Author Topic: Cheaper to keep them  (Read 5177 times)

radram

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Cheaper to keep them
« on: June 14, 2015, 08:22:12 AM »
http://fox6now.com/2015/06/04/gov-scott-walker-to-reveal-long-awaited-deal-to-pay-for-downtown-bucks-arena/

What do you think?  Does it take money to make money(or in this case, save money), or is this a proper post for this thread?






nobodyspecial

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Re: Cheaper to keep them
« Reply #1 on: June 14, 2015, 10:48:08 AM »
It obviously provides fantastic financial benefits for a city when it pays a professional sports team to move/stay there  otherwise cities wouldn't continue to pay $Bn to do this.

music lover

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Re: Cheaper to keep them
« Reply #2 on: June 14, 2015, 11:07:34 AM »
It obviously provides fantastic financial benefits for a city when it pays a professional sports team to move/stay there  otherwise cities wouldn't continue to pay $Bn to do this.

That's not really true. Sports teams redistribute money, they don't create it. Joe Fan who spends $4000 on tickets and $1500 on beer and hot dogs now has $5500 less to spend elsewhere and the local economy suffers:

http://www.marketplace.org/topics/business/are-pro-sports-teams-economic-winners-cities

http://www.theatlantic.com/business/archive/2012/09/if-you-build-it-they-might-not-come-the-risky-economics-of-sports-stadiums/260900/

SwordGuy

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Re: Cheaper to keep them
« Reply #3 on: June 14, 2015, 12:06:54 PM »
Cities have ZERO business building stadiums for private businesses.  Those businesses should build their own stadiums.

Indexer

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Re: Cheaper to keep them
« Reply #4 on: June 14, 2015, 12:32:42 PM »
Sports teams do redistribute wealth.... every business does to a degree.  The movement of money through the economy is what gets it going. 

The money going to a sports team might have been money that would have went to other entertainment.

However consider this.... if only one city in a large area has sports teams/major events where will people go?   Are people more likely to move to a city if it has sports teams? 

I live in the South.  Lets use Charlotte as the example.  It just had the DNC a few years back.  It has been one of the fastest growing cities in the country.  It has the Panthers, Nascar, music venues that stay packed, huge man made lakes, a theme park, and most of NC & SC are an entertainment dead zone for hundreds of miles in any direction.  Money that would have been spent in other small towns/cities is instead spent in Charlotte.  If you were the mayor of Charlotte what would you do?  You could say the same thing about Atlanta.

forummm

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Re: Cheaper to keep them
« Reply #5 on: June 15, 2015, 10:25:21 AM »
The research is pretty compelling that it's a financial loser for municipalities that pony up for sports teams. But teams are very good at making the city council star-struck and playing cities off of each other to sweeten the pie.

Tax breaks or other incentives for businesses in general are typically bad financial decisions for municipalities. But come election time they seem nice to uninformed voters.

music lover

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Re: Cheaper to keep them
« Reply #6 on: June 15, 2015, 10:41:24 AM »
Sports leagues generate a lot of money but somehow have convinced politicians and taxpayers that paying for their place of employment is a good idea, even though they have a payrolls of $50 - $100 million each year.

As an example, if the NHL cut their $71 million salary cap to $41 million, then every team would potentially have $30 million a year for their arena fund, or close to a billion every 30 years, and could exist with $0 in taxpayer subsidy. The only people hurt by this would be players who would be forced to live on $2 million a year instead of $5 million.

MoneyCat

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Re: Cheaper to keep them
« Reply #7 on: June 15, 2015, 02:56:21 PM »
Wait, isn't that the same governor who drastically reduced education spending in his state?  People actually voted for him?

HoneyBadger

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Re: Cheaper to keep them
« Reply #8 on: June 15, 2015, 05:15:22 PM »
I live in Glendale, Arizona - the poster child for the failure of sports arenas to "pay for themselves."  I drive on streets that are going back to gravel and pay the highest sales taxes in the metro area.  I was recently involved in a campaign to stop the fire sale of a Glendale public library; the proceeds no doubt were intended to offset PART of the annual cost of keeping the hockey team in town.  It infuriated me that Glendale would even consider ignoring the will of the voters (who approved general obligation bonds to build a library, not to engage in real estate speculation to benefit a sports team).

Glendale began the process of terminating their contract with the Coyotes this week.  We'll see how that plays out. 

Cpa Cat

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Re: Cheaper to keep them
« Reply #9 on: June 15, 2015, 05:46:06 PM »
http://fox6now.com/2015/06/04/gov-scott-walker-to-reveal-long-awaited-deal-to-pay-for-downtown-bucks-arena/

What do you think?  Does it take money to make money(or in this case, save money), or is this a proper post for this thread?

The article seems to indicate that they get $3 for every $1 of investment due to income tax revenue from the team (and those who work for the team) and from visiting teams. They're saying that if the team leaves, along with their extravagant incomes, then that money is lost.

If that's true, then they're not talking about redistributed spending. They're talking about income taxes collected from NBA salaries.

It's hard for me to believe that a single sports team actually generates that much income (and consequently, income tax) - but I'm not really into sports. So maybe it's true.

And then one of their diagrams seems to indicate that the stadium's revenue is somehow included, even though none of their quotes say so.

Also, if they're any good, they will host more games and the more likely they are to host big events (finals, semi finals) that people actually travel to see.

