It's time politicians told the billionaire owners of lucrative sports ventures to pay their own way.raymond biesinger/The Globe and Mail
When the owners of the Calgary Flames began negotiating with the city last year for a new downtown sports and entertainment complex, the dance followed a choreography perfected over many years by many professional sports leagues and their wealthy operators.
The goal of the exercise is to persuade politicians to part with public money to cover a hefty chunk of the costs for state-of-the-art stadiums and arenas. And the steps to get there are time-tested.
First, complain about how hard it is to get a decent return out of an antiquated venue that doesn’t generate enough cash for the team to stay competitive. Then dangle a few carrots like downtown revitalization, job creation, higher tax revenues and other important economic gains. And finally wield one big stick—a credible threat to relocate the beloved franchise to another city if the financing package isn’t up to snuff.
If everything goes according to plan, the owners get juicy subsidies and tax breaks for years to come, while scarce public funds are diverted from more urgent infrastructure, public transit, housing or other needs.
The problem is, these lofty economic promises rarely get fulfilled and the costs invariably run way over budget. In many cases, the projects end up actually having a negative impact on the local economy. Which is why it's time politicians told the billionaire owners of lucrative sports ventures to pay their own way.
In Calgary's case, Mayor Naheed Nenshi wisely rejected the Flames' request, countering with a more modest proposal that would be less taxing for a community still coping with the effects of the oil price slump.
The Flames broke off talks last September, hoping a more amenable city council—and mayor—would emerge from the municipal election the following month.
National Hockey League commissioner Gary Bettman, an expert stickhandler in the public-money game, pointedly noted how helpful the mayor of arch-rival Edmonton had been in reaching a new arena deal and suggested that Nenshi didn't seem to care about whether or not the Flames stayed in Calgary. A Flames staffer described Nenshi's re-election as ''worse than Donald Trump being president.''
On the eve of another hockey season, the pas de deux continues. Calgary City Council set up a committee to work on reopening the talks to replace the 35-year-old Scotiabank Saddledome. Nenshi supports the effort, although he has repeated his concerns about safeguarding taxpayers' interests.
In this, he has joined a growing chorus of public officials and voters who have learned to refuse the extravagant financial demands of Big Sport.
When the FIFA World Cup, the world’s most-watched sports event, comes to North America in 2026, none of the matches will be played in soccer-loving Vancouver, Chicago or Minneapolis, all of which refused to bid. Meeting FIFA’s non-negotiable terms would have amounted to writing a “blank cheque,” with no way of knowing what the final tab for taxpayers would be, B.C. Premier John Horgan said.
Politicians worried about a public backlash if they turn down the often extortionate demands made by the likes of corruption-tainted FIFA, the International Olympic Committee or their home teams need only to put the issue to a vote. Whenever taxpayers get a say, the result is almost always a resounding no.
A boondoggle with seats
Everyone has an interest in low-balling the
anticipated price of a new stadium. The final
cost to taxpayers is often more than double
the original estimate
Original Cost
Original city Subsidy
$1.5 billion
final cost
Final city subsidy
Mercedes-Benz Stadium
Atlanta, Georgia
$950 Million
$700 Million
$200 Million
$720 million
Lucas Oil Stadium
Indianapolis, Indian
$620 Million
$550 Million
$400 Million
U.S. bank stadium
Minneapolis, Minnesota
$1.1 billion
$975 Million
$500 million (and counting)
$498 Million
$2.3 billion
Yankee Stadium
New York
$1.2 billion
$800 Million
$446 Million
A boondoggle with seats
Everyone has an interest in low-balling the anticipated
price of a new stadium. The final cost to taxpayers is often
more than double the original estimate
Original Cost
Original city Subsidy
$1.5 billion
final cost
Final city subsidy
Mercedes-Benz Stadium
Atlanta, Georgia
$950 Million
$700 Million
$200 Million
$720 million
Lucas Oil Stadium
Indianapolis, Indian
$620 Million
$550 Million
$400 Million
U.S. bank stadium
Minneapolis, Minnesota
$1.1 billion
$975 Million
$500 million (and counting)
$498 Million
$2.3 billion
Yankee Stadium
New York
$1.2 billion
$800 Million
$446 Million
A boondoggle with seats
Everyone has an interest in low-balling the anticipated price of a new stadium.
The final cost to taxpayers is often more than double the original estimate
$2.3 billion
Original
Cost
Original
city Subsidy
final
Cost
final
city Subsidy
Mercedes-Benz Stadium
Atlanta, Georgia
Lucas Oil Stadium
Indianapolis, Indian
U.S. bank stadium
Minneapolis, Minnesota
Yankee Stadium
New York
$500 million (and counting)
$1.2 billion
$1.1 billion
$975 Million
$950 Million
$1.5 billion
$800 Million
$720 million
$700 Million
$620 Million
$550 Million
$498 Million
$446 Million
$400 Million
$200 Million
In 2016, San Diego County voters rejected a proposed increase in hotel taxes to pay for a new stadium to house their National Football League team. Maybe they took notice of what happened in St. Louis that same year, when owner Stan Kroenke, who’s worth about $8 billion (U.S.), moved the city’s NFL franchise back to its original base in Los Angeles.
Taxpayers were stuck paying off more than $140-million (U.S.) worth of debt for a massive, largely unused domed stadium in the heart of St. Louis. No wonder disgusted voters turned their thumbs down on a request last year to fork out $60 million to house a Major League Soccer expansion team.
Four Canadian NHL teams—in Toronto, Montreal, Vancouver and Ottawa—financed their own homes. In Winnipeg, public money covered 30% of the $134-million price tag of the MTS Centre. The Edmonton Oilers, whose city-owned arena opened in 2016, opted for something closer to the public-private model preferred by most U.S. operators, with the emphasis on the public part of the partnership.
But regardless of where the funding originates, the economic reality rarely comes close to the reveries spun by the promoters. Economists, who as a group almost never agree on anything, have overwhelmingly concluded that major sports and their playpens don't provide much of a boost to local economies. Only 2% of the economists surveyed by the University of Chicago last year thought the gains from sports subsidies were worth the cost.
After assessing the economic effect of Chicago's major sports teams, Temple University economics professor Michael Leeds found there is almost none. ''If every sports team in Chicago were to suddenly disappear, the impact on the economy would be a fraction of 1%,'' Leeds said in 2015. ''A baseball team has about the same impact on a community as a midsized department store.''
Yet there are still politicians and civic boosters willing to acquiesce to demands for liberal access to the public purse if it means keeping Big Sport and its big fan base happy. Some even use public money to construct majorleague-calibre venues on spec in the hopes of attracting an existing or expansion franchise, as St. Louis did.
One such dreamer is Quebec City, which used provincial and municipal funds to erect a $370-million, 18,300-seat arena in 2015 in its (so far) futile quest for another NHL shot. It was a foolish move that showed contempt for taxpayers and has only served to create another bargaining chip for any team trying to score public subsidies in its own market. Almost by definition, successful arenas don’t need subsidies. Governments that throw money at them anyway are gullible and wasteful and ought to be turfed out of office.