Field of Schemes Page 8

  The TWA Dome was constructed entirely at government expense, with $301 million raised by selling general-purpose bonds. That $301 million, plus interest, will be paid back at $24 million a year over thirty years; a boost in the county hotel tax will pay for about a quarter of the sum, and the rest will be paid out of the general city and state treasuries. The 113 luxury boxes and sixty-five hundred club seats will generate $1.8 million per year in tax subsidies via the business-entertainment deduction, paid for by the federal treasury. U.S. taxpayers will likewise be responsible for an additional $6 million a year in subsidies through the federal-tax exemption of the bonds. Trans World Airlines agreed to pay $1.3 million a year (plus inflation) to plaster its name on the dome, nearly a million of which will go to the Rams. Total subsidy: $1.07 billion over thirty years.

  That amounts to a public cost of $36 million a year; meanwhile, the Rams’ annual revenues were expected to leap by more than $15 million.6 And according to the team’s brand-new lease, if the stadium does not remain among the most lavish in football for another ten years, the Rams can then leave town for more lucrative turf—or demand further improvements.

  Notes

  1. A fascinating glimpse into the inner world of baseball’s finances was provided in 2001, when Major League Baseball released to a congressional committee its most comprehensive itemization of team finances since the antitrust hearings of the 1950s. Among the revelations, as detailed by Doug Pappas in a seven-part series for the Baseball Prospectus Web site: Both the Atlanta Braves and the Chicago Cubs, which were owned by major media conglomerates, appeared to be charging their cable superstation siblings well below market rate for broadcast rights; $174 million in paper losses were actually depreciation charges and actually represented a tax benefit to owners of $60 million or more. And even as MLB claimed that player salaries were driving the sport to the brink of bankruptcy, the league’s own figures showed that non-player expenses were rising faster than player salaries. The league’s claim that it had lost $519 million in 2001 despite record revenues, concluded Pappas, was “about as believable as Enron’s September 2001 financial statements.”

  2. In 2006, as discussed in chapter 15, savvy sports owners figured out how to evade the 10 percent rule altogether, with the blessing of the IRS.

  3. The new record, as of 2006: the staggering $400 million fee paid by Citigroup to affix its name to the new Mets stadium for the next twenty years. None of this money will go to New York City, the building’s owner.

  4. Researcher Judith Grant Long (see chapter 13) has more recently estimated that, when one includes hidden subsidies, taxpayers are on the hook for an average of 65 percent of arena costs.

  5. The city of San Diego ended up paying the team $36.4 million for unsold tickets, against $42.9 million in team rent payments, before the lease was finally renegotiated in 2004.

  6. Rams revenues rose $10 million the team’s first year in St. Louis and kept right on rising: By 2005 the franchise was bringing in $179 million a year, up from $76 million a decade earlier. The team’s estimated value, meanwhile, had soared from $193 million to $757 million.

  4

  The Art of the Steal

  The subsidy they get is totally disproportionate to the economic benefit they bring.… It would ashame Jay Gould and his fellow robber barons of the nineteenth century. Even Genghis Khan got sated after a while. —Houston mayor Bob Lanier, explaining why he had opposed public funding for a new stadium for the Houston Oilers football team, August 1996

  The result [of not using public funds] is that we won’t have any pro sports in Houston. Things might change someday, but the reality is that if you say [no to public subsidies] in today’s market, you’re below any market. —Lanier, explaining why he was supporting public funding for a new stadium for the Houston Astros baseball team, October 1996

  Stadium deals can bring unprecedented riches to a sports team owner, but city residents tend to be unenthusiastic at first. “Sure, we love our team,” is a typical response when the stadium juggernaut rolls into a new city. “But hundreds of millions of dollars for rich owners and greedy players, when we can barely even afford to buy books for our school kids? It’ll never fly.”

