May 1: “We’re confident that forty-five days from now, we’ll stand before you celebrating the Florida Marlins staying in South Florida.” A month later, as state legislators declared the stadium bill “certainly dead for this year,” he pushed back his deadline by another five days, to give Miami commissioners time to vote on it. “This is it,” Samson told ESPN.com columnist Jayson Stark. “It has to happen in the next week. And if not, we’ll move on.”

  It didn’t happen. But far from moving on, as of 2007 the Marlins owners were still pushing for that extra $30 million, while jetting around the country to such locales as Las Vegas and San Antonio to strike fear in the hearts of local legislators.

  Moving the Goalposts

  In May 1999, with the Seattle Mariners’ Safeco Field nearing completion, the team had already gotten $336 million in public subsidies, thanks to Senator Slade Gorton’s last-minute move to squeeze an extra $45 million out of the city of Seattle. Yet following that, thanks to the Mariners’ numerous design-change requests even after concrete had started being poured, the stadium’s cost had soared still higher, standing at a staggering $514 million—$100 million more than had been budgeted.

  Although the Mariners had agreed as part of the Gorton deal to pay for any additional cost overruns, team execs now came back with a novel argument. The added costs, the team explained, were not “cost overruns” but rather “unanticipated capital costs”—and it asked the state to refinance the ballpark bonds and use the proceeds to bail out the Mariners. If it did not, the team threatened, it would have to cut loose star players Alex Rodriguez and Ken Griffey Jr. to pay for its extra cost. (Griffey, annoyed at being dragged into the dispute, promptly griped, “Every time money comes up with ownership, it’s Junior and Alex’s fault?”)

  A judge ultimately disagreed with the Mariners’ argument, and the team ponied up the extra $100 million out of its own pocket. (Griffey and A-Rod both ultimately departed—and the Mariners promptly won a record 116 games in the 2001 season.)
More successful were the San Diego Padres, who took a November 1998 public vote for $225 million in stadium subsidies and leveraged it into $299 million by the time Petco Park finally opened in 2004, while eliminating a promised park where fans could watch games for free (an admission fee is now charged on game days) and demanding to build taller residential towers than had been approved by voters. If their demands weren’t met, Padres president Larry Lucchino had warned, “the question of relocation [would] have to be addressed.” He’d added, “I think that’s a viable prospect.”

  Increasingly, teams were using a new gambit to claim further subsidies down the road, even as they locked themselves into thirty-year leases. A typical stadium lease these days contains “state-of-the-art” clauses guaranteeing that the building will remain one of the most modern facilities in its sport.

  As a result, when the Cincinnati Bengals demanded artificial turf at their four-year-old Paul Brown Stadium in 2004, taxpayers were forced to pay the tab because a lease clause put Hamilton County on the hook for installing any and all new technologies that had been adopted by fourteen NFL teams, or by seven using public money. Among the “Level I enhancements” specifically listed in the lease were such items as “smart seats,” “stadium self-cleaning machines,” and a “holographic replay system.”