Pro Sports on the Dole; R. Keating

THEFREEMAN IDEASON UBERTY Pro Sports on the Dole by Raymond J. Keating B aseball is no longer just a game; it's big business. Such is the conventional wis dom today. And with salaries skyrocketing to the point where now the average major league baseball player earns $1.2 million a year, who could disagree? However, ever since the first professional team, the Cincinnati Red Stockings, was fieldedin 1869,baseball has been a business. Indeed, this is not something to be ashamed of; it should be celebrated. The fact that baseball is a business allows the profession als who play the sport to hone their skills to a point and for a period of time largely unknown to those participating in amateur sports. The business status of baseball has en abled it to become America's "national pastime. " Just as the great feats of Johnny Bench, Tom Seaver, Mike Schmidt, and Reggie Jackson captured the imagination of my generation, the achievements of Ken Griffey, Jr., Matt Williams, Barry Larkin, and Cal Ripken, Jr., inspire today's youth and the rest of us as well. This excellence largely emerges out of baseball's status as a business or profession.

Unfortunately, the dark side of big busi ness is a major part of the game as well. Corporate welfare deeply infiltrates base ball, along with most other professional sports. That is, a distasteful and costly alliance between government and business. Mr. Keating is the director ofNew York Citizens for a Sound Economy Foundation, and partner with Northeast Economics and Consulting. Fans no longer support their favorite teams and players merely through ticket prices, concessions, team apparel and souvenirs, and cable TV subscriptions, but through their taxes as well. Taxpayers across Amer ica-whether they are fans or not-are sub sidizing the portion of the entertainment industry known as professional sports. While such subsidies are completely unjus tified, they become even more egregious considering, for example, that the average employee in major league baseball earns more than a million dollars a year.

Examples abound. New York-long ac cepted as the capital of traditional welfare spending-has managed to turn practically all levels of sport into welfare clients. Most prominently, both the state and New York City have been scrambling since 1993 to come up with plans for either a new Yankee Stadium in a new locale, or upgrades to the current facility in order to stop team owner George Steinbrenner from moving the Bronx Bombers out of New York. The cost to New York taxpayers vary from a whop ping $1 billion proposal for an entirely new stadium to almost $400 million for a seem inglymodest plan for a stadium upgrade that includes a new bridge leading into an 11,000 car parking garage, as well as a shopping mall. However, New York state's officials are not content to extend corporate welfare to only the New York Yankees. In the state's 1994-95 budget, well over $100 million was slated for other stadiums and sports facili114 ties, including $8 million for Rich Stadium, home of the Buffalo Bills; $25 million for the Buffalo Sabres' new hockey arena; $4.5 million for the Soccer Hall of Fame in Oneonta, and millions more for minor league baseball stadiums across the state.

Perhaps most distressing, though, is the $125,000 in state taxpayer dollars for the Baseball Hall of Fame Stadium in Coopers town-a great blow to the innocence and independence of baseball. Of course, New York is certainly not alone in this alliance of government and professional sports. Jacksonville, Florida, for example, has agreed to finance a $121 million Gator Bowl renovation for its ex pansion National Football League (NFL) team, the Jaguars. Meanwhile, some cities and states have taken the saying "Build it and he willcome" from the movie FieldofDreamsliterally. St. Petersburg, Florida, built a domed stadium in anticipation of landing a major league baseball team. A possible move by the San Francisco Giants to St. Pete was nixed, so no baseball team yet. The taxpayers' bill equaled $138 million. Similarly, the State of Missouri started building a new domed sta dium in St. Louis to lure an NFL franchise.