  Yet fly it does, in city after city. Regardless of how vocal the public opposition or how cash-strapped the municipal treasury, rare is the local government that has just said no to the demands of its sports franchises. Before a stadium proposal hits the drawing boards, polls will show that even though people don’t want to see their team leave town (no surprise), neither do they want their tax money spent to keep them; yet invariably, these nos turn to yeses by the time public referenda are held. Nearly every city has some local politicians who proclaim that public funds will be spent on a new sports facility over their dead bodies; by the time the bond issues are passed and ground is broken at the construction site, they will likely as not be the ones wielding the shovels.

  This pattern has been followed in cities large and small, those run by Democrats and Republicans, by free spenders and those traditionally stingy about every penny:

  • Houston Mayor Bob Lanier’s disdain for the sports industry didn’t stop at comparing team owners unfavorably to Mongol hordes. In the midst of Oilers owner Bud Adams’s fight for a new football stadium, Lanier commissioned a study that found that the entire sports industry in Houston, plus all other events at the Astrodome, amounted to less than 1 percent of the city’s economy—smaller than the total economic impact of the Houston Medical Center. In 1995 Lanier let the Oilers pack up and leave rather than accede to their demands. Yet within just a year of that team’s announced departure, the city, county, and state had agreed to team up behind a $465 million construction project for new baseball and football facilities, while making plans for a new basketball arena as well.

  • When the Seattle Mariners threatened in 1995 to leave town if they didn’t get a new baseball stadium to replace the nineteen-year-old Kingdome, Seattle voters narrowly rejected a referendum calling for public financing for a new stadium. But state legislators, not to be deterred, held a special emergency session to authorize the $320 million in funding anyway—then raised the figure to $414 million when the Mariners complained.

  • Detroit had a historic ballpark in Tiger Stadium, a thirty-year lease with its baseball team, and a 2–1 public vote against spending city funds on a new stadium. It also had a well-organized opposition that had convinced the state legislature to deny any state funds for new stadium construction. But though it took ten years and a change of team ownership to make it happen, the mayor and governor ultimately were able to find $320 million to tear down and replace Tiger Stadium—and plan a separate downtown stadium for the Detroit Lions as well.

  • Four times between 1987 and 1992, San Francisco–area voters were asked to approve public money for a ballpark for the San Francisco Giants. Four times, the referendum was presented as the “last chance” to keep the team in town. And four times, the voters turned the Giants down flat. Finally, the Giants’ owner, a multimillionaire real estate heir named Bob Lurie, tried to sell his team to new ownership in Tampa, only to see his own fellow owners reject the deal. The Giants were ultimately sold to local supermarket baron Peter Magowan, who decided to build a new park almost entirely with private funds, and San Francisco looked to have gotten away with standing up to stadium blackmail—until the 49ers football team demanded, and received, $100 million in public money toward a stadium–mall complex to replace Candlestick Park.

  If you’re a sports owner looking to have your city build you a new stadium at public expense, the obstacles can initially seem daunting: Public opposition is a given, and getting government approval can be even worse—even when elected officials are on your side, the political process can drag on for long, luxury box–deprived seasons. To smooth the path, owners and their political allies have devised a set of strategies to coerce elected officials, media reporters, and taxpayers into accepting the necessity of a multimill
ion-dollar subsidy for their local sports millionaire. If you’re an owner looking for a windfall of public money, follow this game plan, and you, too, can pull a last-second victory from the jaws of defeat.

  Step 1: The Home-Field Disadvantage

  When trying to convince taxpayers of your need for a stadium, there’s an obvious obstacle: You already have one. Because of this, the first step is usually the obsolescence claim—alleging that your old stadium is obsolete, insufficient to cater to the demands of modern fans, or even on the verge of physical collapse.

  “They say, ‘The old girl, she’s getting old. I love that place as much as anybody, but…’” says Frank Rashid, cofounder of the Tiger Stadium Fan Club, which spent a decade battling two different pizza barons over the fate of the Detroit ballpark. “Whenever anybody says that, you know, watch out.”

