The name of the game is money

George J. Bryjak

As players' salaries and ticket prices spiral astronomically upward, it is the taxpaying public that is being stuck with the bill for new stadiums.

If there has been one constant in professional sports over the past 20 to 25 years, it is that owners and players are becoming increasingly wealthy at the expense of fans, non-fans, and taxpayers. In 1976, the average salary of major league baseball players was $51,000. That jumped to $412,000 by 1987 and is well over $1,000,000 today.

About the time baseball salaries began escalating, former New York Yankee pitcher Jim Bouton (in his book Ball Four) stated that, "while the players don't deserve all that money, the owners don't deserve it even more." Many would agree that truer words were never spoken.

In the National Basketball Association, the contracts for superstars already are in the $5-10,000,000-a-year range, with the Chicago Bulls' Michael Jordan (the world's highest-paid athlete) earning $78,300,000 in 1997 ($31,300,000 in salary from the Chicago Bulls and $47,000,000 in endorsements). Jordan's income was 2,202 times the median annual household income of $35,460, and someone working for the minimum wage would have to toil for 7,309 years to make that amount of money. Even subs who rarely get into games are earning hundreds of thousands of dollars.

In 1976, the National Football League (NFL) entered into a four-year $656,000,000 deal with the major television networks that netted each team $6,000,000 annually. By 1990, those contract numbers had jumped to $3,600,000,000, or $32,000,000 a year per team. The latest five-network television contract will enrich the NFL by $17,600,000,000 over eight years, or $73,000,000 per team per year.

People who do not know the difference between a first down and a field goal (and couldn't care less) will be paying part of this multi-billion-dollar tab as TV sponsors/corporations pass on much of this cost to consumers. The price of meals in fast-food restaurants, as well as what Americans pay for soft drinks, beer, tires, cars, trucks, and a host of other products and services invariably will be affected by the latest NFL television deal.

These highly lucrative agreements were made possible by the Sports Broadcasting Act of 1961, which granted every organized professional sport the legal fight to conduct business as a cartel (exempt from anti-trust sanctions) regarding the negotiation and sale of its broadcasting rights. When television income is added to monies derived from tickets, luxury boxes, stadium concessions, and the sale of NFL-licensed merchandise, annual team revenues will be well over the $100,000,000 mark.

Oakland Raiders owner A1 Davis stated that even an idiot could make money with an NFL franchise. University of Texas sports economist Gerald Scully concurs, noting that "all clubs in the NFL make money," even those with the worst records and poorest attendance.

Consider the following the next time you hear that a team is struggling financially, or even losing money. Citing documents made public as a result of the 1992 Freeman McNeil v. the NFL anti-trust case, Jerry Gorman and Kirk Calhoun, in their book on the business of sport, reported that, in a recent year, Buffalo Bills owner Ralph Wilson and Philadelphia Eagles owner Norman Braman paid themselves salaries of $3,490,000 and $7,500,000, respectively. Most people would view these hefty numbers as a profit, but in the accounting logic of at least some NFL owners, self-paid "salaries" are an expense. If professional sports teams are such risky enterprises, why aren't owners rushing to unload their franchises? When teams are put up for sale, why is there never a shortage of potential buyers? The answer to both questions is that owners and owner "wannabees" know that the value of professional franchises continues to escalate. Teams that were worth a few million dollars 40 years ago--in 1962, the Los Angeles Rams were purchased for $7,100,000--currently are valued at up to $320,000,000 (the Dallas Cowboys). As a result of the latest television deal, the monetary worth of professional football teams will increase even more. In baseball, Eli Jacobs purchased the Baltimore Orioles for $70,000,000 in 1988 and sold the club five years later for $174,000,000.

Finally, if profits are so meager, why are team owners driving up player salaries with ever-increasing contract offers? In October, 1997, 21-year-old Kevin Garnett signed a seven-year $128,100,00 dollar deal with the Minnesota Timberwolves, a "small-market" team of the National Basketball Association.

Prior to about 1950, all of the major stadiums and arenas in this country were built with private funds. Today, of the 59 stadiums/arenas under construction or recently completed, all but five were financed in whole or part by taxpayers, and in some cases, local citizens really got stuck with the short end of the financial stick. For example, in St. Louis, the $280,000,000 TWA Dome was financed by taxes and other public revenue. The relocated Rams get money from ticket sales, luxury boxes, most concessions, and all events held at the stadium. For this, they pay the city $250,000 a year, less than the $300,000 minimum salary a veteran NFL player must earn.

Additional expenses that taxpayers invariably pick up to accommodate a new facility--even in those few instances where stadiums/arenas are funded privately--include the cost of additional water and sewage connections, rerouting mass transit systems, and the construction of new streets and highways. To help pay for these high-priced sport palaces, cities have levied additional taxes on hotel rooms, rental cars, alcohol, and cigarettes. Taxpayer-financed upgrading of existing facilities or the construction of new stadiums/arenas augments the value of professional sports teams. Owners are spared the financial costs in whole or part of stadium construction/renovation, while the equity of their holdings (teams) escalates.

