Lions and Tigers: Who Bears the Costs?

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.