Posted on 03/25/2004 9:42:51 AM PST by Willie Green
For education and discussion only. Not for commercial use.
DAYTON, Ohio (AP) -- Play ball, tax free.
A study by researchers at the University of Dayton concludes that large public subsidies for the construction of major league baseball stadiums are unnecessary.
Economics professors Marc Poitras and Larry Hadley examined the 13 stadiums built between 1989 and 2001 and concluded teams would probably recover all or nearly all the cost of construction if the ballparks were built with private money instead of taxpayer money.
"The bottom line is that these new stadiums generate sufficient revenue to pay for themselves," Hadley said Wednesday. "If the stadium pays for itself internally, that should be sufficient motivation for the owners to build it."
Cincinnati Reds fan Bob Batson, 42, loves the nuances of the new ballparks but is uncomfortable with the increasing reliance on taxpayers to bankroll stadiums.
"It's a good idea that the community put something into it, but I think the owners expect too much," said Batson, 42, a Wright State University employee who takes his wife and three daughters to a half dozen baseball games a year. "The return is more than enough for them."
Jerry Geisel of suburban Kettering, a Chicago Cubs fan and season ticket holder for the minor league Dayton Dragons, said taxpayers wouldn't give a private company money to construct a new building, but they are willing to pay for baseball stadiums.
"People are stupid enough to fall for it. I think it's absolutely terrible," he said.
The only recent stadium built entirely with private money is SBC Park in San Francisco, built in 2001. Before that, it was Dodger Stadium in Los Angeles in 1962.
In their study, the researchers took into account team performance, ticket prices, the honeymoon period of a new stadium, stadium capacity and player salaries.
With the first season in a typical $268 million stadium expected to produce about $33 million, half the cost of construction would be recovered in five years and all of the cost in 12 years, the study said.
After 20 years, revenues would exceed construction costs by more than $100 million and by $200 million after 30 years, the study said.
The study said that if teams were left to rely on their own funds, they would likely choose functional, no-frills stadiums that would make it even more likely to recover their costs.
Messages seeking comment were left for Major League Baseball and the Cincinnati Reds, who had their $280 million Great American Ball Park built mostly at taxpayer expense.
Andrew Zimbalist, a professor of economics at Smith College in Massachusetts and an expert in sports economics, reviewed a draft of the study.
"It's done carefully," Zimbalist said. "But I'm not entirely persuaded that all of the assumptions they're using are accurate."
He said it might be possible in most instances for teams to privately finance stadiums if they are willing to live with declining rates of return as the stadiums age. But he questioned whether teams are able to do that in the current market.
Since 1990, he said, professional sports teams have gotten stadiums that are about 70 percent publicly financed, resulting in increased profits. Teams that need new stadiums could claim competitive disadvantage if they don't get public financing for their ballparks, he said.
I would love to see cities start refusing to pay for the stadiums. Once one or two do it and don't see the world collapsing around them, then the rest will get some spines.
In Dallas, Jerry Jones, owner of the Dallas Cowboys, is desperate to have his new stadium approved by the taxpayers. I believe he has already decided to sell the team and knows it is worth a 1/4 billion dollars more with the promise of a new stadium. If it were being privately built, the future return would have to be adjusted from the purchase price. As a public project, the cost is a business expense.
This study may make sense from a hinsight, overview prospective, The reality is that EVERY business would like to shift the risk of building/financing a new facility to the taxpayers!
There was some possibility of that when the Montreal Expos relocation started to unravel. The initial plan (as far as I can tell by reading the tea leaves) was to gin up a bidding war between Northern Virginia and DC; however, the NoVA bid collapsed into a black hole of PR and fiscal debacles.
Unfortunately, DC didn't have the sense to hang tough until MLB had no choice but to pay for its own stadium simply to get the dud off its hands.
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