To take advantage of the "segmented" ticket market--affluent and corporate consumers on the one hand and average fans on the other-stadiums/arenas constructed over the past quarter-century have built luxury boxes renting for tens of thousands of dollars a season that enrich owners, ranging from an additional $1,500,000 annually in the case of the NFL Cincinnati Bengals to $37,000,000 for the Dallas Cowboys. Money derived from luxury boxes is not shared with other teams, as gate receipts are.

Former Houston Mayor Bob Lanier, who was instrumental in allowing the NFL Oilers to leave his city rather than have taxpayers finance a new stadium to replace the 30-year-old Astrodome, stated that "The average working person is asked to put a tax on their home, or pay sales tax or some other consumer tax to build luxury boxes in which they can not afford to sit." A number of teams with new stadiums require fans to purchase "licenses" for the right to buy season tickets.

Like corporations that move to developing countries in search of lower labor costs and lax environmental laws, professional teams are moving to municipalities that give them what they want, such as St. Louis luring the NFL Rams from Los Angeles, to replace the Cardinals, which they lost to Phoenix. This strategy of relocation has put fans and local politicians in a difficult position: either meet the demands of owners or run the risk of losing the home team, as Cleveland did to Baltimore in the NFL. Pressures to build or refurbish stadiums only will intensify once professional teams begin relocating or expanding to Mexico, Europe, and even Asia. (The NFL already is considering playing at least one regular season game in Mexico.)

Sport sociologist Jay J. Coakley notes that, while club owners and like-minded politicians try to sell voters (most often successfully) on the economic benefits of building state-of-the-art stadiums/arenas, "dozens of studies done by independent economists, both liberal and conservative," do not support this position. The principal argument of stadium advocates is that new facilities create jobs. However, although paying well, construction jobs are short-term, and stadium designers/builders often bring in materials and specialized construction workers from other cities. Positions such as stadium vendor, security guard, and parking lot attendant are seasonal and low-paying. While the franchised restaurants and stores new stadiums typically attract create employment, this may occur at the expense of long-time local establishments that are driven out of business.

In addition, because discretionary funds are limited in any population, sporting events do not generate new income as much as they represent a transfer of existing money within the business community. That is, the more people expend on tickets, stadium food, and souvenirs, the less they have to spend on other forms of recreation such as eating out, going to the movies, and/or purchasing sporting equipment.

In his study of all major league cities over a 28-year period, economist Robert Baade concluded that "Sports investments appear to be an economically unsound use of a community's scarce resources." Stanford economist Roger Noll argues that "Opening a branch of Macy's has a greater economic impact" than building a new stadium. San Francisco budget director Teresa Serrate can document just a $3,100,000 net gain from the baseball Giants in a city with a gross economic product of $30,000,000,000.

If the economic benefits argument falls short, owners and their supporters can be counted on to roll out the "community pride" position. In a 1996 interview, NFL team owner Art Modell--whose Cleveland Browns became the Baltimore Ravens--stated that "The pride and presence of a professional football team is far more important than 30 libraries."

While $270,000,000 of public funds in Maryland were used to subsidize the Ravens and NFL Washington Redskins, whose new stadium is in the Maryland suburbs, some Baltimore schools were rationing toilet paper and chalk. Students wore coats to class in school districts that could not pay heating bills. Funny how residents get the pride-along with a whopping bill for generating that feeling--and reduced community services, while owners and players, who mostly do not live in the area once the season is over, reap the profits.

I would imagine that, taken as a group, owners of professional teams--or, in the case of corporate ownership, the CEOs of these organizations--are staunch opponents of "giveaway" programs associated with welfare capitalism. When their economic interests are at stake, though, "socialism for the rich," as the NFL has been referred to, in the form of taxpayer-funded stadiums, is perfectly rational and acceptable.

For the most part, team owners and professional athletes do not even engage in a pretense of being concerned about the economic well-being of the people who support their industry. In the aftermath of the $17,600,000,000 NFL television deal, there was much speculation about how high the salary cap would go and what impact this economic windfall might have on player movement via free agency. However, neither the athletes nor the owners, to my knowledge, have uttered a word about sharing any portion of this money with fans/taxpayers by way of reducing ticket prices (or at least holding them steady), making charitable donations in lieu of exorbitant salary increases, or contributing additional funds toward the upkeep of existing stadiums or the construction of any new ones.

Fans of losing teams in any sport always have kept the faith in terms of a "wait-till-next-year" mentality. While the coming season can bring anything from a first- to last place finish, we can be certain that owners and players will continue to get their share of the sports dollar--and much more.

COPYRIGHT 1998 Society for the Advancement of Education
COPYRIGHT 2008 Gale, Cengage Learning