Despite lobbying by U.S. Representative Richard Gephardt, the NFL shunned St. Louis during its last expansion meeting. The cost of the yet-to-be-completed stadium to Missouri's taxpayers-an estimated $200 million. The city of Nashville, Tennessee, is building a taxpayer-funded arena for bas ketball and/or hockey without a tenant as well, at a cost of $140 million. These governments have decided to take on the role of venture capitalist. Govern ment bureaucrats lack the experience, knowledge, and proper incentives to make such investment decisions. In addition, the risky nature of these endeavors dictates that private resources should be used in lieu of taxpayer dollars. Billions for Baseball Baseball stadiums opening to great ac claim recently include the Baltimore Ori115 oles' Camden Yards, the Chicago White Sox's new Comiskey Park, the Texas Rang ers' Ballpark at Arlington, and the Cleve land Indians' Jacobs Field. The acclaim is certainly justified as these new stadiums are unique parks made for baseball, unlike the sterile, round, utilitarian, astroturf stadiums built in the 1960sand 1970s. Unfortunately, taxpayers were tapped for these parks as well-$200 millionfor Camden Yards, $135 millionfor Comiskey Park, and $236million for Jacobs Field and a new arena for bas ketball's Cleveland Cavaliers. As for the Ballpark at Arlington, the total cost of $190 million was split-$135 million in taxpayer fundingthrough a one-halfcent city sales tax and $55 million in private financing by the Rangers including the sale of 15-year op tions on 10,400 of the new stadium's seats and first-year sales of luxury suites. In 1995, the Colorado Rockies will move into a new stadium in Denver which cost taxpayers $141 million.

Even the self-proclaimed free-market governor of Massachusetts, Bill Weld, has succumbed to the temptations of taxpayer subsidized professional sports. He has thrown his support behind a $700 million stadium and convention center in downtown Boston for the NFL's New England Patri ots. In Connecticut, multiplelayers ofgovern ment complicate the arena business. The city of Hartford owns the Hartford Civic Center, but is leasing it to the state of Connecticut at a cost of $48 million for a 20-yearperiod in order to help pay the city's debt service. In turn, the state is investing in upgrades to the arena-home of hockey's Hartford Whalers-at an estimated cost of more than $5 million. According to a Con necticut economic development spokes man, the state expects to cover their total costs through arena-based revenues, includ ing a $1 ticket tax, and even "generate a small profit." (Of course, the question aris es: If the Hartford CivicCenter can generate a profit, why not privatize it?) In a June 6, 1994, article, Forbes maga zine reported, "Over $1 billion has been spent for facilities opened since 1992, 116 THE FREEMAN • FEBRUARY 1995 ground has been broken on another $1.5 billion worth, and there are plans for still another $5 billion in construction by the end of the decade. " With taxpayers footing most of the bill. The assumption underly ing all this activity-government subsidiz ing, taxing, borrowing, and playing venture capitalistis that taxpayer subsidization of professional sports enhances economic growth. This is, at best, a questionable assumption.

Robert A. Baade, an economics professor at Lake Forest College in Illinois, wrote a study recently for the Heartland Institute in which he compared economic growth rates in metropolitan areas before and after the introduction of professional teams, new sta diums, and new arenas. His results over whelmingly indicate "that professional sports is not statistically significant in de termining economic growth rates." Baade declares that his study "finds no support for the notion that there is an economic ratio nale for public subsidies to sports teams and stadium and arena construction." He fur ther explains: "Attending a sporting event is but one possible use of an individual's leisure time and money. It is possible that no connection between professional sports and per capita income growth emerged be cause sports spending simply substitutes for other forms of leisure spending." Baade also notes that the types of jobs associated with stadium activity tend to be seasonal and low wage.

Charles C. Euchner, a political science professor at the College of the Holy Cross, also raises serious doubts regarding the economic merits of new sports stadiums in his book Playing the Field: Why Sports Teams Move and Cities Fight to Keep Them. He goes a step further, however, observing: Whatever the merits of sports-based development, those cities that most need an economic boost are least able to make major investments such as stadium con struction. Studies have shown that eco nomically struggling cities tend to pay more for expensive and ineffect.ive projects for development because of a sense of desperation to show tangible improvement. Stadiums and sports teams are luxuries that fiscally strapped cities can ill afford-yet have great difficulty bypassing because of the potency of sym bolic notions like "renaissance" and "major league status." Keep the Yankees in New York? This "sense of desperation" is most evi dent in the scramble by state and city officialsto keep the Yankees in New York.

