How to Stop the Stadium Wars (2015-03-17):
Or better yet: The next time the Cobb County Braves decide they’re ready to spin the Wheel of Taxpayer Subsidy, we should all hope the whole practice has become illegal.
That’s what the Obama administration proposed in its budget last month: to end the issuance of tax-free government bonds for professional sports facilities, a practice that has, according to research by Bloomberg, siphoned $17 billion of public money into arenas for NFL, MLB, NBA, and NHL franchises over the last 30 years and cost Americans $4 billion in forgone federal taxes on top of that. It’s too late for residents of Cobb County, but Congress might yet save the rest of us some dough.
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After an initial attempt in the 1960s to steer government bonds toward true public works, Congress placed a provision in the 1986 Tax Reform Act that seemed sure to kill tax-free, no-limit stadium deals. It had exactly the opposite effect. Essentially, qualifying projects now need either to serve public uses or to rely on public funding. With pro sports facilities, the former is obviously impossible, so the latter, though politically improbable, has become the way billionaire team owners retain access to cheap government financing. Cities and counties wound up borrowing more for their teams than ever before.
It’s been clear for decades that new stadiums don’t bring the business they promise, let alone enough economic activity to justify the investment. It’s a ruse, but it works because public officials are more worried about being blamed for the loss of a team in the short run than, say, for failing public schools in the long run. And it works because the country has more big cities and rich counties than sports teams in each league, so that even if Cincinnati taxpayers wise up, their counterparts in Austin will step in.
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Obama’s budget isn’t the first national political effort to impose federal taxes on stadium deals. New York Sen. Daniel Patrick Moynihan proposed ending the loophole in 1996, and it’s been kicked around in committee since. But with groups like the Koch brothers’ Americans for Prosperity now opposing stadium deals at the local level, Obama’s idea has a chance of gaining bipartisan support.
Additional sources mentioned the proposal in February and March. I do not see more recent mentions. Is it surviving? The linked article mentions some lower status proposals (I’ve bolded the proposals, also above):
One solution, instead, could be to change the way teams operate, either by bringing antitrust suits against the leagues (which sports economist Andrew Zimbalist has suggested) or by allowing cities to exert greater control over their brands (as law professor Mitchell Nathanson has imagined). Should names like the Irving Cowboys, the East Rutherford Giants, and the Orchard Park Bills be forced upon suburban squads? In his 2000 book Leveling the Playing Field, Harvard Law professor Paul Weiler fantasizes about a nationwide union of cities that could lock out pro sports teams to obtain a league-imposed “stadium cap” on taxpayer subsidies, which would effectively end bidding wars.
The article also links to Should we ban states and cities from offering big tax breaks for jobs? (2014-09-15) which includes more general ideas:
Unilateral disarmament is a tough political proposition. As a systemic solution, Funkhouser advocates instead some kind of national law, what he loosely envisions as a domestic equivalent of the Foreign Corrupt Practices Act, which bans bribes of foreign officials to obtain business. At the very least, he says, we should hold accountable officials and chief executives who promise jobs and economic gain — for which a community has paid dearly — that never materialize.
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LeRoy doesn’t realistically expect any federal law any time soon. But he suggests a more modest alternative. In the mid 1980s, the federal government threatened to withhold a share of federal highway funds from any state that didn’t enforce a legal drinking age of 21. We should do the same today around economic development incentives, LeRoy says: withhold 10 percent of some coveted federal funding stream — maybe Community Development Block Grants — from states that actively poach jobs from each other.
Add these to my preferred limitations on civic extortion for stadiums (no copyright for events in subsidized venues) and generally (ban based on a modern conception of the U.S. constitution’s import-export clause).
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Apparently it is looking more likely that more than one professional sports team will leave Oakland for locations willing to give billionaires greater subsidies. Good riddance! Though I am a little bit sad that the people of other cities that I like (e.g., Los Angeles) will lose out, tempting as it is to blame their politicians and publics.
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Speaking of Los Angeles, film location/movie production subsidies are another high visibility extortion that ought be vulnerable to a similar range of targeted or general limitations.