Thursday, August 2, 2012

The Economics of a City Having an NFL Franchise Are Brutal – Brutal on Taxpayers That Is

The National Football League – Welfare for Billionaires

This Forum has frequently commented on the travails of the state of Minnesota and its attempt to retain the Minnesota Vikings football team.  The attempt was a success (?) as taxpayers in a state that shut down its government because of a fight over taxes agreed to hand out hundreds of millions of dollars to build a football stadium.

Apparently the next team in the bulls eye is the St. Louis Rams, previously the Los Angeles Rams and before that the Cleveland Rams.  The Rams were lured to St. Louis by a huge public subsidy.  This along with the flight of the Oakland Raiders back to Oakland left Los Angeles with no professional football team. Far from being a problem, this has given the NFL a huge lever over cities who will not cough up hundreds of millions to keep a team.  In essence the league owners have the following position, pay up or we move the team to L. A.

For the past 17 years, Los Angeles has been the National Football League’s lost city of gold. The second-largest media market in the U.S. hasn’t had an NFL team since both the Rams and Raiders left town after the 1994 season in search of new stadiums. Now, the league appears ready for a return to L.A., and one of the most likely candidates to relocate there is none other than those same Rams, currently playing in St. Louis. The team’s potential round trip illustrates team owners’ continual success at playing cities against one another to gain access to public funds.

The price tag for keeping the Rams in St. Louis is not a billion dollars of taxpayer money, but it is close to that amount.

In February the St. Louis commission proposed a $124 million renovation of Edward Jones, including upgraded box suites and a 96-foot-long video board. In May, the Rams came back with a $700 million proposal calling for added bowl seating and an adjustable roof. “It is our goal to keep the Rams in St. Louis for many years to come and to do so with improvements to the facility that make sense to the Rams ownership and our community,” CVC President Kathleen Ratcliffe wrote in an e-mail.

But the NFL may have decided that the time has come where they can make more money by putting teams in southern California.

While Rams owner Stan Kroenke waits for an arbitrator’s ruling on the wildly different proposals, two billionaires with competing plans say they’re ready to build state-of-the-art venues in L.A. as soon as the NFL delivers a team to take up residence. Philip Anschutz, whose Anschutz Entertainment Group operates the Staples Center and owns stakes in three L.A. teams—the NBA’s Lakers, the NHL’s Kings, and pro soccer’s Galaxy—is backing Farmers Field, a 68,000-seat stadium to sit alongside Staples downtown.

Edward Roski Jr., chairman of Majestic Realty, wants to build a 75,000-seat stadium in City of Industry, 20 miles east. Both pledge to bankroll the buildings with little or no public money. In a memo sent to league owners on June 29 and first reported in theLos Angeles Times, NFL Commissioner Roger Goodell referred to the two plans as “advanced to the point where the prospects for a new facility are better than they have been in many years.” Any L.A. stadium should be prepared to house two teams, he wrote. Since the NFL doesn’t have plans to expand beyond its current 32 clubs, that means two franchises will probably be on the move—putting more pressure on host cities to keep owners happy.

One solution of course would be to let the local community own the team, which seems only fair since in some, but not all, cities they are the ones footing the bill for the stadiums.  But that solution would deprive billionaires of the ability to make even more money, so no, other than Green Bay that is not allowed. Oh, and don't believe the spin that in some cities the team and its private owners paid for the stadium, even in those cities the teams got millions in public funding for infrastructure.  See, that's why government cannot afford to help provide health care, the money went to football stadiums and related projects.

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