Detroit's professional football and baseball teams, the Lions and the Tigers, are
looking to roar into the city's downtown area in the new millennium. The teams' proposed
adjacent stadiums will be located near Tigers owner Mike Ilitch's Fox Theatre. Some
officials and observers are already touting the economic benefits that the new development
will bring to the troubled city, but when Michigan taxpayers are tapped to pay the bills,
others say that government is not playing fair.
The new stadium proposal estimates that a total of $505 million will be needed to build
the two stadiums and provide parking and other support structures such as practice and
food preparation facilities. The state has offered to kick in $55 million for land and
infrastructure costs using money from the state "renaissance fund." The
renaissance fund consists of money raised from Indian-operated casinos. This allows
government officials to circumvent traditional appropriations processes by moving millions
of dollars through a nine-member board instead of the full legislature.
Wayne County, for its part, will pony up "surplus" land and institute new
taxes on hotel stays and car rentals to pay its contribution of $100 million. Tiger
Stadium will become "Comerica Park" thanks to a $66 million deal with Comerica
Bank, and Detroit's Downtown Development Authority will pick up an additional $85 million
of the tab. That leaves only $215 million for the teams themselves to pay for their new
private, profit-making homes.
Contrast the Tigers' new home with the San Francisco Giant's new field of dreams. The
Giants are moving into "Pacific Bell Park" the same month that the Tigers begin
play in Comerica Park. The difference? Pacific Bell Park is the first 100% privately
financed baseball-only stadium since the opening of Dodger Stadium in 1962. It seats
42,000, sits on 13 acres, has 63 luxury suites, 74 rest rooms, retail outlets, and its own
center-field brew pub. The most interesting fact about this new stadium is that attempts
to fund it with public money via voter referendum were quashed in each of four tries. With
their hands tied by voters, the Giants organization looked for and found the $295 million
in private investments that is necessary for construction of Pacific Bell Park. Jack Kent
Cooke Stadium, constructed for the Washington Redskins in Maryland in 1997 was also funded
privately and was dubbed "Stadium Deal of the Year" by Project Finance
magazine.
There are other examples of successful, private sports stadiums. Why has Michigan
chosen the political route of building them?
Economic Wizardry
Politicians and special interests often sell the idea of taxpayer funding for stadiums
to the public by trumpeting economic benefits such as new jobs and greater prestige for
the city. When the Lions and Tigers stadium deal was struck, one newspaper headline
headline joyfully proclaimed a "Detroit comeback." William Clay Ford, Jr., the
Lions' vice chairman, said that being "an integral part of Detroit's renaissance is
an absolute honor of the highest degree."
But new government-subsidized stadiums are hardly a sound foundation for rebuilding a
city buried under excessive regulation and taxestaxes that are six times higher than the
average tax burden in other Michigan cities, according to a 1993 Mackinac Center for
Public Policy study.
Other studies have shown that sports stadiums do little or nothing to boost a region's
economic growth. One such study showed that, of 27 cities sporting new stadiums, not one
had a corresponding positive economic impact. In another study, economist Robert Baade of
Lake Forest College in Illinois examined nine new stadiums and found no discernable
economic impact in four cases and a significantly negative impact in the other five cases.
In truth, taxpayer funding of stadiums represents a "Wizard of Oz" illusion
of economic development. When the curtain is pulled back from the impressive-sounding
promises and projections for new prosperity, there is only the ugly reality of politicians
pulling levers, pushing buttons, and pitching smoke-and-mirrors economics.
Subsidizing the Rich
Michigan and Detroit are by no means unique in redistributing wealth from lower and
middle income taxpayers to the millionaire owners and players of professional sports. Some
states including Ohio actually mandate that taxes be spent on semi-professional and
professional sports teams. Nationwide, this pernicious and increasing form of corporate
welfare will cost taxpayers roughly $7.2 billion between 1987 and 2000. That represents
60% of the total $12 billion price tag expected for new stadium construction.
The way to rein in this corporate welfare run amok is simple: Outlaw sports subsidies.
In 1851, the people of Michigan adopted a state constitution that strictly prohibited the
state from subsidizing projects that could and should otherwise be handled by private
citizens and businesses. Under the 1851 constitution, Michigan was able to to transform
itself from a swampy backwater into an economic powerhouse, bringing to the world a host
of indispensable products and services. Why? One reason was that government was required
by law to take no interest in business.
Ending Corporate Welfare
The time has come for a new 1851-style amendment for new sports stadiums. A voter
referendum in favor of ending state subsidies to private business projects (such as
stadium construction) would keep Michigan politicians and favor-seeking businessmen from
draining state coffers. The referendum could also stipulate that every dollar spent on
"recreational" facilities, such as sports stadiums, by local units of government
would result in a corresponding $1 decrease in its state revenue sharing money for that
municipality.
Government-subsidized stadiums constitute the socialization of business risks, whereby
private owners or enterprises are allowed to foist their losses on a hapless public, but
get to keep any profits they earn from their ventures. The result of this process is
increased taxes, a redistribution of wealth from the middle class to the wealthy, and the
politicization of what should be clear economic decision making. By forcing people to fund
stadiums that they might never patronize voluntarily, government condescendingly assumes
it knows what is best for all citizens. Michigan should do away with all tax subsidies for
professional sports stadiums, and the sooner the better.
