From: snichols@adobe.com (Sherri Nichols)
Newsgroups: rec.sport.baseball
Subject: Publicly financing stadia
Date: 13 Aug 92 05:38:13 GMT
Organization: Adobe Systems Incorporated

I recently picked up an interesting book, _The Diamond Revolution: The
Prospects for Baseball After the Collapse of its Ruling Class_, by Neil J.
Sullivan (1992, St. Martin's Press, ISBN 0-312-07723-8).  Mr. Sullivan is
Associate Professor of Public Administration at Baruch College, City
University of New York, and has written two other books about baseball:
_The Minors_, and _The Dodgers Move West_.  The books covers a wide range
of topics, but in light of the current events, there are a couple of
especially relevant chapters.

One is on who should finance the building of stadia.  He proposes that
there are three models for how the building of a stadium can be financed:
one where the owner of the team assumes all the costs, including land
acquisition and infrastructure costs; one where a public entity assumes all
the costs, and public-private coalitions.  

The first model is problematic because it is difficult for the team owner
to acquire the land, which is usually owned by more than one entity, any
one of which can hold up the entire project.  It has also been made more
difficult by the Tax Reform Act of 1986, which eliminated the possibility
of using tax-exempt bond issues to finance a stadium.  

The second model is problematic, he claims, both from the team's point of
view and from the city's point of view.  From the team's point of view, the
public financing of stadia has in the past resulted in ball parks that were
not very well suited for baseball.  There are signs, with Camdem Yards,
that this is changing, but the second downside he points out still remains:
that the team does not have control of the maintenance of the park.  "When
budgets are strained, living with a little more filth at the ball park may
be easier to accept than fewer police officers or health care workers".  A
ballpark well suited to baseball can help make the attendance less
dependant upon the vagaries of team performance.

From the city's point of view, there are numerous problems.  First off is
the myth of economic benefit: that building a publicly financed stadium
will result in increased tax revenues, economic growth, and more jobs.
Sullivan quotes from a study done by economist Robert Baade:

	Economic "growth" spurred by sports franchises or stadiums is not
	likely to be true growth at all, but merely "realignment".  Jobs
	are not created, but diverted from the manufacturing economy to the
	service economy, or from higher-skilled to lower-skilled (and lower
	paid) occupations.  Similarly, spending on sports activities may
	only divert spending from other leisure activities, and new
	business startups in the neighborhood of a stadium may be negated
	by business failures in other areas of the city.

Second, of course, is that if the team doesn't own the stadium, it's more
likely to leave the stadium, leaving the city with an expensive white
elephant.  Third, he points out that any benefits that do accrue to a city
from having a major league team accrue with a privately built stadium as
well.  

His proposal is that the third model is the preferred model.  Government
assistance is likely to be needed for site acquisition and infrastructure
(roads, for example).  He believes that in principle, government assitance
should end at the point, with the team assuming the rest of the obligation,
as the team is the primary beneficiary.  Talking about Camden Yards, he
says 

	The new ballpark affords a charming place to see a game, and not
	incidentally, boosts the value of the Orioles franchise.  Taking
	advantage of this windfall, Eli Jacobs has teh club on the market.
	After a public investment that the voters had tried to reject, the
	principal beneficiary of the new ballpark is the owner, who can
	pocket millions in profits after risking none of his own money in
	the new facility.  If an unflattering article in _Business Week_ is
	accurate, the public largesses that Eli Jacobs has received in
	Baltimore will make the Orioles a rare profitable venture for him. 


He concludes the chapter by pointed out that citizens and governments need
to remember at all times that sports franchises are entertainment
businesses, and are not indispensable to the community.  "They provide us
with fun and games, not food and water."

There's another chapter talking about franchise moves, but this post is
already too long.

Sherri Nichols
snichols@adobe.com