Ultimatum: Sonics, Sonics owners, NBA -- Step up to a little responsibility your own selves. Millionaire owners and millionaire players want taxpayers to pony up $200 million for another re-do of the Coliseum, this one mostly so the team can seal inside whatever economic benefit there is to having them in town.
Hello, NHL, as Omir the Storyteller suggested in his comment to our last Sonics post.
David Stern, Sonics GM Wally Walker, and Sonics principle owner Howard Shultz have been playing tag team wrestlers on the city council, with governor Chris Gregoire officiating. So far it's been lots of flaming leotards and smack vs. a brick wall.
Fix your own house. And I'm not talking about Key Arena. I'm talking about the financial mess of a league that requires an annual payroll for 12-15 players of $80 million, generates a business you need $200 million to buy into, gives tax breaks of three times operating losses, and still requires extorting more from the citizens. It's a monopoly run amok. Come up with something that gives us some choices or protects us from you having no competition.
The NBA proved itself a methodical monopoly when it absorbed women's basketball. It started its own league, then ran the competition into the ground via the television contract. But enough is enough. It's time for these guys to clean up their own business so teams compete on the court, not in my wallet.
And if they don't?
I'll do nothing.
Which is exactly what the Sonics ought to do for the remaining three years on their lease.
David Stern, NBA Commissioner, refuses to take any responsibility.
"I would say that the city is making it pretty clear of what they want us to do, and we'll accommodate them."
Huh?
What I mean is they're not interested in having the NBA there. We understand that, we understand that there are competing issues, and the mayor is free to make whatever decisions he needs to make and I support that. But that's a pretty strong signal and I think that the existing ownership has said they don't want to own a team that's not in Seattle, so I know what they're in the process of doing. So we'll just see how this play ends."
It's a weird strategy for the NBA to throw away Seattle, because that's what they're doing if they insist on a price that is this ridiculous structure and its gametime-only amenities. If the national economy turns down, it may be that Seattle has the only lights left on outside the oilfields. It would be a good place to have a sports franchise.
[We really ought to look into these tax rules. According to the Seattle Times, a kind of depreciation on player contracts is allowed "for the first several years after they buy a team" which can be used against other tax liabilities.(?)(!) Could it be the "losses" are soon going to become losses, as in real money, and this is what is generating the interest in new revenue?]
The suite owners are already writing those costs off their corporate taxes. The bonds that financed the last remodel are tax exempt. Since Washington has no state income tax, the players (several earning over $5 million per year) pay more into the general funds of other states than they do into Washington's.
So the citizens are doing their fair share.
Thanks to the Mayor and Council for not caving in.
We'll see how the play ends.
# Posted by Alan : 8:33 AM
Showing posts with label Sports Economics. Show all posts
Showing posts with label Sports Economics. Show all posts
Friday, April 28, 2006
Tuesday, March 28, 2006
Sonics Recap
The Sonics want a theme park. The Seattle City Council doesn't want to pay for it. What are the economics?
First, the financing....
Key Arena was renovated last in 1995, to the basketball team's specs, with money from revenue bonds. Revenue bonds actually use money generated by the building to pay for its construction, a concept that was called "unique" .... Of course, they are tax-free bonds, so even these imply a significant public subsidy.
As late as October of ‘03, Sonics head man Wally Walker said, "Key Arena is a wonderful place to watch a basketball game. We are not unhappy with it." (PI, 10.20.03)
Then, as councilmember Jim Conlin puts it, "for reasons on which the interested parties do not agree," the revenues betan to fall short, and the city began to pay debt service out of the General Fund.
During this past legislative session the team pitched the legislature with a plan for a $220 million reconstruction of the Key to be financed by an extension of the current hospitality taxes. The new rehab was not so much to improve the "wonderful" basketball arena as to create internal capacity for dining and drinking .... Financed by taxes on restaurants.
