What A Day - Why You’re Paying for a Billionaire’s Stadium

Episode Date: September 14, 2024

2024 is on track to be the biggest year for public stadium subsidies we’ve ever seen. Billionaire team owners keep asking for—and receiving—more exorbitant arenas and upgrades from local governments. But who’s footing the bill? The taxpayers! Even though most economists say the returns from these facilities never live up to the hype, city officials continue to court teams and kowtow to their demands. Why do teams like the Raiders, Orioles and Penguins have local governments in such an expensive chokehold? What does a stadium actually do for a community? What happens when voters have a say? Erin and Tre’vell break down how we got here, and explain why getting a new stadium in your neighborhood is no slam dunk.

Tre'Vell, I've got a sports trivia question for you. Okay, not my usual area of expertise, but go for it. Okay, I think you can probably answer this one. What do the Arizona Cardinals, Baltimore Orioles, and Pittsburgh Penguins have in common? Oh, this is easy. They're all named after birds. Okay, yes. Okay, technically, yes. Okay, but also, and more importantly for our purposes today, all of them play home games in stadiums paid for in large part by local taxpayers.

Okay, so hold on now. Aren't sports teams owned by literal billionaires? Why would they need taxpayer money to fund stadiums? That sounds odd, to say the least. It is odd, but it is incredibly common. And it's getting even more common. Billionaire team owners keep asking for and getting more exorbitant stadiums and upgrades from local governments. In fact, 2024 is on track to be the biggest year ever for public stadium subsidies. This despite the fact that most economists believe that the projected return on public investment never lives up to the hype. Which means if you're like me and will likely never buy a game ticket, you're probably still paying for sports. I'm Erin Ryan. I'm Traevel Anderson, subbing in for Max Fisher, who will be back next week. This is How We Got Here, the show where we ask a big question about one of the week's headlines and tell a story that answers that question. This week, what is the real cost of a fancy new stadium?

We're talking about this because many sports fans like me absolutely love September. College football is back. The NFL is back. The WNBA season is barreling toward playoffs. European soccer is in full swing. We've got the end of baseball regular season, the beginning of the playoffs. And starting in October, the NBA and NHL are back too. But certain aspects of the business of sports are ethically, shall we say, complicated. Right. And every single year, I feel like I read about another new stadium in particular being built or upgraded. So y'all must be having the time of y'all lives over in Sportslandia.

You're not imagining things. And the reasons why things are the way they are and likely to get worse before they get better are fascinating and, as American, as a $14 concession stand hot dog. Okay, so how did this start? To understand how this odd practice started, I reached out to Dan Moore, a sports writer based in the Bay Area.

Dan wrote a piece for The Atlantic this year about the frustrating cycle that cities seem to be in when it comes to subsidizing professional sports arenas. Sounds right up our alley. So to understand the current subsidy bonanza, we need to take a trip to Oakland, California, in the late 1970s and early 1980s. You there mentally, Trayvon? I'm there. Okay. Now, at the time, Oakland had two sports teams, the Raiders and the Athletics, both of which had devoted fandoms, both of which played in Oakland Coliseum.

The facial hair of the A's, by the way, Google 70s A's facial hair, legendary. It was a good time to be an Oakland fan. It was a good time to be a fan of weird facial hair, mustaches, beards, sideburns. But then the owner of the Raiders, Al Davis, started making demands. Here's Dan. Davis was demanding new upgrades be made to the publicly funded Oakland Coliseum. I believe luxury boxes were the issue at play. Oakland refused.

Davis moved his team out of town. This was something new. Fans and politicians across the country began to worry if we don't actually give these owners what they are asking for when it comes time to build them nice new stadiums or upgrade existing stadiums, they might leave. Our team might be next. That fear acquires a new kind of political fuel a few years later when the Colts leave Baltimore for Indianapolis under the same conditions, they're offered more public funding, a publicly funded dome specifically. Elsewhere, they move, and now all bets are off.

Politicians, they feel beholden to a kind of hostage situation anxiety. We have to give these owners what they want. Okay, so subsidies for sports arenas had existed before, but Davis was the first team owner to literally take his ball and go home when he didn't get what he wanted. Right. Davis moved the Raiders to Los Angeles in protest. But then in 1996, the Raiders yo-yoed back to Oakland when the city footed the bill for upgrades to the Coliseum. It was massively expensive and funded with public bonds. So why did Oakland come around? Well, Travelle, something happened all the way on the other side of the country between 1981 when the Raiders left Oakland and 1996 when they came back.

