Between the years 2019-2021, the four major American sports will open six new venues. While the flood of new stadiums that characterized the early twenty-first century has somewhat faded, those six venues alone account for somewhere in the neighborhood of $8 billion in construction projects. The most expensive of the proposals, SoFi Stadium, future home for both the Los Angeles Rams and Chargers, has offered the very broad estimate of $2.6-$4.9 billion for their palatial new digs in Inglewood. What is perhaps more shocking than the unprecedented price tag for SoFi, is the fact that the stadium is being entirely privately funded.
After more than sixty years of consistently publicly-funded development, much of it detrimental to the surrounding communities, there is finally starting to be enough of a pushback that franchises are choosing to pay for their venues themselves. Two of the other new stadiums are following suit, the NHL’s Seattle Center Arena ($700 million price tag) and the newly opened home of the Golden State Warriors, the Chase Center in San Francisco ($1.4 billion). What has become the traditional model is not extinct, to be sure. Citizens are still forcibly contributing to the privately-owned future homes of the transplanted Las Vegas Raiders ($750 million of $1.9 billion tax payer funded), and Globe Life, new home of the Texas Rangers ($500 million of $1 billion). It remains to be seen what effect the fire that took place at Globe Life last weekend, causing damage to 2,000 square feet of the roof, will have on that estimate.
The business of stadiums and arenas has changed drastically since the commercialization of sport. At first, there was no such thing as an enclosed venue. The first time anyone paid to watch a baseball game was in 1858, when star players from Manhattan and Brooklyn got together in Flushing, Queens to play the three-game Fashion Race Course Series, a battle for borough supremacy. The field was roughly a mile and a half from the current location of Citi Field ($614 million in public subsidies on the $830 million project, which opened back in 2009). The owner of the undeveloped land charged fifty-cents per customer to witness the games.
Other sports had charged admission previously, including boxing (which was still largely illegal), horse racing and cricket, though the real money in those days was not made in ticket sales, but rather in gambling. It was not until 1892 that boxing organized and sufficiently legitimized that the first sanctioned heavyweight bout was held, when “Gentlemen Jim” Corbett upset John L. Sullivan in New Orleans. It marked the first time money was legally collected to witness the sport.
With the twentieth century, as professional sports continued to expand in the United States and England, there grew a greater need for larger venues to house these now commercial contests. There was a transition in both countries from wooden stadiums to concrete and steel, mostly due to fire hazard concerns. It was expected that the owners of the teams would pay for the construction of these stadiums, often needing to prove that they had the financing in place before they were granted a franchise. However, it was not unheard of for municipalities to contribute. Twenty-seven stadiums were built in the U.S. between 1909-1956, and public funding covered 47% of those expenses, most of that on projects in Chicago and Cleveland. Those numbers, in both the quantity of constructions, as well as the public contribution to them, changed drastically after World War II.
The first major example of this took place in Milwaukee. In an effort to entice a major league franchise, the city spent spent $6 million of public money to construct County Stadium. Boston Braves owner Lou Perini owned the territorial rights to Milwaukee, which had been attempting to woo St. Louis Browns owner Bill Veeck. The Braves were continual second fiddles to the Red Sox for the affection of Boston fans, and sold only 281,278 tickets in 1952. Confronted with the possibility for him to shift his franchise to an untapped fan base in a brand new, free stadium, Perini claimed eminent domain over Veeck. With the support of the other owners he made the surprise announcement in March that the Braves were heading west. It marked the first major shift in the landscape of Organized Baseball in half a century.
Perini’s gamble paid immediate dividends. Attendance skyrocketed to 1.82 million paying customers, a new National League record. Perhaps invigorated by their new home, and larger crowds, the team was also a success on the field, ending the season in second place after a seventh place finish the year before. Sophomore Eddie Mathews exploded for forty-seven home runs, leading the league, while also knocking in 135 runs. Warren Spahn, in the ninth year of his career, set a career-high in wins (23) and a career-low in ERA (2.10) and WHIP (1.058). The city was baseball-mad, and the lesson learned by the other owners around the league was that there was new leverage to force governments to fund stadiums. Pay for it, or they would threaten to take their teams elsewhere. These threats became the new standard operating procedure for decades.
After his failure to secure Milwaukee, in 1954 Veeck sold the Browns to a group in Baltimore for $3.1 million, establishing the current Orioles. Their original home was first built in 1921 using taxpayer funds, largely due to Mayor William F. Broening. Initially known as Municipal Stadium, it underwent a major renovation in 1949, expanding the seating and making it more professional in caliber. With the announcement of the incoming Orioles, work on the second deck was intensified and the final product resulted in an additional $6.5 million in costs, again paid for by taxpayer monies. The site’s new name became Memorial Stadium and it served as the Orioles home until Oriole Park at Camden Yards opened in 1992. It was Camden, and its universally admired old-school design, that set off the flurry of new construction that marked the end of the twentieth-century.
