Cities Rethink Public Subsidies for Sports
Seattle faces costly stadium repairs, but the dome-sized question is: Should city pay?
SHOULD cities subsidize major-league sports franchises?
The question crackles in dozens of cities across the country, as local leaders try to decide how much money - if any - taxpayers should be giving to attract or support a professional sports team.
Nowhere is the topic testier than here in Seattle, where, even before tiles began falling from the Kingdome roof this summer, the city's baseball team was calling for a new stadium.
John Ellis, chairman the Seattle Mariners' ownership group, says it is impossible for the team to ``remain in the Kingdome and continue to pay competitive player salaries.''
The money-losing Mariners say a ballpark with a retractable roof, instead of a closed dome, will draw more fans. And they want a facility better designed to make money off of luxury seating and concessions.
The only question: Who will pay for the $261-million park.
At least 50 other US cities are asking similar questions as they grapple with how to woo a new sports team or hang on to ones they already have.
``Thirty years ago it was just assumed'' that the city would pay, says Dean Baim, an economist at Pepperdine University in Los Angeles. The team brought economic development to the community, the theory went.
Now researchers are questioning that assumption, and taxpayers are more finicky than ever about approving bonds. The days of welfare reform for professional sports may be at hand.
``The pendulum is swinging back toward private participation,'' Professor Baim says.
But old ways die hard. Ballparks built since 1987, including ones in Denver, Chicago, Baltimore, and Arlington, Texas, have gotten an average of two-thirds of their money from public sources such as excise taxes. Cities typically also provide land, infrastructure, and sometimes tax breaks.
How far will the pendulum shift?
If the public takes a coldly economic view, perhaps further.
``Sports are just not big-league in terms of economic developmental impact,'' asserts Robert Baade, an economist at Lake Forest College in Lake Forest, Ill. His research suggests that teams mostly ``realign demand'' that would flow to other entertainment businesses in that city.
But a sports franchise does offer big-league value in entertainment, morale, and national exposure for cities. Baim says San Jose, Calif., would have a higher profile as an important city if it had successfully lured baseball's Giants from San Francisco a few years ago. (The city is home to a hockey team, the Sharks.)
As Seattle weighs the pros and cons of a new stadium, some football fans this fall returned to the Kingdome prepared - wearing hard hats.
A task force will present its final proposal next month to the King County executive.
The task force says it will not propose new broad-based taxes for the project. That stand squares with a recent poll of voters that went 4-to-1 against a taxpayer-funded stadium. The commission is considering other forms of revenue, such as taxes on visitors (hotels and rental cars) and ticket taxes on fans.
The owners want to keep the Mariners in Seattle, and offer to help finance the stadium and to share future profits.
Some fans wonder why the dome cannot be fixed up with more luxury seats, especially since Seattle's drizzly climate would limit the number of open-air games in a new park to perhaps 30 out of 81 home games. The number could fall further if the team presses ahead with plans to play some home games in Vancouver, B.C., and in Japan.
In a repair project fraught with cost overruns, the county is already spending an estimated $51 million to patch the dome. Meanwhile, the Seahawks, the facility's other major tenant, don't want to play second-fiddle to the Mariners. The football team recently unveiled a $120-million wish-list of Kingdome improvements.
But turning the dull gray shell into an attractive baseball venue is not so easy. A study for the task force suggests the cost would be two-thirds as much as the all-new stadium but would only boost cash flow by one-third as much.
The task force is currently divided over whether to support a retractable-roof or a middle option: an open-air stadium with no retractable roof.
``The cover is imperative,'' says Mariner chairman Ellis, citing ``what the weather can be like here in April, May, and even June, as well as October.'' The team says it lost $17 million last year, while Financial World magazine puts the losses at $4 million. The new stadium would add about $24 million in new revenue for the team, but would cost about $29 million a year in debt service. Uses other than baseball would be minimal.
A MILE or so north of the Kingdome, a new arena is under construction for the Seattle SuperSonics. The basketball team, with fewer players than baseball, is doing well financially and will use its new luxury-seat revenues to pay for the $73 million project.
The Seahawks, meanwhile, have been roughly breaking even, according to Financial World.
If Seattle did lose the Mariners, the city would be in good company; St. Louis and Baltimore have each lost football and basketball teams.
``The notion that life stops if the Major League Baseball team leaves just doesn't hold up,'' says Bruce Mann, a historian at the University of Puget Sound in Tacoma.