Cities Pay Dearly for Pro Sports, for Good Reason
Sometimes you can't just follow the money.
Las Vegas's plan to commit $750 million of public funding toward building a football stadium for the Raiders -- a plan being debated in the legislature this week -- is bringing out the predictable critics. They argue that the economic benefits would not make up for the initial outlay, or that public money would be more productive if invested in infrastructure or education.
The trouble is that the desirability of cities is not dictated purely by fiscal measures. If it were, more business would leave California for Texas than actually happens. Culture, social capital and identity play a part -- supported by the economy, and supporting the economy, and valuable beyond easy calculations. They are worth some public investment.
In his book, "The Wealth of Humans," Ryan Avent recounts the collective suffering experienced by Washington Nationals fans during a heartbreaking loss in the 2012 postseason. Counterintuitively, he noted that while the loss was disappointing to fans, "the collective nature of the sadness was oddly thrilling" by creating a shared experience among those who went through it, bringing together people who might otherwise be disconnected.
He says: "Baseball is a good metaphor for most things in life, and the economy is no exception. As in baseball, value is fundamentally social in nature: it is the collective passion and interest that makes the sport such a valuable institution." As part of their efforts to recruit the former Montreal Expos to DC, the city of Washington ultimately spent $670 million helping to finance Nationals Stadium. 1
Cities that are rich economically tend to be rich culturally. Residents of Northern and coastal cities like Boston, New York, Chicago, San Francisco and Los Angeles might take this for granted, but newer, poorer, faster-growing cities in the Sun Belt do not. They aspire to be like their coastal peers one day. A city like Boston will always have its legacy as one of the birthplaces of this nation. It also has some of the world's finest educational institutions, geographical assets like the Charles River and Boston Harbor, and of course, the Red Sox.
The value of the Red Sox to Boston goes beyond the economic activity or tax dollars generated by the franchise. It gives people an activity to do on dates. A way for grandparents to connect with their grandchildren. A topic of conversation for two business people sharing space in a coffee shop or an airport lounge. Something to bring together people of different faiths or ethnicities. By putting on a Red Sox hat, an immigrant service worker has a way to signify that he or she is a part of the city, potentially easing tensions. In sum, the Red Sox serve as a powerful generator of social capital, and a unifying "civic church," a desirable asset for a city to have at any time, but especially in the fractured, polarized world we live in today.
At their best, pro sports teams not only help form social capital in a city, but also can take on the values and identities that cities have for themselves. Think of Magic Johnson's "Showtime Lakers" in Los Angeles, Cal Ripken's "Oriole Way" in Baltimore, or the grit and resilience of the Steelers in Pittsburgh. It's understandable that cities with weaker social ties and less of a sense of identity would aspire to have such a civic asset.
This isn't to say that such a public investment always pays off. Since forming the Miami Marlins, the owners have seemed more interested in bilking taxpayers and banking cash than investing in the franchise or the community. For cities that already have existing franchises, paying for a new stadium may indeed be little more than a handout to ownership. And cities already rich in cultural capital may experience diminishing returns from adding a new team. But they may still wisely choose to do so.
Would it be better if billionaire owners paid for their own stadiums? Of course. But as long as they have leverage in the matter, it's unsurprising that they'll take, or demand, public funding. Luring and keeping a pro sports franchise is one of the costs of being a successful big city, with an enduring identity. Public officials have shown time and time again that they'll pay up if they have to.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Atlanta's two new publicly-funded stadiums set to open in 2017 are replacing existing stadiums that aren't even 30 years old. Both of these two would fail this "social capital" test.
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