GRANDSTANDING

April 16, 2012 by  
Filed under Blogs, Hot Button / Lynn Ashby

Houston has a pro soccer team, the Dynamo, which has a new stadium, and, no matter where you live in Texas, it may be costing you money. The new Dynamo owners are paying $60 million of the $100 million total. Texas Southern University, which will use the stadium for football, is contributing an estimated $1-2 million. The rest is being paid by the city and county.

This sports facility comes after Houston built stadiums for the NFL Texans and the Astros, plus an arena for the Rockets and Aeros (hockey). It’s hard to get a grasp on the actual cost of these playpens for the billionaire owners. There is the infrastructure such as city streets, curbs, waters and waste, taxes diverted, bonds sold, and on and on. In addition, the Astrodome cost $35 million in 1965 or $244 million in 2012 dollars. But it still carries as much as $32 million in debt for improvements — nearly as much as the original cost of construction – to keep the Oilers from leaving. Hahah.

The Dallas Cowboys built a stadium in Irving with a unique design: a giant doughnut. The fans were covered but the field was open so, as the story goes, God could watch his team. It speaks volumes to know that the design was never copied by any other city anywhere. So owner Jerry Jones wanted a new stadium and got it: Originally estimated to cost $650 million, the stadium cost $1.15 billion,[ making it one of the most expensive sports venues ever built.

To aid Jones in paying the construction costs of the new stadium, Arlington voters approved an increase of the city’s sales tax by 0.5 percent, the hotel occupancy tax by 2 percent, and car rental tax by 5 percent. The City of Arlington provided over $325 million (including interest) in bonds as funding, and Jones covered any cost overruns. Also, the NFL provided the Cowboys with an additional $150 million loan, as per their policy for helping the financing for the construction of new stadiums. Then there is San Antonio, which built that ghastly Alamodome in hopes of landing an NFL franchise. No luck. On the other hand, look at Los Angeles, the second largest city in the nation, with no NFL team because its priorities are not pro sports. LA seems to be doing just fine.

All these facilities were sold to the taxpayers as an investment in future earnings with sales taxes, hotels, etc. But that is unsportsmanlike conduct, according to scholarly studies. For example, Dennis Coates, PhD. economics, University of Maryland-Baltimore County and president of the North American Association of Sports Economists Impact, determined, “the presence of franchises in multiple sports, the arrival or departure of teams, and stadium construction — in a given area reduced per capita personal income by about $10. In other words, every man, woman, and child in the metropolitan area was poorer by $10 as a result of the sports environment.” Sports facilities now typically cost – COST — the host city more than $10 million a year.

Professional sports teams are very small businesses, comparable to large department or grocery stores. One study found that the overall economic addition an NFL team injects into a city is about the same as a Wal-Mart store. What’s more, the entertainment dollar is only so big. Money spent on the Cowboys or Rockets is money not spent on movies, restaurants, roller rinks. Think of it more like a pizza pie. When one slice is cut larger, all the other slices get smaller. The pie doesn’t grow.

Here’s something else to consider: Roger Noll and Andrew Zimbalist’s study, “Sports, Jobs, and Taxes: The Economic Impact of Sports Teams and Stadiums,” found: “Most professional athletes do not live where they play, so their income is not spent locally. Moreover, players make inflated salaries for only a few years, so they have high savings, which they invest in national firms. Though a new stadium increases attendance, ticket revenues are shared in both baseball and football, so that part of the revenue gain goes to other cities. Similarly, most tax collections inside a stadium are substitutes: as other entertainment businesses decline, tax collections from them fall. On balance, these factors are largely offsetting, leaving little or no net local export gain to a community.” This includes state taxes not paid.

Why would a strapped community put scarce public funds into an essentially private company which reaps the benefits? Because there is a hard-driving owner who threatens to take his franchise elsewhere. Indeed, by their very nature, owners of pro sports franchises are rich egomaniacs. In “North Dallas Forty, or maybe “Semi-Tough,” the owner of a Dallas football team shows an organizational tree of his various companies – oil, cattle, computers. “But this,” he says, pointing to the icon of his pro football team, “got me on the cover of Time.”

It’s the same with colleges. Before an Oklahoma State football game, T. Boone  Pickens is being interviewed by a reporter on the field. “Mr. Pickens, why didn’t you give forty million to the English Department instead?” Said Pickens without missing a beat, “Because you wouldn’t be interviewing me now if I’d given forty million to the English Department.”

Don’t forget our high schools: “’Look, football has always been a big deal here. This is Texas.’ – Steve ‘Bubba’ Williams, athletic director at Allen High School, overlooking his new $60-million football stadium. But seating 18,000 with double-decked press boxes and huge video screen, Allen’s facility will still be only the fifth largest high school football stadium in Texas.” – The New York Times

Finally, in 1950 when Rice Stadium was being built by Brown & Root, there were rumors that construction was behind schedule. A reporter went out to the site and found CEO George Brown himself shoveling dirt. The reporter inquired, “Mr. Brown, do you really think this place is going to be ready on time?”

Said George Brown, without looking up, “It’s a night game.”

 

Ashby is subsidized at ashby2@comcast.net

 

 

 

 

 

 

 

 

 

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