Baseball’s migration west in 1958 has long painted Brooklyn Dodgers owner Walter O’Malley as the biggest fiend in the plot, but it should be noted that Dodgers Stadium in Los Angeles (which had its own legal issues) was entirely privately funded. The other lead actor in the exodus, New York Giants owner Horace Stoneham, only agreed to the cross-continental move on the condition that the city of San Francisco provide his club with a new home. They did, to the tune of $15 million, but not before a grand jury investigated the irregularity of the man who sold the city the land also receiving a no-bid contract to build the ballpark. It was decided that nothing illegal occurred in the transaction, though it was determined part of the plan was to circumvent the public voting on how their taxes were being spent. The backroom beginnings of Candlestick Park set the standard for many teams over the next few decades.
Baseball does not have exclusivity when it comes to shady dealings in the stadium game. In 1984, Bob Isray, owner of the NFL’s Baltimore Colts, insisted that the city make upgrades to Memorial Stadium, which they shared with the Orioles. The city refused and, at the end of March, even went so far as to pass a law which allowed them to seize control of the team from Isray. He responded by literally packing up the Colts’ offices in the middle of the night and moving the team to Indianapolis, shocking the football world.
Indy lured him with the Hoosier Dome, an already under-construction stadium that was connected to the Indiana Convention Center. The project used a mix of public and private funding to cover its $77 million price tag. After an extended legal battle between the two cities, the Colts played their first game in their new home on August 11, 1984, a preseason affair against the New York Giants. The debt the city generated for their prize is still being paid off today, even though the Dome was demolished over ten years ago. Its replacement, Lucas Oil Field, currently holds the record for the most subsidized NFL stadium in the country, costing $620 million in public finds. That number will be surpassed by the Las Vegas Raiders.
Between 1990-2018, there were twenty-three NFL stadiums, twenty-three MLB stadiums and forty NBA/NHL arenas constructed in the United States, and virtually all of them received some form of taxpayer funding. Each of them has come with the promise of increased revenue for the surrounding economies and nearly every single one of them has failed to deliver on that promise. The guaranteed jobs of new constructions are temporary and seasonal. The economic “gains” from ticket sales have been found to actually just be offsets of the losses in other entertainment based businesses. If fans are going to the stadiums, they aren’t going to the movies or the theatre. It has also had the side-effect of pushing poorer local residents out of their homes, as new stadiums increase area rents but do little else to spur local economies.
A nefarious twist on this final phenomenon can be found in Detroit. Nearly fifty blocks of downtown, an area with the mundane moniker “The District Detroit,” have been reserved under a plan to transform the languishing region into an entertainment complex. Over 60% of that real estate is controlled by Ilitch Holdings, owned by Marian Ilitch and, prior to his death in 2017, her husband Mike. Founders of Little Caesers Pizza, and owners of both the Detroit Tigers and Red Wings, the Ilitches have sold their scheme to the public as a revitalization effort. In truth, beginning in the 1990s, the Ilitches spent fifteen years enacting a plan referred to as “dereliction by design.” They left the city to rot so they could buy the surrounding land for pennies on the dollar. In the meantime, they have received $400 million in taxpayer funds to build Little Caesars Arena. The rest of their promises, of restaurants, shops and apartments, have never come to fruition.
In 2017, a bill was introduced in Congress to address the growing concerns around stadium subsidies. Sponsored by Democratic New Jersey Senator Cory Booker and Republican Oklahoma Senator James Lankford, the Eliminating Taxpayer Subsidies for Stadiums Act was designed to ban the use of federal tax subsidies, in the form of tax-free municipal bonds, to construct sports venues. It stalled on its original pass through Congress and was reintroduced in May as part of the 2019 agenda. Political prognosticator Skopos Labs gives the bill a 2% chance of successful passage.
Despite the unlikeness of legal steps being taken to curb public spending on private stadiums, there has been a significant downturn in subsidies. At the height of the phenomenon, between 1956-1976, public funding accounted for 75% of all the money spent on stadium construction. Between 2004-2012, in part due to the financial crisis and the subsequent recession, that number dipped to 47%, its lowest since before the war. Still, without legislation, each new deal continues to be privately brokered between ownership and the municipalities. This can result in situations like Arlington and Las Vegas, or, even worse, Detroit. We are still some time from being able to measure the long-term benefits of the privately funded ventures in San Francisco and Los Angeles, but it is inarguable that footing the bill for sports franchises that are owned by the super-wealthy has been a failure for half a century. It’s time for a different plan.
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