Many New Yorkers still feel the pain of the Dodgers' and Giants' flight to California more than three decades ago. Over these same three decades, New York has wit nessed an even more massive exodus of individuals, entrepreneurs, and businesses. Apparently unwilling to make the decisions that will stem and even turn this tide, government officialshave grabbed onto the myth that if New York can just keep the Yankees the city's economy will somehow stay afloat. In fact, status seems to be the only benefit to be derived from government subsidiza tion of teams and stadiums. Hundreds of millions of taxpayer dollars is a hefty price to pay for a nebulous feeling of status. Yankee Stadium, for example, seems to have done little even for the status of the South Bronx. Indeed, ProfessorBaade observes, "The data suggest that stadium subsidies and other sports subsidies benefit not the com munity as a whole, but rather team owners and professional athletes." One of the latest government proposals, to keep the Yankees in the Bronx would fit this observation. The plan for a bridge from Manhattan leading straight into a new parking garage, where fans then would proceed through a mall into the stadium, seems specifically designed to separate the stadium and fans fromthe local, often dangerous, community where Yankee Stadium sits.

Very little empirical evidence exists sup porting government subsidization of professional sports. Complementing the economic arguments against such activity is Ameri ca's tradition of limited government. When one considers the proper role ofgovernment in society, the case against taxpayer-sup ported sports facilities becomes even stron ger. A sound governing philosophy dictates that government should undertake only those critical activities that the private sec tor proves unable to supply. On the federal level, national defense comes to mind. On the state and local levels, one thinks of public safety, such as police and the justice system. The political debate intensifiesonce the focus moves beyond such duties. Wit ness the growing debate over welfare in our nation. The notion, therefore, that sub sidizing professional sports-a part of the entertainment industry-is a proper gov ernment undertaking becomes highly de batable, to say the least. It is difficult to imagine any of our Founding Fathers, if alive today, supporting taxpayer-funded baseball stadiums as a legitimate function of government.

From 1950 through 1980, though, the trend toward government-owned stadiums and arenas seemed irreversible. According to economics professors James Quirk and Rodney Fort, in their book Pay Dirt, the percentage of publicly owned stadiums in baseball's American League rose from 12 percent in 1950 to 86 percent in 1980; the National League rose from 0 percent to 83 percent; the NFL increased from 36 percent to 96 percent; the National Basketball As sociation (NBA) from 46 percent to 76 percent; and the National Hockey League (NHL) from 0 percent to 52 percent. A small retreat was witnessed in the 1980s, though, as publicly owned facilities actually dropped by 1991 in the National League to 75 percent, in the NFL to 93 percent, and to 65 percent in the NBA. During this period, the Miami Dolphins moved into the $100millionteam-owned Joe Robbie Stadium, and baseball's St. Louis Cardinals bought Busch Stadium. Also in 1992,Toronto's Skydome, home to the Blue Jays, was privatized.

PRO SPORTS ON THE DOLE 117 TaxpayerRevolt? Government ownership of stadiums and arenas is not inevitable. The question be comes: How to stop the channeling of tax payer dollars to professional sports? A ques tion that has been asked about countless government ventures of highly dubious na ture throughout the ages. The first option would be a noble decla ration by the powers that be in professional sports that taxpayer dollars will no longer be sought or accepted by their respective sports. It is difficult to imagine George Steinbrenner, for example, who has so clev erly manipulated New York's elected offi cials thus far, suddenly declaring that he no longer seeks taxpayer dollars and is willing to buy Yankee Stadiumfrom New York City and invest in improvements. After all, the beneficiaries of government programs and spending never suggest eliminating those benefits. The second option would require self control on the part of America's elected officials-swearing offtaxpayer subsidies of sports. In the past, elected officialshave had few incentives to cease subsidizing sports.

