The following is an essay first published by the Mackinac Center for Public Policy for the Detroit Tigers’ home opener in April 2002. Two reasons make it worth reprinting today.
First, the Tigers, now at 28 wins and 75 losses, are on pace to lose more games this year than any team in the history of Major League Baseball. This could push the "Subsidies per Victory Ratio," first proposed by the Mackinac Center, to new heights. Second, the Washington Post just published a fascinating analysis of revenue forgone by the federal treasury due to the financing of professional sports stadiums with tax-exempt bonds. Since 1990, 38 professional sports teams have either built new stadiums or refurbished older ones using $7 billion worth of tax-free financing.
Sports stadiums such as Comerica Park are often built with special favors provided by federal, state, and local governments. Government officials believe helping wealthy owners build stadiums for their teams also creates jobs in net terms. Empirical evidence does not support such a belief. It is painful enough to watch our beloved sports teams lose, we should not be forced by government to pay for it.
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"We count everything in baseball. God, that’s all we do." —Kevin Costner in "For Love of the Game."
As the Detroit Tigers take to the field in their home opener Friday, we would like to recommend a new statistic — perhaps a new category of statistics — for baseball’s number crunchers: the subsidies-to-victories ratio (SVR).
The SVR would measure the total value of government favors to professional sports teams (subsidies and tax credits, for instance) with respect to a team’s win record or some other recognizable statistic.
Okay, so it’s using baseball to make a point. But the point’s actually pretty amazing. The new statistic would remind fans that they can lose more than a ball game when their tax dollars are used to build sports stadiums for professional teams. Government subsidies for professional sports stadiums are not only economically unsound, they are unfair to sports fans and non-fans alike.
Government participation in the construction, even the operation, of sports stadiums is nothing new. Indeed, 1,500 years ago Rome fell under the crushing burden of its welfare state, which included government-subsidized entertainment in the form of gladiator duels and other "games." Historian W.G. Hardy estimates that Rome spent the equivalent of $100 million annually to support public entertainment. What is new about modern games is the size and number of deals featuring a marriage of tax dollars and politicians promising "jobs."
Economist Charles Rock of Rollins College, writing for the James Madison Institute, a Florida-based think tank, reports that since 1960, $17 billion has been spent financing stadiums for just the four professional sports leagues: hockey, football, basketball, and baseball. More than two-thirds of that financing came from taxpayers.
The use of tax money for construction and renovation of stadiums is usually sold by politicians as "economic development" for communities that get the new stadiums. But the evidence shows little relationship between the presence of professional sports teams and real economic growth — and what relationship it does show is negative. According to the National Taxpayers Union Foundation, a decade’s worth of professional sports stadium construction has left federal, state, and local taxpayers $7.5 billion poorer, and the tab could double if 15 additional projects on the drawing board are built.
This is why professional baseball should adopt the SVR — so fans can be reminded that they pay for their teams as many as three times over: 1) when they pay their taxes 2) when they pay for tickets and 3) when their teams turn in losing seasons.
It works like a charm: For example, in Comerica Park’s first season, the Tigers had an SVR of $1,455,696. That is, it cost taxpayers more than $1.4 million for each of the Tigers’ 79 victories.
Kind of makes the local Little League game sound more inviting, doesn’t it?
By contrast, the San Francisco Giants had an SVR of only $103,000. Why the difference? For one thing, Pacific Bell Park was built with a heck of a lot less tax dollars — $105 million less — than was Comerica Park. All Pac Bell received was a $10 million so-called Tax Increment Financing deal that some analysts don’t even consider tax money. The other thing is that the Giants won more games than the Tigers. A lot more.
The Detroit Tigers didn’t have the worst opening season SVR in the major leagues. The Pittsburgh Pirates opened PNC Park last year and won only 62 games. Their SVR: $2.8 million per victory. The Milwaukee Brewers — a team that bested the Pirates — came out even worse. Last year, the Brewers inaugurated Miller Park, a $400 million behemoth with a retractable roof. Taxpayers coughed up $310 million and suffered through a 68-94 season, leaving them with a whopping SVR of $4.5 million per game victory.
There are many more ways to count up how much citizens are paying in government subsidies for the many accomplishments — both positive and negative — of our baseball heroes. For instance, you could factor the dollar amounts into Pitched Strike Outs, Runs, and Team Home Runs and publish them on sports pages next to box scores (see table above).
Like Kevin Costner said in a recent film, "We count everything in baseball." Why not how much the fans shell out of their pockets in taxes for each strike out? That home run by Bobby Higginson was great — "But how much did it cost?" one fan asks another as both munch their popcorn.
Okay, so we’re a bit over the top here — but the point is to underscore the losing nature of stadium subsidies: When economists and urban planners try to come up with the "development" that results from these boondoggles, they come up empty handed virtually every time. Something that can and ought to be done more cheaply by the private sector winds up on the backs of already overburdened taxpayers. Even people who dislike baseball are forced to pay for the recreation of those who do.
It’s time for governments to stop subsidizing the commercial efforts of for-profit sports teams and let them win or lose on their own merits.
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Michael LaFaive is director of fiscal policy for the Mackinac Center for Public Policy. More information on economic development is available.