Management from the Tampa Bay Rays announced that between now and 2027 they would like to see the Rays move from their current location in downtown St. Petersburg, FL to another location in Pinellas or neighboring Hillsborough County. One location already being looked at is downtown Tampa, currently the home of the St. Pete Times Forum (but the locals still call it the Ice Palace) where the Tampa Bay Lightning hockey franchise plays.
One might be compelled to ask what exactly nomadic sports teams and their ever more expensive and audacious stadiums have to do with politics or economics. On the surface it may look like a simple case of a private entertainment enterprise making a business move, one that has nothing to do with politics. However, looking at the bigger picture, the comings and goings of sports teams is very political when you consider the various systems employed in running any city where said sports teams would make their home.
Cities need money to run effectively. There are public services that need to be funded and so Cities tax their residents to pay for these services. This requires most if not close to all the residents of a city to be gainfully employed, preferably in the private sector, in order to make money to then be taxed and spent on services for said residents. This is a pretty simple and obvious concept.
The problem these days is that there are far more residents in most cities than there are adequate private sector jobs. Furthermore, in many cities you may have a substantial amount of your workforce working in the public sector and being represented by unions, which commands an even larger portion of the collective tax revenue. The semi-cannibalistic system leads to shortfalls in finance and either taxes get raised or services get cut. When either happens residents flee for a better life causing a concentric circle of poverty, crime and general blight. It is here that the conventional wisdom regarding sports stadiums starts to rear itâ€™s head.
In cities dealing with situations such as Iâ€™ve described above, there is a concerted interest to either keep a local sports franchise or draw one to the city. The rational is that sports teams and the stadiums they play in bring untold tourism and leisure dollars. The city of Orlando, for example, exists because Disney and Universal Studios have built theme parks there. Tourism and entertainment bring both local and foreign dollars in year round, which should in theory then be spent back on the locals by providing more and better services.
Having said all that, one might think that the politically expedient thing for St. Petersburg to do whatever it takes to keep the Tampa Bay Rays happy and more importantly, still. Meanwhile, the mayor of Tampa Pam Iorio is warm to the idea of the Rays moving across the bay to Hillsborough County and might make some hard decisions with regards to building the Rays a brand new stadium. Rays owner Stuart Sternberg said, â€œâ€¦taxpayers or private investors would have to pick up more than half the cost of the stadium, which could have a price tag of $500 million or higher.â€
To be clear, a private enterprise is saying that in order for him to move his enterprise to their city the taxpayers will have to cough up $250 million if not more. This is after the taxpayers of St Petersburg already ponied up $293.3 million to build and maintain Tropicana Field.
Raising taxes is a surefire way to get yourself voted out of office and so inevitably, to satiate the beast, services get cut i.e. less money for schools, hospitals, law enforcement, sanitation, etc. The locals make these concessions and sacrifices hoping that a new stadium will revitalize their city bringing revenue, jobs and prestige.
The reality is that today, and for the bulk of years past, stadiums have not been the boon weâ€™ve all been promised.
According to The Sport Digest, â€œThere areâ€¦an overwhelming number of academic studies that show little or no economic benefits of sport facility subsidization. Many of these studies point to the substitution effect. The substitution effect argues that â€œas sport- and stadium-related activities increase, other spending declines because people substitute spending on sports for other spendingâ€ (Coats & Humphreys, 2004). Therefore, not all of the spending resulting from the construction of the new facility is new spending. When ignoring the substitution effect, many believe that the economic value of the facility is vastly overstated (Coats & Humphreys, 2004).
Opponents also argue that the multiplier for sports spending is often substantially less than the multiplier on other entertainment spending. Most of the revenues generated from sports are used to pay players, managers, coaches and trainers. Unlike the employees of local restaurants, theaters and stores, many of these players, managers, coaches and trainers do not even live in the city full time. Therefore, these large salaries are spread into other city and state economies (Coats & Humphreys, 2003)â€¦With the economic crisis facing America today, the sporting industry is not immune. Brett Yormark, chief executive of the New Jersey Nets, put it plainly when he said, â€œWeâ€™re not just competing for peopleâ€™s entertainment dollars anymore. Weâ€™re going up against milk and orange juiceâ€ (Futterman, 2008). Recently, NBA Commissioner David Stern announced the lay off of approximately eighty league employees, which accounts for 9% of the total. For many years, television contracts have helped to insulate professional sports from the volatility of the economy. But the changing economy has caused teams to rely more and more on ticket revenue. With the rising cost of everyday needs, many families are opting to stay at home and watch their favorite sporting event on television. This is causing a major blow to the sporting industry (Futterman, 2008).â€
So letâ€™s go through this again: thinking a new sports team and stadium will bring in revenue, taxpayers forgo services and theories about the free market to lure said team to their city, then the team performs badly (both economically and competitively) and threatens to move elsewhere lest the good citizens cough up more dough. Does anyone else see a problem with this picture?