Sports leagues generate a lot of money but somehow have convinced politicians and taxpayers that paying for their place of employment is a good idea, even though they have a payrolls of $50 - $100 million each year.

As an example, if the NHL cut their $71 million salary cap to $41 million, then every team would potentially have $30 million a year for their arena fund, or close to a billion every 30 years, and could exist with $0 in taxpayer subsidy. The only people hurt by this would be players who would be forced to live on $2 million a year instead of $5 million.

But then the city/state would lose the tax revenue generated by 30 million dollars a year worth of income per year. Which, in Wisconsin would be around 2.3 Million dollars per year per person, plus local sales tax and revenue from spendy NBA players.

The math still seems shifty to me, and it certainly requires that the team be good enough to have players that call for the highest salaries and continue to do so over a lengthy period of time.
« Last Edit: June 15, 2015, 05:47:42 PM by Cpa Cat »

TheGrimSqueaker

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Re: Cheaper to keep them
« Reply #10 on: June 15, 2015, 09:40:28 PM »
This is a statistical outlier, but the city of Albuquerque benefited substantially from a stadium deal with the Isotopes.

Some years ago, the City renovated a multi-use facility into a baseball-only facility, for the near-exclusive use of a business. Taxpayer dollars were used for this. Since then, the City has been raking in rent from the use of the facility, which really is well designed and a pleasure to attend. A year or so ago the cost of the renovations was repaid and it's been pure profit from that point forward. All the concessions are staffed by local charities, who receive a portion of the money made from food sales.

There was a lot of resistance to the renovation and the exclusive contract at the start, but this has been one of the rare occasions when the municipality really did make a profit long-term.

Glenstache

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Re: Cheaper to keep them
« Reply #11 on: June 15, 2015, 10:39:23 PM »
This has been a hot-button issue in Seattle for a number of years and we have a whole stadium district. We paid off the last round of stadiums (kingdome) *after* the new ones had been around for many years. We have sport-specific stadiums for baseball and football immediately next door to each other. Several years ago the NBA tried to extract a new stadium for the Sonics and were basically attempting to extort money. Recently a SF billionaire has been pushing to bring the Sonics back to Seattle (as a renamed team from somewhere else or a new team) and having some sort of hybrid public/private franchise. It takes a really minimal reading of the memorandums of understanding and associated documents to realize that it is a terrible deal for the city with enough window dressing to make for sound bite rebuttals. Multiple studies have shown that it will generate no new net revenue for the city as a whole. A small number of businesses immediately adjacent to the new stadium would benefit, but that's it. The location of the stadium would additionally be terrible for the much more profitable and important to the broader economy port operations. Luckily for now it looks as though it is going nowhere fast.

On the other side there are a lot of passionate fans who really want a basketball team. That's great and I hope they find an outlet for that. But, the NBA is fundamentally a private for profit enterprise with a history of playing cities against each other to extract infrastructure. The issue is only complicated in that sports tap into deeply emotional territory for a large segment of the population. This is emotional for me in the frustration it incurs at the insanity of it here in Seattle and in all the other examples like the OP's example.

TheGrimSqueaker

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Re: Cheaper to keep them
« Reply #12 on: June 16, 2015, 08:09:23 AM »
Spiffy factoid: some of these major professional sports organizations are actually registered as not-for-profit companies and are tax exempt 501(c)(6) organizations. Meaning: they don't pay income tax, but donations to them aren't tax exempt.

The NBA never has been tax exempt, but the NFL was until very recently, having just given up its tax exempt status. The NHL, NCAA, and PGA tour are tax exempt. MLB used to be, but they gave up their exemption in 2007.

Individual teams are not tax exempt.

radram

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Re: Cheaper to keep them
« Reply #13 on: June 16, 2015, 09:01:39 AM »
@moneycat,

That is him, but no one person can be blamed or take credit for change.  It takes a governor, senate, and house working together.  WI has all 3 with the same political affiliation.  One of the newest proposals here is to lift all requirements for non-core teachers.  Not only would a teaching degree not be required, but not even a high school degree would be needed to teach non-core subjects.  This has not been very well received so far, so it probably will not be part of the next budget.

Next up is cuts to secondary education.

It remains to be seen if these reductions will benefit the state in the long run.  I can only speak to what I have seen.  I FIRED last Monday after spending the last 14 years teaching high school in WI.  When I started, very few left the building year to year.  The past 2 years, there was over 20% turnover each year.  I would estimate that there has been about a 90% turnover in the past 5 years.  They got the desired effect of "new blood" at a reduced cost, but we will see if things are better for students.

For ME, the changes prevented OMY syndrome because I no longer enjoyed the working conditions, and finally took the plunge last week Monday.  It will hopefully play out to be a win for me and my family.  More to come from me in the FIRED thread.

One correction, we didn't vote for this guy.  We voted for him 3 times in 4 years.  The people are speaking, and saying this is what we want.

As far as the stadium bringing in money, the proposed site has been sitting vacant for well over a decade, in anticipation of this new stadium deal.  How much has that cost the city?  Will would have been there instead?  What will go there if the stadium is a no go?  Have these factors been included in the "charts" in the article.  I would assume not.

Every now and again, you hear of a project that actually brings in people that otherwise would not have come.  The Callatrava addition to the Milwaukee Art Museum appears to be one example.  Will a 3rd stadium build within 5 blocks of 2 other stadiums (one built in the 70's, one in the 80's), be the economic jump start we are hearing?  Again, time will tell.