Like Disneyland... The creation of Disneyland's Orlando site came about because the company looked across the street in Anaheim and saw all those motels and fast food stores making big bucks off being across the street from Disneyland. So the company built where it could own "across the street," capture the positive externalities, as it were. That's what the Sonics want to do. So there goes the last fig leaf of economic benefit for the city. Oh, and after the city builds it, the Sonics want to run the new building.
Now the politics ....
The city council was not too happy about the broken spokes on the revenue bond wagon. Times are tight in a post-Eyman world. So the Sonics went directly to the legislature, and they brought in David Stern, NBA commish, Mr. Fatuous, to say "A substantial amount has been done for the baseball and football teams. I'm here to personally find out whether the same is being considered fairly for the NBA. If not, that's a decision we can accept. But we'll have to act on it ourselves."
Meaning they'll move the franchise. And not to Bellevue. Oklahoma City, maybe.
Stern called the Key Arena deal the "least competitive lease in the league."
But sports are popular. Especially when the team is winning. Openly opposing a stadium or arena is a good way to get unelected. Gary Locke's finest hour was in leading the fight to keep the Seahawks in Seattle when they tried to sneak out the back door.
The current Guv did not object to the Sonics' request, but insisted that they get agreement with the city and then have a public vote of the taxpayers. Neither came true.
That brings us to the economics ....
A 1922 Supreme Court ruling essentially exempted pro sports from monopoly control because they are "exhibitions" and not interstate commerce. For many decades team owners used their monopoly position to exploit fans, and they used their monopsony (single-buyer) position to exploit the players. When players won free agency, they joined the owners in exploiting the fans.
There is only one league in each sport, baseball, hockey, basketball, football. Leagues intentionally keep the number of franchises below the number of markets which could support them in order to extort concessions from cities and arenas and to keep the value of the franchise high. If competition shows up, they coopt it or suppress it.
The supposed economic benefits for a city of having a team do not exist. Check out the bomb blast zone around Royal Brougham, the site of the baseball and football fields. Ringed by parking lots, the facilities are cut off from the surrounding area. The only businesses benefitting are a few in Pioneer Square catering to beer sucking.
One estimate is that a sports franchise has the economic impact of a small department store, hardly what you'd spend $220 million to keep.
The jobs are primarily low-wage seasonal jobs. The three dozen (max) good salaries in the Sonics organization don't stick very close in the off-season. (It's ironic that California and New York, with income taxes, actually see more contributions from Sonic players than Washington does. Incomes are pro-rated and allocated to the sites where teams play.)
The bottom line ....
Maybe Howard Schultz will sell or move the team. Fine. We'll just get a team from the other league. What? No other league! Talk about non-competitive.
First, the financing....
Key Arena was renovated last in 1995, to the basketball team's specs, with money from revenue bonds. Revenue bonds actually use money generated by the building to pay for its construction, a concept that was called "unique" .... Of course, they are tax-free bonds, so even these imply a significant public subsidy.
As late as October of ‘03, Sonics head man Wally Walker said, "Key Arena is a wonderful place to watch a basketball game. We are not unhappy with it." (PI, 10.20.03)
Then, as councilmember Jim Conlin puts it, "for reasons on which the interested parties do not agree," the revenues betan to fall short, and the city began to pay debt service out of the General Fund.
During this past legislative session the team pitched the legislature with a plan for a $220 million reconstruction of the Key to be financed by an extension of the current hospitality taxes. The new rehab was not so much to improve the "wonderful" basketball arena as to create internal capacity for dining and drinking .... Financed by taxes on restaurants.
Like Disneyland... The creation of Disneyland's Orlando site came about because the company looked across the street in Anaheim and saw all those motels and fast food stores making big bucks off being across the street from Disneyland. So the company built where it could own "across the street," capture the positive externalities, as it were. That's what the Sonics want to do. So there goes the last fig leaf of economic benefit for the city. Oh, and after the city builds it, the Sonics want to run the new building.
Now the politics ....