Little organized opposition existed to such ventures and many fans were at least per ceived to be appreciative of such govern ment action. The final decision will lie with the Amer ican voters. In fact, when put to a vote of the people, some taxpayer-funded sports stadi ums have not fared well. The people of San Francisco, for example, have turned down several referendums for a new home for their Giants. Even some politicians have said no. Tax-cut-minded New Jersey Gov ernor Christine Todd Whitman recently nixed a deal to build an arena in Camden to lure the Philadelphia 76ers and is examining privatization options for the state's Mead owlands Sports Complex, home to the NFL's Giants and Jets, the NBA's Nets, and the NHL's Devils. Indeed, alternatives to taxpayer subsidies are available. The NFL expansion Carolina Panthers, while accepting $40-45 million worth of land from the city of Charlotte, will 118 THE FREEMAN • FEBRUARY 1995 play in a new stadium privately financed, in part, through the sale of permanent seat licenses. These license sales guarantee the purchasers the right to buy season tickets in perpetuity. They also can be bought and sold in the marketplace. The total construc tion costs of the new Carolina Stadium will be $160 million, with $100 million from the seat licenses and the rest from private in vestors. In addition, Washington Redskins owner Jack Kent Cooke is proposing to privately finance a new stadium in Mary land, with construction costs estimated at $160 million.

The American people need to understand that the economic impact of government subsidization of sports is negligibleat best. More likely, by adding to ever-increasing levels of government spending and taxes and choosing political rather than market means of allocating resources, one can le gitimately' argue that such subsidization is anti-growth in nature. Fans also must realize that professional sports in America will still thrive without taxpayer subsidies, as they did in the past. Naturally, team owners will have to reallocate some resources toward capital investments. However, no one should weep for America's multi-billion dollar sports industry, nor its millionaire players. They would simply be confronted with the same decisions faced by all other busi nesses. In fact, government officialswould better focus their attention on creating a healthy economic environment for their respective cities and states by lowering taxes, reducing regulatory burdens, and paring down the size of government. Such an enterprising environment attracts investment, busi nesses, and individuals, who in turn create a viable market, for baseball, football, hockey, and basketball.

Heck, an environment conducive to eco nomic growth and opportunity might even create a market for soccer in the United States. Well, perhaps I go too far. D IN MEMORIAM Murray N. Rothbard (1926 - 1995) O n January 7,1995, Murray Rothbard departed this mortal life so that he may join the immortals. Sudden death delivered him from his daily chores and put his task in other hands. Those of us who were privileged to know Murray Rothbard have lost a dear col league who inspired us with his incisive observations, brilliant reflections, and always keen and sparkling remarks. His departure from the stage of life is a loss to the whole libertarian world which he helped to forge and mend. He was not only one of the greatest economists of our generation but also a great social and political thinker. His was a powerful mind comparable to those of his teacher, Ludwig von Mises, and his teacher, Eugen von Bohm-Bawerk.

Murray was an indefatigable worker, the author of an unending stream of books and booklets, essays and articles, many of which have been translated into foreign lan guages. Several are masterpieces which are destined to be studied by future genera tions of students and scholars. They have earned him a place of honor in the annals of libertarian thought. Hans F. Sennholz THEFREEMAN IDEASON UBERTY Religion'sModemWitchHunt by Charles Dickson T he Old Testament Book of Exodus con tains a verse which reads, "thou shalt not suffer a witch to live." For hundreds of years since those words were first penned, religious groups have used them to justify persecution of those accused of practicing witchcraft. Some historians estimate that during the period extending from the fif teenth through the eighteenth centuries churches put 300,000women to death. This figure includes such episodes as America's infamous Salem witch trials of 1692 when the Massachusetts colonists executed 20 persons and imprisoned 150 others.