  Rashid should know, because he’s watched some masters of the obsolescence claim at work. In 1987, Tigers owner Tom Monaghan (also the owner of Domino’s Pizza, and a leading supporter of the antiabortion group Operation Rescue) claimed that it would cost up to $100 million to effectively repair seventy-five-year-old Tiger Stadium; when Rashid’s group investigated, they found the actual figure to be a mere $6 million.

  At the same time, America’s oldest ballpark, Comiskey Park on the South Side of Chicago—built in 1909 as one of the first steel stadiums in the country—was similarly declared obsolete. As in Detroit, the White Sox owners hired an engineering firm to study the feasibility of renovating Comiskey; the old ballpark passed every test the engineers threw at it (including piling 50-gallon drums of water in a stadium concourse to see if the floor would give way), but the study recommended tearing it down anyway. The owners also may have decided to help it along some: By many accounts, from the time owners Jerry Reinsdorf and Eddie Einhorn purchased the team from Bill Veeck in 1981, hardly a single penny was put into maintenance of the ballpark.

  Several hundred miles to the northwest, meanwhile, citizens of Minneapolis could look on their neighbors in Chicago and Detroit and breathe a sigh of relief that they were through with such squabbles. The downtown Hubert H. Humphrey Metrodome might not be the most beautiful edifice in the country—Yankees manager Billy Martin once wondered aloud, after watching his fielders losing fly balls in the glare of the translucent fabric roof, how they could “name someone like Hubert Humphrey after such a dump.” But at least it was new, built in 1982 to house the baseball Twins and football Vikings, costing the citizens of Minneapolis some $55 million. It was also fresh and modern, a domed stadium built at the height of dome fever—a time when St. Petersburg dome booster Richard Dodge could say, “There is something about a dome that excites people; they get more bullish on themselves and where they live. It gives them a new and positive view of themselves. They react to issues and challenges in different ways. You can say it is the pride factor.” Old Metropolitan Stadium out in suburban Bloomington, roofless and unloved, was dynamited in 1985, its demise filmed for use in a disaster movie, and was replaced by the Mall of America.

  Eleven years later, the fashion pendulum had swung to old-time parks like Camden Yards, and the antiseptically modern Metrodome suddenly looked positively archaic. The Twins, noting that a minor-league team across the river in St. Paul was outdrawing their club on warm summer days, decided that an unroofed stadium was what they needed after all. Or perhaps a retractable roof, like those tried in fellow cold-weather cities Toronto and Montreal—though the former city’s dome had gone more than $300 million over budget, and the latter’s was stuck permanently in the closed position. Minnesotans, who were still paying a sales-tax surcharge to finance the bonds for the old new stadium, were faced with picking up the tab for a do-over.

  Shortly after the Twins presented their demands, the Minnesota Vikings football team suggested that they should get a new stadium as well.

  In Houston, the Astrodome, dubbed the Eighth Wonder of the World when it was built in 1966, was abandoned by its football tenants in 1995, and the eponymous Astros demanded a new open-air downtown park the following year. Basketball and hockey arenas have been even quicker to be thrown on the scrap heap. In 1986 Denver spent $12.5 million renovating McNichols Arena—just eleven years old at the time—for the Nuggets basketball team, improving the scoreboard and adding new luxury boxes and restaurants. Eight years later, city arena manager Gary Lane was calling the boxes “spartan” and “claustrophobic,” and the Nuggets were demanding a new facility.

  Next door to the Nuggets, Denver Broncos owner Pat Bowlen chimed in that his football team’s home, Mile High Stadium, was rusting and might fall down. “This is a serious, serious question,” said Bowlen in asking for $180 million in state money toward a new stadium. “Where do we play in 1998 or 1999 if that stadium is condemned?” As in Detroit, independent engineers countered that Mile High was in fine shape; one declared that the stadium could “last indefinitely” if properly maintained. What was not in perfect shape, it turned out, was Bowlen’s bank account—the owner had sold the rights to Mile High’s luxury boxes some years earlier to raise some quick cash, and hoped that a new stadium would restore the millions a year in luxury-box revenue that he had sold off.