The city council was not too happy about the broken spokes on the revenue bond wagon. Times are tight in a post-Eyman world. So the Sonics went directly to the legislature, and they brought in David Stern, NBA commish, Mr. Fatuous, to say "A substantial amount has been done for the baseball and football teams. I'm here to personally find out whether the same is being considered fairly for the NBA. If not, that's a decision we can accept. But we'll have to act on it ourselves."
Meaning they'll move the franchise. And not to Bellevue. Oklahoma City, maybe.
Stern called the Key Arena deal the "least competitive lease in the league."
But sports are popular. Especially when the team is winning. Openly opposing a stadium or arena is a good way to get unelected. Gary Locke's finest hour was in leading the fight to keep the Seahawks in Seattle when they tried to sneak out the back door.
The current Guv did not object to the Sonics' request, but insisted that they get agreement with the city and then have a public vote of the taxpayers. Neither came true.
That brings us to the economics ....
A 1922 Supreme Court ruling essentially exempted pro sports from monopoly control because they are "exhibitions" and not interstate commerce. For many decades team owners used their monopoly position to exploit fans, and they used their monopsony (single-buyer) position to exploit the players. When players won free agency, they joined the owners in exploiting the fans.
There is only one league in each sport, baseball, hockey, basketball, football. Leagues intentionally keep the number of franchises below the number of markets which could support them in order to extort concessions from cities and arenas and to keep the value of the franchise high. If competition shows up, they coopt it or suppress it.
The supposed economic benefits for a city of having a team do not exist. Check out the bomb blast zone around Royal Brougham, the site of the baseball and football fields. Ringed by parking lots, the facilities are cut off from the surrounding area. The only businesses benefitting are a few in Pioneer Square catering to beer sucking.
One estimate is that a sports franchise has the economic impact of a small department store, hardly what you'd spend $220 million to keep.
The jobs are primarily low-wage seasonal jobs. The three dozen (max) good salaries in the Sonics organization don't stick very close in the off-season. (It's ironic that California and New York, with income taxes, actually see more contributions from Sonic players than Washington does. Incomes are pro-rated and allocated to the sites where teams play.)
The bottom line ....
Maybe Howard Schultz will sell or move the team. Fine. We'll just get a team from the other league. What? No other league! Talk about non-competitive.
Friday, February 10, 2006
Sonics Redux
The Sonics are setting up the town and the legislature for a $225 million renovation to Key Arena, to be paid for by the grunt taxpayers. It would be one thing if this were for the benefit of the average fan, but the average fan can't even afford parking, much less a ticket.
No, this whole thing for the benefit of high-rollers. The owners are high rollers, the players are high rollers, the improvements are for suites for guys who averaged $100,000 in tax breaks from George W -- that's a high roller (and they don't pay anyway, they charge it off to the company which deducts it from taxable income).
But we have to do it, Ollie, so they can buy the best players and coaches. There's competition from the Seahawks and Mariners who have this fancy stuff and now the guys with dough want it at the Arena. The Sonics might run off to ... ah ... Kansas City. Besides, you want us to win the championship, don't you? Our Sonics.
Right. Mr. Sonic is coaching the Portland team because they gave him a $27 million contract. If not for a salary scheme that encourages it, a lot of these multimillionaire players wouldn't be here either.
It happens year after year. Here or somewhere else. Pay up or we'll leave. These national sports leagues extort new facilities for the benefit of their players and owners. They may have psychological needs that make them thrive on the competition of the game, but they never really lose. The only real losers are the cities and their taxpayers. The race for the championship is a one-up game, a race to the top for the team, but a race to the bottom for the city.
The Sonics say they are losing money, but if they sold the franchise today, they would recoup every penny they've spent and pocket a bundle besides. I went over it in a post last year.
It's time for a National Basketball Cities Group, a cartel of cities so they can talk on the same level to the NBA owners and the NBA Players Association. Competition on the court is fine, but competition between cities on who can give away the most money? No. The group could set a standard for the support they're going to give these teams. If the teams didn't like the standard, let them build their own arena. What a concept. If they moved, that city could offer the arena to a team in the other league for free.
