Field of Schemes Page 4
As for the neighborhood activists who had opposed Camden Yards, not all of their worst fears were realized. The surrounding neighborhoods, so far at least, have neither been gentrified beyond recognition nor lost in a flood of sports-fan amenities. “They did a good job of doing a bad thing,” concedes Bill Marker, looking up at the new stadium that literally casts a shadow over his mixed-income row-house neighborhood of Ridgely’s Delight. True, the “historic” nature of the ballpark is more cosmetic than real; even the warehouse, without which the baseball field would, in Lapides’s words, “just be sort of a blob sitting in the middle of a field,” lost its northern end, lopped off to afford better views of the downtown skyline from the seats behind home plate. And the city did lose many of the one thousand manufacturing jobs provided by the twenty-six companies that had existed on the Camden Yards site, in addition to the property taxes that the food plants and other businesses had generated.
Just across the highway from the new stadiums, the black enclave of Sharp–Leadenhall is less thrilled with its new neighbors, as it continues to plead for money from the city to repair its recreation center and swimming pool amid city cutbacks. “Oh man, the city,” sighs Sharp–Leadenhall Planning Committee organizer May Ringold. “It’s a pity that the city’s there. We need some of that federal money. We’re just a small community, but we’ve been around since the seventeenth century.… If the stadium wanted to come into our neighborhood, I think they should try to help spruce up the neighborhood itself.” The Stadium Authority’s only offer to date: a new path through the community’s playground, so that football fans could walk through more quickly on their way to the games.
Three miles to the north, in Baltimore’s old sports center, the picture is more uniformly gloomy. Memorial Stadium now sits empty, save for the eight Sundays a year when the Ravens are in town, occupying the old bowl as they await their new digs at Camden Yards.5 The residential neighborhoods around the stadium, Waverly and Charles Village, whose modest brick houses provided the backdrop for so many Orioles and Colts games over the years, have started showing the first signs of decline: “For Sale” signs sprout like dandelions along Thirty-third Street, and the shopping drag on nearby Greenmount Avenue is littered with empty storefronts. The Stadium Lounge, on Greenmount and Thirty-fourth, bears two large signs in its window: “The Stadium Lounge Welcomes the NFL Baltimore Ravens” and “Checks Cashed in a Flash.”
Jack Lapides, who is quick to praise the decision to place the new stadiums downtown instead of in the suburbs, is just as quick to point out that Baltimore already had a ballpark that met the same “old-time” criteria that would later draw compliments at Camden Yards. “The old Memorial Stadium was a perfectly valid ballpark,” he says. “And it also would have kept up one of the few truly integrated neighborhoods in Baltimore, a nice middle-class neighborhood. People loved having the stadium there—many moved to the neighborhood because the stadium was there. And this was a nice draw in another part of the city, rather than putting everything in the Inner Harbor of Baltimore.”
The greatest irony about these new sports palaces is that those who paid the most for them—the buyers of Maryland lottery tickets and Cleveland cigarettes—are the least able to enjoy them. Ticket pricing is steeper than in the old parks, though admittedly not quite as prohibitive as elsewhere in the country. But more important, the facilities often have fewer seats than their older counterparts, and that, coupled with a much greater number of luxury boxes and season tickets, has meant far fewer tickets available for the average fan.6
Jacobs Field is beautiful, agrees union activist Ryan. “One of the things that happened though, I’ve noticed as a lifelong Indians fan, is that the increase in prices and the decrease in low ticket prices has made the crowd much more white. Incredibly much more white.
“And with the special parking and all that, the wealthier people don’t mix with the working-class people for the most part. And to me that’s disturbing. If you take a look at who’s paying for that [with cigarette taxes], it is more the working-class people.”
The cost of a game at Camden Yards is “prohibitive for a poor family,” agrees Lapides. “You used to be able to go out to Memorial Stadium and sit in a fairly decent seat for three bucks. Three bucks won’t even buy you a hot dog now at the new stadium.”