Please, no more sports trivia. Okay. Don't think of this like sports trivia. This is about city planning. This is about social justice. This is about so much more than where the Colts are playing and who the Ravens are going to be against. I love that for me. Baltimore built Camden Yards for the Orioles with taxpayer money. Remember, the Colts had left not long before. So Baltimore was

down to one sports team and they were like, we've got to keep them. They kicked off a bonanza of public spending on arenas. So what was so special about Camden Yards? First of all, it was beautiful. Baseball fans loved it. Back then, a lot of baseball stadiums were kind of soulless domes, like the Metrodome where my twins used to play. But Camden was this kind of old school field that felt like an old fashioned baseball stadium, but had modern amenities. My family went there on vacation, and we're not even Orioles fans. It was kind of like Wrigley Field

if Wrigley didn't always smell vaguely like piss. See, I knew I wasn't missing anything by not going to baseball games. So second of all, there was a widespread perception that Camden had revitalized Baltimore's downtown, which, well, there's some debate over whether it actually did much economically, but that's the perception. Okay. And so once Baltimore had seen this

great success with its publicly funded baseball wonderland, other cities thought they could replicate it. And once the idea of a sports stadium being a public investment rather than a private playground took hold, local government in Oakland was more amenable to upgrades to the Coliseum. But Aaron, I'm curious. We hear about sports teams moving around in the U.S. like all the time, it feels like. Does this happen in other parts of the world? Not really. And the reasons behind that are also uniquely American. Here's Dan again. Pro teams in Europe tended to originate from the ground up from the communities that they've represented. So the team started as church groups. They started from neighborhood groups where the point kind of was representation and competition. And the stakeholders in these teams had ownership stakes in them. In America, pro teams started with, you know, one guy started a team and owned it outright. And the goal was to sell tickets and make money to the extent that the teams won games

or did right by the fans that they came to represent. That was a means to an end of selling tickets. Team owners in America began to benefit from the perception that they owned a piece of civic life similar to teams in Europe, when in fact they did not. Here's Dan again. One way that manifests is in the early 20th century, pro teams and leagues in America start to get antitrust exemptions, grounded in the idea that these are not typical for-profit businesses. These are community assets. Okay, so in the U.S., owners get to enjoy the perception that they are providing a public service when really they're just making money. Right. Schrodinger's civic institution, if you will.

And just doing a little mental math, right, there are many more cities in the U.S. than there are teams in each of these leagues. So the cities are competing with each other for the teams. Right. Another way that owners are advantaged here. There's something else I want to get into when it comes to stadiums and the public good, and that's the cost of stadiums beyond just the dollar amount they require to be built. Because here in Los Angeles, stadiums have a pretty nasty history of displacing people who, you know, lived in the place where owners wanted to build a stadium. Definitely. Have you ever been to Dodger Stadium? I actually used to live walking distance from it. Yeah. I used to play in Elysian Park with my dog

almost every day. And when the Dodgers won the World Series in 2019, there were so many fireworks, I thought the neighborhood was going to burn down. Okay, so that stadium and that park were built in a place that was once a thriving residential neighborhood called Chavez Ravine. Communities, so inconvenient when there are sports to be played. So in the early 1950s, Chavez Ravine was a vibrant Mexican-American community, despite the city of Los Angeles labeling it, quote-unquote, blighted. But then the city decided Chavez Ravine would be a great place to build massive public housing. In 1951, they started kicking the residents out using eminent domain. Uh, what happened to that plan?

Well, two years later, when Los Angeles elected a more conservative mayor, he halted the construction of all public housing. At the same time, Walter O'Malley, the owner of the Brooklyn Dodgers, was in a tiff with the local government over in Brooklyn over the dilapidated conditions of Ebbets Field. Wow, the more things change. So Los Angeles decides to try to lure the Dodgers out west by offering O'Malley some

undeveloped land near Chavez Ravine, which still had some people living there. But O'Malley didn't want that. He saw Chavez Ravine while flying over it and decided that it would be a perfect spot for his stadium. I'd imagine that the residents of Chavez Ravine were not too happy to learn that their houses were being razed to make room for baseball. Definitely not. In fact, a lot of people in L.A. were sore about how it all went down. The city was not supposed to just go around seizing land from people if it wasn't for public use, and in no world is a stadium for a privately owned baseball team considered a public use. Well, at least not back then.