You've got it all wrong, chile. There is no other league. The other league is the CBA. Guys there don't make but one percent of what they make in the NBA.
No other league? Man, that looks like an opportunity to me.
No, this whole thing for the benefit of high-rollers. The owners are high rollers, the players are high rollers, the improvements are for suites for guys who averaged $100,000 in tax breaks from George W -- that's a high roller (and they don't pay anyway, they charge it off to the company which deducts it from taxable income).
But we have to do it, Ollie, so they can buy the best players and coaches. There's competition from the Seahawks and Mariners who have this fancy stuff and now the guys with dough want it at the Arena. The Sonics might run off to ... ah ... Kansas City. Besides, you want us to win the championship, don't you? Our Sonics.
Right. Mr. Sonic is coaching the Portland team because they gave him a $27 million contract. If not for a salary scheme that encourages it, a lot of these multimillionaire players wouldn't be here either.
It happens year after year. Here or somewhere else. Pay up or we'll leave. These national sports leagues extort new facilities for the benefit of their players and owners. They may have psychological needs that make them thrive on the competition of the game, but they never really lose. The only real losers are the cities and their taxpayers. The race for the championship is a one-up game, a race to the top for the team, but a race to the bottom for the city.
The Sonics say they are losing money, but if they sold the franchise today, they would recoup every penny they've spent and pocket a bundle besides. I went over it in a post last year.
It's time for a National Basketball Cities Group, a cartel of cities so they can talk on the same level to the NBA owners and the NBA Players Association. Competition on the court is fine, but competition between cities on who can give away the most money? No. The group could set a standard for the support they're going to give these teams. If the teams didn't like the standard, let them build their own arena. What a concept. If they moved, that city could offer the arena to a team in the other league for free.
You've got it all wrong, chile. There is no other league. The other league is the CBA. Guys there don't make but one percent of what they make in the NBA.
No other league? Man, that looks like an opportunity to me.
Wednesday, January 25, 2006
The economic model is broken
"A substantial amount has been done for the baseball and football teams. I'm here personally to find out whether the same is being considered fairly for the NBA,"
NBA Commissioner David Stern before the Senate Ways and Means Committee on Thursday.
It's a tag team match! Yes, the Seahawks' billionaire owner got a new stadium, and before that the Mariners' billionaire owner got a new stadium, but before that there was a mega-million dollar remake of the Sonics' home. Heck, the bonds on the Key (funny how they forgot the name) aren't even paid off. The fans and the taxpayers are getting the stuffing beaten out of them, and now we're supposed to feel guilty?
Seattle is not alone. The same edition of the Seattle Times that had Stern in the Local section had an article in Sports with the header "Blazers future uncertain." According to Portland Trailblazer owner Paul Allen's spokesman Lance Conn "all options are on the table" because "the economic model is broken."
Yes, the economic model is broken! We're paying players and coaches literally millions of dollars a year and now we're supposed to pony up to build better suites for high rollers. It is just absurd.
It's the worst of all economic models, a monopoly run by millionaires where cities are manipulated into a financing contest with each other. "The team can't win unless we've got the money." Phooey. Let them play the game on the court, not in our wallets.
Restaurants are already taxed on everything that moves and some things that don't. Sales tax, B&O tax, lots of payroll taxes, syrup taxes, alcohol taxes, and probably some I don't remember. Meanwhile Ray Allen pays the same state tax on his $14.5 million salary (team total is $52 million) as the minimum wage busboy. The corporate honchos who rent the fancy new suites get a deduction. Even Key Bank writes off the cost of paying to put its name on the place.
If they really end up taking the team to Kansas City, I have an idea. A new league. Seattle, Tacoma, Portland, Spokane, Fresno, Boise, San Jose. A cities group sells franchises for, say, a million. The maximum public investment is set, so big markets can't play George Steinbrenner and break the small markets. Maybe a salary scale for players is included.
And then we play basketball. What a concept.
We might even be able to watch people like Wil Conroy and Tre Simmons without having to go to Fargo or Marseilles.
