Posted on 02/16/2016 8:55:19 AM PST by MichCapCon
U.S. Sen. Claire McCaskill has proposed legislation that would force sports teams who relocate to a new city to pay back public subsidies received from their former state or town. This legislation is likely influenced by the St. Louis Rams’ recent decision to move to Los Angeles (Sen. McCaskill hails from Missouri). This is a solid idea, especially given what the economic research says about stadium subsidies and given the inability of cities to protect taxpayers from being left in the lurch on these stadium deals.
The Rams were lured from Los Angeles to St. Louis in 1995 by a new, publicly financed stadium, the Edward Jones Dome. The city borrowed nearly $500 million (inflation-adjusted) to construct the stadium and still owes approximately $100 million. This debt service will cost city taxpayers $5 million per year until 2021. The Rams also get to keep the revenue from the naming rights for the stadium, which is worth just under $4 million per year. Sen. McCaskill’s proposal would require the Rams to pay back the $100 million the city still owes.
But what’s lost in this debate is that it shouldn’t require federal law to prevent pro sports teams from abusing their publicly financed stadium deals. Unfortunately, most of the time, cities negotiate terrible agreements with franchises, leaving taxpayers in a vulnerable position.
For instance, St. Louis agreed to a “state-of-the-art†clause in the Ram’s lease with the city. This required the Edward Jones Dome to be in the top 25 percent of NFL stadiums as measured by various stadium characteristics. If the Dome fell out of the top 25 percent, the Rams were free to break the lease and move. Given the large amount of new stadium construction in the NFL, the Edward Jones Dome quickly fell out of the top 25 percent, and the team claimed that the stadium would need $700 million in renovations to make it a top-tier stadium again. The city didn’t have $700 million to spare (which city does?) and, as a consequence, arbitrators in 2013 ruled that the city was in violation of the lease and the Rams were free to move.
But St. Louis is not alone. The Cincinnati Bengals have a similar clause for Paul Brown Stadium, which requires Hamilton County taxpayers to pay for any feature in the stadium if at least 14 other NFL stadiums have that feature. Since Paul Brown Stadium opened in 2000, 15 new NFL stadiums have been built, and there of lots of technologies and amenities that Hamilton County taxpayers are now on the hook for. Repayment on the debt issued to pay for the Bengals' home field now consumes close to 20 percent of Hamilton County’s entire budget.
State-of-the-art deals don’t just happen in the NFL. The Charlotte Hornets and Atlanta Braves have worked similar requirements into their leases with their respective cities.
Given that local governments appear unable to competently negotiate stadium leases that protect taxpayers, McCaskill’s legislation could be a step in the right direction. By making it financially prohibitive for teams to move until stadium debt is repaid, the legislation would essentially remove state-of-the-art clauses. Teams would likely try to work around this by demanding cities issue debt for shorter maturities so that the debt is paid off more quickly.
But better than this legislation would be a simple ban on public subsidies for stadiums altogether. The economic literature on this issue is very clear: The economic impact of a sports stadium is zero, or even slightly negative. Banning these subsidies altogether would be sound fiscal policy and provide the ultimate protection for taxpayers.
So does socialism, but that doesn't stop the elites from foisting it on the larger population.
I hate the whores of the NFL almost as much as I hate Congress but if the people are willing to tax themselves for the benefit of a billionaire, let them do it.
Never, ever shelter anyone from the realities of their decisions
Far be it from me to come to the defense of greedy owners, but why should they have to pay back something the people of St. Louis were stupid enough to do to lure them in the first place?
Sort of like a money back guarantee. You don’t always get one for something you purchase.
If this were such a good idea why aren’t the cities negotiating it up front with the owners before they build the stadium?
The people are not willing to tax themselves to build stadiums, and when it’s put to a referendum, they usually vote against it, which is why it rarely is put to referendum. They are, however, perfectly willing to tax someone else.
Why were these cities dumb enough not to put a timeframe in the deal?
e.g. If you move before 25 years you have to pay XXX Billion dollars
The St Louis thing has a bit more to it than that. When Kroenke bought the Rams he was bidding against the current owner of the Jaguars. Kroenke was adamant that the Rams would continue to stay in St Louis.
He then proceeded to drive the team into the ground and went to court to break the lease, which would then allow the team to move if they so chose.
He also purposely alienated the St Louis fans and don’t get me started on the players coming out doing “hands up don’t shoot”. After doing all he could to drive fans away, he then used that as a reason he should be allowed to move.
When Kansas City upgraded the Truman Sports Complex they put the sales tax increase on a referendum, which passed. They had a second referendum for a moving roof to cover Kauffman and Arrowhead, which didn't pass. Of course both the Royals and the Chiefs contributed tens of millions to the upgrade and both have leases that run until 2031. Maybe Jackson County is just better at negotiating than St. Louis is?
McCaskill wants to indemnify the foolish politicians of St. Louis. Guess which party they come from? Let them spin in their vortex of stupidity. The folks of St. Louis can come over to Kansas City, we have a very nice stadium.
The problem is that the crooks who negotiated this deal are long gone, so no one is held accountable. A better law would be for stadium bonds to only schedule 4 years out. If you can’t pay for it by then, you can’t pay for it.
They could call the Bill the SOUR GRAPES-SORE LOSERS ACT
>>The people are not willing to tax themselves to build stadiums, and when it’s put to a referendum, they usually vote against it, which is why it rarely is put to referendum. They are, however, perfectly willing to tax someone else.<<
The only thing L.A. ever did consistently and correctly was tell the NFL that getting a team there will never cost a single taxpayer dime.
The new stuff for the Rams is 100% privately funded.
This legislation is a bad idea. If localities want to tax themselves for ANYTHING that is between the people and their elected government. This smacks of imperialism.
I am kind of split on these. Cities get a lot of intangibles by hosting a sports team. Yes, they usually get crappy deals on the stadiums themselves, but cities compete with each other for business development, relocation, and quality of life. Having a sports team gets the city name recognition that it wouldn’t get otherwise. Los Angeles doesn’t need a sports team. Neither does New York. Everyone knows those cities even if they don’t have a sports team. But St. Louis is a second tier city that doesn’t get press coverage outside its region. It needs publicity.
Actually Kroenke kept to the lease longer than he had to. There was a clause in there that the stadium would be reviewed by a 3rd party every 10 years and if it wasn’t one of the 8 best stadiums in the league the Rams were free to go. The stadium failed that test 10 years ago and the team stayed, they spent the next 10 years trying to get a new stadium or at least a serious remodel, they never put it together, the stadium failed the 20 year test. Now the Rams are gone. The city knew the terms, they failed their end.
The problem is that the billionaires can buy off the politicians who then subsidize them.
I would like to see public subsidies of sports teams allowed—however since the public officials who approved it were probably corrupt the city mayor and state governor of each location should automatically serve a five year jail term in exchange.
Then we will see how interested they are in spending the public’s money.
Better idea: why not make the moron politicians that made the the bad deal personally financially responsible?
Makes too much sense.
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