But the city had a hard time getting the final holdouts off the land. In 1959, police arrested a literal war widow who refused to leave at the command of the city. Eventually, they kicked the last holdout off his property. Thus paving the way for Dodgers Stadium. How's that song go? Kick me out for the ball game? It must, huh? Yeah.

Okay. And there are also examples, must, huh? Yeah. Okay. And there are also examples, right, that aren't as dramatic. For example, SoFi Stadium was recently built in Englewood, which has many residents fearing that its presence will upset the character of a historically black neighborhood that is already rapidly pricing residents and local businesses out. Right. Stadiums that are built in neighborhoods that are, quote, depressed or, quote, dilapidated often expedite gentrification. Here's Dan Moore again. There's that sense that, oh, we're going to replace a working class neighborhood with

just a billionaire's play thing. And that's bad. And there's also fears of the gentrification that come along with that. And so a new stadium that comes with a bunch of luxury condos and that theoretically, if it's successful, encourages the construction of more luxury apartments and high scale gastropubs, that is not exactly for the people who live in that neighborhood or the people who live in that area of the city, that is with the goal of kind of importing other people. And so that brings me to another question I had, Aaron,

which is whether these stadium projects funded with public money actually end up paying off. And so I reached out to Mike Leeds, a professor of economics at Temple University, who specializes in part in the economics of sport. I asked him straight up if taxpayer-funded stadiums are ever good investments. In theory, there is an argument that can be made for subsidies, but the actual value is really quite limited. So in practice, it's usually far in excess of the value of the stadium to the city. So one can make an argument that there should be some subsidization, but the actual value is very little. So the subsidies are far in excess of any value to the community. Wow. Field of dreams,

right? To say the least. Now, these projects get off the ground because of extremely sunny projections of how they pay for themselves, how they provide jobs, how they will generate tax revenue. But that's not exactly true. Funny enough, Dan Moore had something to say about that, too. Right away in the early 90s when team owners started making these arguments and started putting out these rosy, self-funded economic projections about what their stadiums would do. Each one from Cleveland to Oakland to Baltimore, everywhere that cities started building or renovating stadiums with public funds in hopes of revitalizing downtowns via the stadiums. They're all making promises of thousands of new jobs, of tons of new tax revenues generated from new businesses that will pop up around the stadium. And none of that truly happens. The jobs that stadiums tend to create are seasonal and low wage. Tax revenues that can be attributed to the development become nowhere near close to justifying the public investment, especially when it numbers, as it has pretty much everywhere, in the hundreds of millions of dollars.

And in some cases, like recently in Nashville, in more than a billion dollars. They're not delivering on their projections. And there's also the cost beyond just the sticker price of building the stadium. Here's Professor Leeds again. Land is a very important factor, and it is often as valuable as the structure which is built on it. So you want to make sure, is the city selling the land? Is the city leasing the land? Is the city granting the land? Tax abatements can be a big factor. Associated infrastructure. So cities often have to build parking facilities. They often have to restructure highways. There's all sorts of additional costs that go into a stadium.

One statistic I'm fond of quoting is that the Steinbrenners in the 2000s paid for Yankee Stadium, the new Yankee Stadium. And they called it a gift from the Steinbrenner family to New York. And I don't doubt their sincerity for a minute. But the associated infrastructure and the associated costs and the associated tax abatements in the land and so forth came to such an extent that estimates are that as much as one third of the total cost was borne by the city and state for a free stadium. Free stadium really means that a lot of these are built by issuing tax-advantaged bonds that the public is on the hook for servicing. Basically, the sports franchise gets a credit card and taxpayers are stuck paying the interest. That is such a crazy deal to me.

I cannot believe that that's what's happening. And you know, like Mike Leeds said, the land being used for a stadium is not being used for other things that could be used in the city. And that's a huge sacrifice. And there's another thing at play here. The opportunity costs to go back to Oakland stadium renovations of the mid 1990s didn't generate the tax revenue that economists predicted. And so the city was on the hook to service the bonds issued, which meant it had to dip into its general fund, which meant that things like public schools and public services weren't being funded because the city had to pay investors who bought stadium bonds. It's just not working for the people. No, absolutely not. And here's another painful chapter in the saga of Oakland Coliseum. After playing there for a little over a decade,

the Raiders left Oakland after all to go to Las Vegas. Shortly thereafter, the Oakland A's also announced that they were moving to Vegas. They're currently like stuck in Sacramento, which is very funny, which means that now the city of Oakland is still paying those bonds off on a stadium where zero professional sports teams play. That's not great. No. I mean, Travell, I'm curious, why do you think that politicians keep falling for the promises of publicly That's not great. benefit, not for the people, at least. So maybe there's something in it for them themselves. It feels like an ego thing to me, honestly. Like, I think that they want to be the person who kept the team in town. They want to be somebody that gets to sit in the like fancy seats at the game of the stadium that they ushered through. I think it's like local politicians wanting to feel

like big shots. And at the same time, sports fandom in some places, it's like a lifestyle. My husband's from Pittsburgh. And if the Steelers ever threatened to move, everybody in that city would like move heaven and earth. They would pay whatever it took because there's such a culture around the team and there's such a tradition around the team.