FYI, there was one coherent voice in the house at the Ways & Means Committee.
Message Testimony of SEIU 775 President David Rolf
Senate Ways and Means
Members of the committee, my name is David Rolf. I am the President of SEIU 775, with 30,000 members in the long-term care industry, in every zip code in the state.
I cannot imagine a lower priority for the use of the public's money then the purpose this bill anticipates.
This contemplated act of corporate welfare takes place within the following context:
Incomes are stagnant or declining for 2/3 of households. Health care costs are eating up a greater percentage of employee paychecks and employer profits, even while benefits get cut and hundreds of thousands are uninsured. The average home price is now out of reach for an average income family in Seattle . Tuition costs put higher education out of reach for some working families. Fifty-two percent of all baby boomers have no retirement savings besides social security and their home equity. And, of course, the impoverishment of nursing home and home care workers threatens the quality of care for tens of thousands of elderly and disabled Washingtonians. The profitability of a sports facility should not be a higher priority than the health care of frail elderly people, or education, or housing.
The indirect transfer of public wealth to private, for-profit sports teams should not be a priority of our government, under any circumstances, at any time.
If you do pass this bill, we urge you to authorize the use of this tax for housing, health care, arts, education, and social services, but not to help subsidize the profitability of professional sports teams.
Thank you.
NBA Commissioner David Stern before the Senate Ways and Means Committee on Thursday.
It's a tag team match! Yes, the Seahawks' billionaire owner got a new stadium, and before that the Mariners' billionaire owner got a new stadium, but before that there was a mega-million dollar remake of the Sonics' home. Heck, the bonds on the Key (funny how they forgot the name) aren't even paid off. The fans and the taxpayers are getting the stuffing beaten out of them, and now we're supposed to feel guilty?
Seattle is not alone. The same edition of the Seattle Times that had Stern in the Local section had an article in Sports with the header "Blazers future uncertain." According to Portland Trailblazer owner Paul Allen's spokesman Lance Conn "all options are on the table" because "the economic model is broken."
Yes, the economic model is broken! We're paying players and coaches literally millions of dollars a year and now we're supposed to pony up to build better suites for high rollers. It is just absurd.
It's the worst of all economic models, a monopoly run by millionaires where cities are manipulated into a financing contest with each other. "The team can't win unless we've got the money." Phooey. Let them play the game on the court, not in our wallets.
Restaurants are already taxed on everything that moves and some things that don't. Sales tax, B&O tax, lots of payroll taxes, syrup taxes, alcohol taxes, and probably some I don't remember. Meanwhile Ray Allen pays the same state tax on his $14.5 million salary (team total is $52 million) as the minimum wage busboy. The corporate honchos who rent the fancy new suites get a deduction. Even Key Bank writes off the cost of paying to put its name on the place.
If they really end up taking the team to Kansas City, I have an idea. A new league. Seattle, Tacoma, Portland, Spokane, Fresno, Boise, San Jose. A cities group sells franchises for, say, a million. The maximum public investment is set, so big markets can't play George Steinbrenner and break the small markets. Maybe a salary scale for players is included.
And then we play basketball. What a concept.
We might even be able to watch people like Wil Conroy and Tre Simmons without having to go to Fargo or Marseilles.
FYI, there was one coherent voice in the house at the Ways & Means Committee.
Message Testimony of SEIU 775 President David Rolf
Senate Ways and Means
Members of the committee, my name is David Rolf. I am the President of SEIU 775, with 30,000 members in the long-term care industry, in every zip code in the state.
I cannot imagine a lower priority for the use of the public's money then the purpose this bill anticipates.
This contemplated act of corporate welfare takes place within the following context:
Incomes are stagnant or declining for 2/3 of households. Health care costs are eating up a greater percentage of employee paychecks and employer profits, even while benefits get cut and hundreds of thousands are uninsured. The average home price is now out of reach for an average income family in Seattle . Tuition costs put higher education out of reach for some working families. Fifty-two percent of all baby boomers have no retirement savings besides social security and their home equity. And, of course, the impoverishment of nursing home and home care workers threatens the quality of care for tens of thousands of elderly and disabled Washingtonians. The profitability of a sports facility should not be a higher priority than the health care of frail elderly people, or education, or housing.