If city schools and low-income fans were the losers in the twin stadium deals, the undeniable winners were the owners. The Orioles, bought by Eli Jacobs for $70 million while Camden Yards was still under construction in 1989, were resold in 1993 for $173 million, appreciating a whopping 147 percent in just four years. Art Modell’s football team jumped $38 million in value in one year after it left Cleveland for Baltimore. The Indians, whose new stadium coincided with the team’s first contending team in forty years, were the least-valued team in baseball in 1993, the year before Jacobs Field opened, with a value of $81 million; by 1996 the team had appreciated to $125 million, a tidy 54 percent profit in three years for the Jacobs brothers.7
Even if the increased attendance abates after the novelty of the new stadiums wears off, team owners can always hit up their hosts for a few renovations or lease improvements, under threat of once again taking their act on the road. “If it’s not a personal toy of yours, if you are an owner and you have any fiduciary responsibility to anybody, and you don’t demand a new facility, you’re probably violating your fiduciary duty, given the way this stuff goes,” notes Marker.
Fiduciary duty can rest easy. In the decade following the Colts’ flight, not many owners would pass up the opportunity to levy demands on their city, or someone else’s. Baltimore and Cleveland would prove to be merely the tip of the sports-welfare iceberg.
Notes
1. In 2000 the Cleveland Plain Dealer put the public’s final tab at $470 million. Gateway project director Tom Chema later admitted of the $344 million figure: “I didn’t have a clue what this project was going to cost.… That wasn’t a real number. I didn’t want to say that number. I tried to avoid saying that number; but when you are in an election campaign, you have to put a number on it.”
2. The new Cleveland Browns, an expansion team bearing the old name and uniforms, took the field for the first time in 1999. The final price tag for the new football stadium: $309 million, of which $216 million came from county taxpayers.
3. In December 2004 the Newark Star-Ledger reported: “Today, the main streets in and around the Gateway are marked by empty office towers, vacant department stores and storefronts with ‘For Lease’ signs. After spending $700 million to build the nation’s most extensive sports infrastructure, this city finds itself in a familiar place: trying to fix a downtown abandoned by businesses and the middle class, with neighborhoods gripped by despair.” Shortly before this, the Census Bureau had declared Cleveland to be the poorest city in the nation.
4. A subsequent study by Johns Hopkins economists Bruce W. Hamilton and Peter Kahn calculated that Camden Yards earned the state of Maryland $3 million a year in new revenues, while costing $14 million a year in construction debt. As baseball business writer Doug Pappas would later note: “All told, each dollar of extra revenue from the ballpark costs Maryland taxpayers almost $5—making Camden Yards one of the few investments worse than the lottery which financed it.”
5. Memorial Stadium was demolished in 2001 and replaced by apartments and a retirement home.
6. John Christison, the former manager of the Orlando Arena, was blunt in a 2001 interview: “These things would not be practical if it were not for public money to make them happen. And my disappointment is that the public is not getting a hell of a lot for their investment. They’re not getting cheaper ticket prices, certainly. The average schmuck that pays for the thing out of property tax, or whatever the case, isn’t getting a bigger more comfortable seat, he’s not getting warmer popcorn. What he’s getting is a higher ticket price and a tougher time trying to buy a ticket to take his kids to the game. Somebody’s getting fat, but it’s not the ta
xpayer.”
7. In Indianapolis, meanwhile, the Colts owners were soon threatening to pull up stakes again if a new stadium wasn’t forthcoming to replace the now two-decade-old dome. After rumors that Bob Irsay’s son Jim, who had taken over the reins of the franchise after the death of his father, would move the team to Los Angeles, in 2005 the Indiana state legislature approved construction of a $687 million replacement—with $635 million of the funding shouldered by taxpayers.