Wait it gets worse.
Going back to the issue of the Rays leaving St. Petersburg, a number of businesses have opened around Tropicana Field and are typically fed from the fans that attend the game and then hang out in St Pete afterwards (or before the game). Generally speaking, stadiums are placed in an area of blight and subsequently the local economy picks up in the short run, as well as home values in that particular area. However, once the gravitational pull of revenue is displaced, suddenly those same local businesses are stuck in a situation that leaves them without the patronage they had grown accustomed to.
â€œA report released by a business group called the ABC Coalition in January said visiting teams and out-of-town fans generate $137 million to $213 million a year in direct tourism spending, part of the team’s annual economic impact estimated at $298 million,â€ according to an article in the St Petersburg Times. That same article has a number of anecdotal stories about local business owners worried that if the Rays move, they will most likely go out of business. Some will prevail because their business plan didnâ€™t solely rest on the Rays but not enough to keep a city afloat.
So here is the riddle: what intervention can be utilized to create more of a mutual investment in local sports teams and their stadiums without hurting either the stakeholders or the city itself? The answer is community ownership.
From The New Rules Project, â€œThe Green Bay Packers, one of the NFL’s best teams of the 1960s, and increasingly of the 1990s, are owned by their fans. Football champions in 1929, 1930, and 1931, Super Bowl I, II, and XXX champions, the Packers were incorporated in 1923 as a private, non-profit, tax-exempt organization. Article I of their bylaws states, “this association shall be a community project, intended to promote community welfare…its purposes shall be exclusively charitable.” The team can move only through dissolution, in which case the shareholders get only the $25 a share they put in. A board of directors, elected by the stockholders, manages the teamâ€¦The loyalty of these fans and owners is legendary. Games at Lambeau Field have been sold out for over thirty consecutive seasons. Streets are literally deserted for three hours on autumn Sunday afternoons. The waiting list for season tickets is 36,000 names long, for seats in a stadium that holds 60,000. It is common for season tickets to be willed from one generation to the next and to be hotly contested in divorce proceedingsâ€¦Green Bay’s metropolitan area is home to fewer than 200,000 people, yet the Packers rank in the top 20% of all professional teams in terms of franchise value. As player salaries have continued to escalate, however, the shareholders in late 1997 decided that more revenue needed to be raised for the team to remain competitive into the future. The 10,000 shares issued in 1950 were split into 10 million shares, 400,000 of which were made available to the public at $200 a pieceâ€¦Unless a city is fortunate enough to have a generous owner with a sense of loyalty to the community, fans and citizens will either be forced to pay up themselves for a new stadium, often unwillingly, or watch their teams leave.
Public ownership, on the other hand, allows for stadium funding to come from those in the community who want to support the team. Furthermore, in cities where the team is a permanent, rooted civic asset, fans and citizens are much more willing to financially support their team. If the fans receive a commitment, they will return loyalty with loyalty, as the fans in Green Bay have overwhelmingly shown.â€
Studies have shown that community ownership also has a positive effect on State Parks as well as lakes, beaches and streams. The community ownership concept is another form of the Basic Income Guarantee, which is currently employed in Alaska, where the locals get a cut of the oil revenue produced from local wells (itâ€™s that check the Simpsons got when they moved to Alaska for five minutes). Community ownership solves the issue of the locals being at the mercy of the team owners while also creating opportunities to help build the brand of their home team. Whether itâ€™s stocks or direct payments, if the locals are getting a cut, thereâ€™s incentive to help the team survive.
Ultimately the fate of the Rays is still very much up in the air and if modern sports have taught us anything, even if they move to New Jersey, within a few years another franchise will take itâ€™s place. The real issue here is that in its current form, professional sports is not the medicine cities need to prosper. There must be a change in the way entertainment and the citizenry do business.