The indirect transfer of public wealth to private, for-profit sports teams should not be a priority of our government, under any circumstances, at any time.
If you do pass this bill, we urge you to authorize the use of this tax for housing, health care, arts, education, and social services, but not to help subsidize the profitability of professional sports teams.
Thank you.
Saturday, December 17, 2005
Sports economics, a lesson in getting jobbed.
As much as I like sports, we have to stop getting mugged by these guys. The latest is the Sonics want a $20 to $200 million upgrade to Key Arena or they're going to have to take offers from other cities.
What's wrong with this picture? Sporting events are not public goods; and it's not right to support them with tax money. I don't care how many times we've done it. In Washington we already support our millionaire ballplayers in a very real way by not having an income tax. This puts us in the company of Florida and Texas among states with major sports. Since half the games are at home, that's a 3% to 6% advantage for our players. Don't think they aren't aware.
Plus, every new arena or upgrade is focused on fancy new luxury boxes, leased by companies who write off the pleasure on their taxes. The average fan can't even afford the parking, let alone a ticket. And don't talk about a beer and a hotdog. The media rights, the team apparel, through the roof.
But the "economic benefit" to the neighborhood of the venue must be worth the whole thing. Right? Well, No. That benefit is made of mist and it dries up under even the faintest light. Those restaurants in the area and the private parking lots may well get a bump, but it is borrowed from other areas where fans would have spent their money in the absence of the franchise.
A public good has two attributes, to a greater or lesser degree, that make it appropriate for tax financing. First, it is not depletable, and second, it is not excludable. A road, for example, is a public good. It is as good for the 100th car as for the first. Not depletable. A road is difficult to keep people from using. Not excludable. Not being depletable means the public good is often much more valuable than private goods. A golden goose. Not being excludable means you have to have different financing than pay-for-use, and the honor system doesn't work. Hence taxes, payments which are compulsory not because the good is worthless, but because if they weren't compulsory many people would not pay. The free rider, is the technical term.
An arena is most definitely excludable, and all the more so for the luxury boxes. It is also depletable on a per-show basis; a limited number of tickets can be sold.
So why are franchises so adept at getting public funding, even in the face of the hundreds of millions in salaries paid out each year for ballplayers? When an NBA player signs up for his multi-millions, he has the answer. "It's a business."
It is a business. A monopoly business. Franchise owners and players are busy splitting the take in one of the most egregious monopoly businesses in America.
We could analyze it at more length, but I hope there's no disputing it's a monopoly. Without a significant "market imperfection," you couldn't get $10 million a year to play a kids' game. If you aren't in the NBA, your pro team is nowhere. There is no alternative. Owners like it that way. It means their investments are no-lose situations. Don't listen to their whining about player salaries. Even a losing franchise can make back the investment, the entire loss in player salaries, and put a bunch in the pocket of the owner besides. Just sell it to the next city. It's value only goes up.
The problems for politicians in dealing with this issue are not small. The first one is basic ignorance. But that is only the first. Sports teams are owned by influential and monied people. The teams have an immense and easily manipulated fan base who will attack unwary politicians. I'm hopeful one or another of our leaders will take this opportunity of the Sonics to raise awareness. (I personally am not sure Howard Shultz, the majority owner of the Sonics and head of Starbucks, really wants the publicity of moving the franchise, but the initial noise is in the opposite direction.) The solution is not to get rid of the sports. We just need to regulate it like the monopoly it is. At its root it is a national problem.
Twenty million dollars -- the low end of the Sonics' plans -- would be a huge subsidy to home grown civic and cultural groups. Yet look at the public reception for a package of King County Council subsidies to local orchestras and community centers. It was only $3.5 million, and "cool" would be an understatement of its reception.