And nobody wants to be the one to say no to the Rooney family and be responsible for the team leaving. Your political wants to be the one to say no to the Rooney family and be responsible for the team leaving. Your political career would be over. And so these billionaires are exploiting that, right, by asking for these upgrades to their stadiums or for stadiums to be built for basically free for them. Politicians in cities that don't have a team want to be the one that's like, I brought this team. This is me. This is, I brought this fund for you. But here's the thing. When it comes to dollars and cents and when the public actually gets a say, they're not really fans of paying for stadiums like this. Here's Dan again. When the prospect of giving corporate welfare in effect to a billionaire team owner so that they can build a wildly

personally lucrative stadium, when that is put to a vote, it almost always fails. You saw this happen recently in Arizona, where a new arena for the Phoenix Coyotes was resoundingly shot down by voters. You saw it tellingly in Kansas City when the prospect of a new tax increase to pay for a new stadium for the Kansas City Royals and the Kansas City Chiefs, who just won the Super Bowl, that was shot down. Okay, so shout out to voters making, you know, their perspectives, their voices heard.

What else can frustrated locals do to prevent their city from, you know, getting screwed like Oakland did? Well, I think it's important to make sure that the public is educating each other on what's going on here. Activists on the ground in places like Philadelphia are really trying to make an effort to get out and communicate to the public that this is happening. And enough public outcry and pushback can kind of stop some of these projects in their tracks. There's also the possibility of changing the way that the federal law is around the way bonds can be issued so that it's not a huge tax advantage

for the public to be on the hook. It's a complicated thing, and I don't want to get too in the weeds. But the reason that these bonds are lucrative is because of the way they're treated by like tax officials. And so, you know, we could change the law, but really the prospect of the law being changed on such a large scale is small. So what it's going to take is like local action, activism, and education. Getting involved. Exactly. So the problem right now and here is that professional sports teams are often on 30-year leases. And seeing as the first modern boom of publicly financed stadiums started in 1993 with Camden Yards. Uh-oh. That means that we're coming up on a bunch of lease renewals. Yes. which means that this year is going to feature a lot of

expensive asks from the mega rich who want everybody to pay for a billion dollar funnel into their own pockets. Corporate welfare at its finest. So look, I'm a sports fan, but I acknowledge that there are some very problematic aspects of sports dictating the way that like a city infrastructure operates like that's that's not ideal and i am also not in favor of billionaires being given handouts i actually think it's funny as we were preparing for this show and i was doing research this is an issue that like unites people across the political spectrum there are so many libertarian economists and thinkers who are like this sucks this is a bad practice who have in the past united with

people that are more progressive, community-oriented people. They have different reasons for thinking that the subsidies are bad, but they can work together and oppose them, which I think is super interesting. I mean, sports can be a nice part of cities and communities. I don't want to pretend that they're not. But not if they have to bleed cities dry to exist. Yeah. And I think the reality is it just doesn't have to be this way. No, it doesn't at all. And so, Trevelle, with all of those complicated thoughts in mind, I would like to play us out on a high note. This is the fight song of the Los Angeles Rams in the 1980s before they moved to St. Louis and then came back. Hey! I'm ready now!

Hey! Hey! Hey! Hey! I'm ready now! Hey! Hey! Hey!

Let's ram it! Do you know how to ram it? Let's ram it! Yeah! Oh my God. Do you know how to ram it? Let's ram it! Let's ram it!

Let's ram it! Let's ram it! Oh wow. How We Got Here is written and hosted by me, Max Fisher, and Aaron Ryan. Our producer is Emma Illick-Frank. Evan Sutton mixes and masters the show. Jordan Cantor sound engineers the show. Audio support from Kyle Seglin, Charlotte Landis, and Vassilis Fotopoulos. Thank you. សូវាប់ពីបានប់ពីបានប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពី 다음 시간에 만나요