  Meanwhile, the shifting sands of stadium tastes have left cities scrambling ever faster to keep up with the latest trends. The owners of the Pittsburgh Pirates, who left thirty-five-thousand-seat Forbes Field in 1970 for the publicly financed fifty-thousand-seat concrete bowl of Three Rivers Stadium, approached the city in 1996 with demands for a new publicly built facility. The new stadium should be a “thirty-five-thousand-to-thirty-seven-thousand-seat park with natural grass and no roof, bells, or whistles,” owner Kevin McClatchy said. And one more thing—perhaps it could be modeled after Forbes Field?

  Step 2: Faking a Move

  “That isn’t even on the table, on the agenda,” proclaimed Philadelphia Eagles owner Jeffrey Lurie to the press corps that had assembled for the opening of Eagles training camp in 1996. Lurie, responding to rumors that the team would relocate to Los Angeles, insisted, “It’s never even been discussed. It’s so off the map.… I know it sells papers and I know.… I lived in [Los Angeles] for nine years and I know you can sell a story quickly by saying, ‘Uh, the team could be moving to L.A.’ Forget about it. The fans can feel very, very safe that this franchise will be very successful in this area.”

  “And,” as the Philadelphia Daily News remarked the next day, “with those three little words—‘in this area’—Lurie perked up the good listeners in the room while opening up another can of worms.” Because “this area,” they knew, could mean across the river to southern New Jersey, which had already offered to build a new arena for Philadelphia’s basketball and hockey teams.

  Successfully threatening to pick up and move a sports franchise to another city is an art form unto itself, one that you need to perform well if you’re to achieve your goal. Lurie brandished a few more tricks of the stadium trade in his speech to the press that summer day in Philadelphia—he also noted how sports teams “spin off tremendous economic benefits” and warned ominously that “I’m not going to allow this franchise to get in the kind of situation Art Modell got into in Cleveland”—but with his opening words, he proved that he had mastered the basic ingredient of sports welfare brinkmanship: the non-threat threat.

  Even the most casual follower of the sports industry can tell you that teams get their demands met by threatening to move to other cities; and yet, virtually no owners ever make that threat themselves. Those who are too direct about the threat risk getting slapped down by angry local politicians and columnists, as San Francisco 49ers president Carmen Policy found out after bluntly threatening to leave town if an upcoming stadium-funding referendum was not approved. His statements made front-page headlines and stunned even 49ers supporters—“I almost shit when I read it,” gulped state senator John Burton—and Policy quickly had to back away from the overt threat.

  Somewhat tempered words, like those used by Lurie
, are more effective in conveying the proper mix of hometown spirit and subtle blackmail. As Miami Heat executive Jay Cross told his fellow sports leaders following his team’s successful campaign for a new basketball arena, “We never threatened. We never said we’re going to leave. When people asked us what we’re going to do if we don’t win the referendum, we said, ‘We don’t know. We don’t know where we’re going to play. We don’t have a choice. We’ll have to look around.’”

  The undisputed master of the non-threat threat has been George Steinbrenner, whose tenure as owner of the New York Yankees (with time off for one felony conviction for illegal campaign contributions to Richard Nixon’s Committee to Re-Elect the President, and one suspension for hiring a gambler to spy on one of his players) has been little more than one long plea for a new city-financed ballpark. Despite being reviled even by many of his own team’s fans as a meddling blowhard, Steinbrenner managed to put himself in position to reap an incredible $1.2 billion stadium—all without a viable threat to move.

  When Steinbrenner, an heir to a shipbuilding fortune, bought the team from CBS for $10 million in 1973, it was about to move into a newly renovated Yankee Stadium (really rebuilt from the ground up), with twenty-five luxury boxes and a state-of-the-art scoreboard, all thanks to $125 million in state and city funding. The administration of Mayor John Lindsay had agreed to the reconstruction in response to threats by the team’s then owner, CBS, to move the team to neighboring New Jersey.