There is no question that politicians who lust after or want to keep a big league sports team in their city become rather stupid in their quest to keep their city relevant in the sports world. Sports is based on emotion instead of rationality and the latest example of that comes from the California state capital of Sacramento. In an effort to placate extremely rich owners---the Maloof brothers---and the National Basketball Association, city elected officials are trying to figure out a way to fund an arena for the Maloofs by March 1 or risk seeing the Maloofs take their business to Anaheim or some other place that would throw money the brothers way.
Sacramento politicians are thinking of selling the city's parking spaces to a private vendor and using whatever money they get for selling the parking spots as a down payment to build the Maloofs' basketball palace. The parking spaces do provide a revenue stream to the city which goes to pay salaries of cops, firemen and firewomen, garbage collectors, tax assessors and others in a place where the unemployment level is around 11 percent.
The parking spaces bring in about $24 million annually. The city elected officials apparently are willing to give up that annual revenue stream for at least 50 years or maybe in perpetuity to build a basketball arena and that begs the question that Sacramento residents need to ask. How do you plan to replace the parking space dollars which go for important city services (although hiring a slew of political operatives for appointee positions probably should be the first area that is cut not only in Sacramento but all government offices around the country as those jobs are no more than thank you payoffs for a job well done during a political campaign or in some instances are given to political losers after a campaign)? How did Chicago prosper from selling off city parking spots in 2008 to plug budget holes? The answer is it did not and Chicago is still in a budget hole and lacks the parking space revenues.
The answer is raising other taxes and fees or cut jobs in an area that has an 11 percent unemployment rate. Another answer may come from private citizens or a grass roots group who may say wait a minute, what are you doing? There could be a court battle over the sale of the parking rights and another group of citizens may ask for a public referendum on the parking space sale issue. In Santa Clara, California a grass roots group is demanding that Santa Clara put the amendment lease the city reached with the San Francisco 49ers ownership in December which puts the onus on the city and city residents to support a more than $800 million loan for stadium construction before the voters.
The group got about 11,000 residents to sign a petition asking for a vote. Santa Clara officials are saying no at the moment. Recalls of politicians and now stadium issues are becoming more and more the norm in the country as Wisconsin Governor Scott Walker and members of the Wisconsin legislature have found out.
What Sacramento officials are trying to do is satisfy the Maloofs and NBA Commissioner David Stern's demands which are give us an arena where we get the federal limit of 92 percent of every dollar generated within the building, how you pay off the arena is your problem not ours. The 92 percent is not limited to 41 regular season games annually, along with a couple of pre-season games and the possibility of up to 16 playoff games or maybe 60 dates. The Maloofs would get a substantial percentage of the revenue generated by every other event in the building including concerts, ice shows, minor league hockey and the circus.
Sacramento officials will counter that the arena construction would create a number of jobs, all temporary, for various people along with some secondary businesses that would provide food and other services for the workers. Construction workers get the same amount of money for a job whether it is an arena or building a house or a factory. Once the arena is built, there are some jobs created however much of those fall into the per diem category and while that is good as an economic supplement for some and a great part time job for a college student, for the most part arena jobs don't do much for the economy.
As one time sports executive Jay Cross said while he lobbied legislators to get their support for a Manhattan west side stadium for the New York Jets that only the owners, players and parking lot attendants make money off the stadium.
Cross's comment was one of the few times that the truth about stadium/arena economic generating status was uttered.
Sacramento officials are dreaming of they think building an arena is going to be an economic engine. The amount of arena/stadium building economic engine failure is astonishing. Two examples come from Harrison, New Jersey and Chester, Pennsylvania where multimillion dollar soccer facilities were built and nothing developed around the facilities. Harrison politicians nearly bankrupted city coffers by underwriting the stadium related building costs and a fight has broken out between the city and the Major League Soccer franchise Red Bulls ownership over rent and the payment of property taxes with Red Bulls ownership refusing to pay rent and property taxes.
A New Jersey judge ruled that the franchise owes Harrison $3.6 million in property tax from 2010 and an additional $3.6 million from 2011. The franchise is appealing the ruling. Sports owners don't like paying property taxes and it is unclear if Sacramento officials have even thought that far ahead in the arena process. In New York, the Dolan family, the owners of Madison Square Garden, the NBA's New York Knicks, the National Hockey League's New York Rangers, the WNBA's New York Liberty and the cash cow Madison Square Garden Network, do not penny a penny in property taxes which is estimated at around $13 million a year on the land that houses the Garden facility.
The clock is ticking toward “the someone” imposed NBA March 1 deadline to have an arena plan in place which isn't a real deadline. Owners have to inform the NBA by March 1 every year if they intend to move to another city. It is, of course, an artificial mark on the calendar.
Selling off municipal assets to pay for an arena which would not be open for public use other to attend events seems rather shortsighted. But the allure of big time sports blinds people and politicians. The battle for the Sacramento arena continues but at what cost? The city thinks a new arena will cost $387 million which is quite a low figure these days. Who pays for cost overruns and the interest on the building debt?
This is how sports operates.
Sports owners are on the public dole and politicians are screaming about cutting government costs. It is so hypocritical though because sports and the people behind the games are too alluring for the average politician to ignore and politicians are willing to throw public money at sports and lay off government workers in the process to pay for a sports stadium or a sports arena which is now a proven public policy failure and a public drain. Just ask those politicians in Hamilton County, Ohio if the think heavy public investment in a Cincinnati Reds baseball stadium and a Cincinnati Bengals football facility was worth it. The answer, if they are truthful, is no. Same is true in Indianapolis, Glendale, Arizona, New Orleans and a slew of cities across the United States. Stadiums and arenas have become a financial liability to municipalities although Sacramento's Mayor Kevin Johnson, a former NBA player, and certain politicians in Sacramento don't see it.
Evan Weiner,the winner of the United States Sports Academy's 2010 Ronald Reagan Media Award, is an author, radio-TV commentator and speaker on "The Politics of Sports Business." His book, "The Business and Politics of Sports, Second Edition" is available at www.bickley.com and Amazon.
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