2
Stealing Home
It’s amazing what a pretty picture you can draw#x2019;s amazing what a pretty picture you can draw when you spend other people’s money. —Houston radio station owner Dan Patrick
If it were only in Baltimore and Cleveland that the commotion over new stadiums reached such desperate extremes, it might be possible to write the two towns off as nothing more than a couple of sad coincidences—a pair of down-on-their-luck cities trying anything and everything to remake themselves. But in city after city, from Boston to Seattle, Los Angeles to Miami, Minneapolis to Houston, the story has been the same: Team owners in the four biggest sports in the country—baseball, football, basketball, and hockey—are demanding new publicly funded stadiums and arenas and threatening to pull up and leave if they don’t get them. North America is in the midst of a remarkable stadium and sports-arena building boom unlike any other in its history. And municipalities large and small are paying the price for it—in massive public expenditures and tax abatements that lead to the loss of revenue for more worthy projects, and in the dismay and heartache of dedicated fans who see their decades of loyalty and devotion trampled en route to the newest arena. Between 1980 and 1990, U.S. cities spent some $750 million on building or renovating sports arenas and stadiums. The bill for the ’90s is expected to exceed $12 billion, about $7.5 billion of which will have been paid by taxpayers—and hidden subsidies could amount to billions more.1
By 1997 almost one half of the country’s 115 major professional sports franchises either were getting new or renovated facilities or had requested them. Indeed, in an era of increased public and government reluctance to lay out public money for anything—from food stamps to the local philharmonic—the eagerness with which cities are offering up hundreds of millions of dollars to build new stadiums is mind-boggling. Welfare as we know it may be dead, but corporate welfare is alive and kicking.
There are instances from sea to shining sea, encompassing every profit-making scheme imaginable. In San Francisco, the Giants baseball team owners pushed four times for a publicly funded new stadium and were four times rejected by Bay Area taxpayers—until winning a compromise on the fifth try. In south Florida, billionaire Wayne Huizenga received a new home at taxpayer expense for his Florida Panthers hockey club after only four years of playing at Miami Arena. His cotenants, the Miami Heat basketball team, also moved to a new facility down the coast, leaving the old arena vacant just ten years after it was built. Meanwhile, Denver built a $215 million baseball-only stadium with money from a sales-tax hike in 1995 (for its new expansion franchise) and followed it up with plans to construct a brand-new football stadium to placate an envious owner. The list includes towns like Seattle, where voters rejected a proposed tax hike to fund a new home for the Mariners but were ignored by a state legislature determined to see the new stadium funded at any cost, and Minneapolis, where Twins owners requested a replacement for a fifteen-year-old facility that the city was still paying off.
A new stadium didn’t always mean massive amounts of public money—until the late 1940s and ’50s, most professional sports teams played in privately owned facilities built by the teams’ owners with their own revenues. But that changed in the ensuing decades; by the early 1990s, 77 percent of stadiums and arenas in use were publicly owned. In the typical scenario, a municipality will float hundreds of millions of dollars in municipal bonds in order to afford the massive initial expenditure, and then pay off the bonds with increased taxes, lotteries, or even general city funds. Because of their guaranteed nature, the repaying of those costly loans has taken on a central role in many cities’ budgets for years after the initial stadium deal. By shackling themselves to these massive debts (and often massive cost overruns), cities may very well have allowed the further deterioration of local schools, roads, and public services. In many cases the bond issue runs years longer than the team’s lease, raising the specter of local governments, ten or twenty years hence, still having to pay off the costs of stadiums for teams that have since fled for greener pastures—or still paying off bonds on old stadiums while building new ones with even higher price tags.
Welfare by Any Other Name
For anyone who has followed the fortunes of city-development policies in recent decades, this story has a familiar ring to it. Over the past twenty years, city governments large and small have made tax breaks and other subsidies a part of their regular repertoire in the drive to keep businesses in town—or lure them to relocate from elsewhere. What some have called “the economic war among the states” has its roots in the earliest years of the country (Alexander Hamilton once got a tax abatement from the state of New Jersey for starting a business there), and helped drive much early industrial development—particularly railroad companies, which grew rich off land grants from the federal government.