There is no end to the appetite of this particular beast, partly because of the power of sports in the national psyche and partly because the reward for winning it all is so enormous. (Make no mistake, there is fierce competition. Otherwise sane and sober human beings would not demand this sacrifice from a society which needs other, truly public goods much more desperately.)
It's only a game. We have to walk by homeless beggars to get inside. Pro sports were better when money wasn't the key to winning. Us real people are losing when we subsidize it because of its monopoly leverage.
What's wrong with this picture? Sporting events are not public goods; and it's not right to support them with tax money. I don't care how many times we've done it. In Washington we already support our millionaire ballplayers in a very real way by not having an income tax. This puts us in the company of Florida and Texas among states with major sports. Since half the games are at home, that's a 3% to 6% advantage for our players. Don't think they aren't aware.
Plus, every new arena or upgrade is focused on fancy new luxury boxes, leased by companies who write off the pleasure on their taxes. The average fan can't even afford the parking, let alone a ticket. And don't talk about a beer and a hotdog. The media rights, the team apparel, through the roof.
But the "economic benefit" to the neighborhood of the venue must be worth the whole thing. Right? Well, No. That benefit is made of mist and it dries up under even the faintest light. Those restaurants in the area and the private parking lots may well get a bump, but it is borrowed from other areas where fans would have spent their money in the absence of the franchise.
A public good has two attributes, to a greater or lesser degree, that make it appropriate for tax financing. First, it is not depletable, and second, it is not excludable. A road, for example, is a public good. It is as good for the 100th car as for the first. Not depletable. A road is difficult to keep people from using. Not excludable. Not being depletable means the public good is often much more valuable than private goods. A golden goose. Not being excludable means you have to have different financing than pay-for-use, and the honor system doesn't work. Hence taxes, payments which are compulsory not because the good is worthless, but because if they weren't compulsory many people would not pay. The free rider, is the technical term.
An arena is most definitely excludable, and all the more so for the luxury boxes. It is also depletable on a per-show basis; a limited number of tickets can be sold.
So why are franchises so adept at getting public funding, even in the face of the hundreds of millions in salaries paid out each year for ballplayers? When an NBA player signs up for his multi-millions, he has the answer. "It's a business."
It is a business. A monopoly business. Franchise owners and players are busy splitting the take in one of the most egregious monopoly businesses in America.
We could analyze it at more length, but I hope there's no disputing it's a monopoly. Without a significant "market imperfection," you couldn't get $10 million a year to play a kids' game. If you aren't in the NBA, your pro team is nowhere. There is no alternative. Owners like it that way. It means their investments are no-lose situations. Don't listen to their whining about player salaries. Even a losing franchise can make back the investment, the entire loss in player salaries, and put a bunch in the pocket of the owner besides. Just sell it to the next city. It's value only goes up.
The problems for politicians in dealing with this issue are not small. The first one is basic ignorance. But that is only the first. Sports teams are owned by influential and monied people. The teams have an immense and easily manipulated fan base who will attack unwary politicians. I'm hopeful one or another of our leaders will take this opportunity of the Sonics to raise awareness. (I personally am not sure Howard Shultz, the majority owner of the Sonics and head of Starbucks, really wants the publicity of moving the franchise, but the initial noise is in the opposite direction.) The solution is not to get rid of the sports. We just need to regulate it like the monopoly it is. At its root it is a national problem.
Twenty million dollars -- the low end of the Sonics' plans -- would be a huge subsidy to home grown civic and cultural groups. Yet look at the public reception for a package of King County Council subsidies to local orchestras and community centers. It was only $3.5 million, and "cool" would be an understatement of its reception.
There is no end to the appetite of this particular beast, partly because of the power of sports in the national psyche and partly because the reward for winning it all is so enormous. (Make no mistake, there is fierce competition. Otherwise sane and sober human beings would not demand this sacrifice from a society which needs other, truly public goods much more desperately.)
It's only a game. We have to walk by homeless beggars to get inside. Pro sports were better when money wasn't the key to winning. Us real people are losing when we subsidize it because of its monopoly leverage.
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