It wasn’t until the early 1980s, though, that the subsidy frenzy really hit its stride. As the national economy sagged throughout the late 1970s and early ’80s, the country’s governors and mayors became more and more desperate to retain jobs and increasingly did so by paying off companies to stay put or relocate to their region. Those years saw an explosion of local government subsidies for private investment. In 1977 fewer than half of all states provided tax incentives or public loans for private development; fifteen years later, hardly a state was without them.
In his study “No More Candy Store,” researcher Greg LeRoy detailed dozens of examples of what he called “subsidy abuse.” In 1994 Baton Rouge granted tax abatements worth a total of $14,372,600 to Exxon in exchange for the company’s creating exactly one new permanent job. Sears accepted $240 million in land and cash bonuses from the state of Illinois just for staying put, while laying off many of its local employees. Meanwhile, the automaker BMW garnered a $150 million subsidy from South Carolina for a new car factory; then Mercedes-Benz topped BMW with a $253 million tax break from Alabama for a plant that created just fifteen hundred jobs, meaning the state had spent nearly $170,000 for each new job. Over one two-year span in the 1980s, the state of Louisiana handed out $3.7 billion in tax abatements and denied exactly zero applications.
Small cities and towns, eager to show that they could compete with the big boys, quickly leaped into the fray. In 1993 Amarillo, Texas, went on the offensive with a page from the phone companies’ marketing plan: The city sent thirteen hundred checks, each worth $8 million, to selected companies around the country, offering to cash the check for any company that would commit to creating seven hundred jobs in Amarillo. The following year, tiny Rio Rancho, New Mexico, outbid towns in several neighboring states for an Intel computer-chip manufacturing plant, handing the chip maker $114 million in incentives and tax breaks even though the town couldn’t afford its own high school.
As a result of the explosion of corporate subsidies, according to the Economic Policy Institute, tax breaks now dwarf all other state and local economic-development projects combined. And as LeRoy writes in “No More Candy Store,” “Despite recurring predictions that the states have finally grown tired of their ruinous ‘economic development civil war,’ the size of incentive packages continues to skyrocket. Whereas a package worth $50,000 per job sparked debate in the mid-1980s, by the early 1990s, there were several deals worth $100,000 to $150,000 per job and one worth $350,000.”2
In terms of the level of public subsidies, sports teams can easily hold their own with other industries. When the first wave of public-stadium building hit in the late ’60s and early ’70s, stadiums were $40 million affairs
, a sum that could be at least somewhat offset by rent and other fees paid by the baseball and football teams that shared these hulking multipurpose facilities. By the 1990s, though, stadium costs had soared to $300 million and up. Teams were demanding separate buildings for each sport, and more expensive accommodations inside, even as rents had plummeted—to zero in some cases—allowing teams to keep all the new revenue from their stadium for themselves at the expense of their host cities. The Ravens’ deal with Baltimore, in which the team pays no rent or construction costs and received a $50 million cash relocation fee, was extravagant but not unprecedented: The previous year, the Los Angeles Rams had agreed to move to St. Louis in exchange for a low rent (just $250,000 a year), while receiving all luxury-box and concession revenues and 75 percent of advertising and naming-rights fees—plus a $46 million relocation fee. (One fellow owner was moved to call it “the mother of all stadium deals.”) What was once at least in part a public investment in a city’s sports team had turned into an outright subsidy—and the price was getting ever steeper.
Sports stadiums and arenas don’t pay for themselves—not even their staunchest advocates claim they do. Even in the 1960s and ’70s, when public money was first used consistently on sports facilities, the returns on the new buildings—increased rent and advertising, higher ticket sales and concession prices—were still usually not enough to offset the millions of dollars a year in debt payments by the state or city that fronted the money. And for today’s buildings, with exponentially higher costs, there is no question of making them self-sufficient.