Friday, December 14, 2012

Economist's Notebook: Subsidizing Pro Sports

There is almost nothing that gets people more inflamed than the sweetheart deals pro sports owners (typically multi-millionaires and billionaires) get to construct new stadiums and renovate old ones.  I totally get the populist angst, why should the public support these dudes?  But I am confused by the belligerence and outrage caused by the insinuation that sports owners are somehow evil wizards that have been able to enchant us and defraud us.

To me there are two glaringly obvious problems with this hysteria.  The first is kind of obvious: these are public performance places no different than the theaters and auditoriums that cities typically subsidize, why?, because people enjoy them and ticket sales alone are not enough to finance their existence.  Even though I have yet not gone to a performance at Portland Center Stage, I am glad the Armory theater exists and plan on seeing a performance there in the future so I am willing to help subsidize it.

But operas, theater companies, orchestras and ballets are typically non-profits so that makes it all OK, plus they are 'art' and worth subsidizing go the typical arguments.  I think this is a bit arrogant and it brings me to the second, larger, point: the fact that so much public money has gone into spots venues is not a demonstration of evil wizardry as much as it is a reveled preference.  People like live sports as entertainment, they value sports teams in their communities and they are willing to help support their existence.  What is interesting to this economic naturalist is that it appears that even if you only watch them on TV people value the existence of team in their communities - they want to support 'our' team.

Arguing otherwise is silly, in my opinion.  The market has spoken.  We readily accept this when we are talking about the Pontiac Aztek (or Pontiac for that matter) but refuse to accept it because among the beneficiaries are very rich people.  So we have to construct narratives that speak to some dark magic that somehow has made us all irrational.  You may not like the fact that these things matter to people and you may wish, as I do, that there would be the same amount of emotional appeal for education, for example, but it is what it is.

I am not in any way endorsing this, by the way, just making the obvious point that the fact that so much public money has gone into these project seems pretty good evidence that they are valuable to their communities.

7 comments:

Dennis said...

What about public officials making sweetheart deals for reasons unrelated to the public good?

I don't think you can make a reveal preference argument when it comes to decisions made without a vote. A counter premised on the claim that such public officials would be voted out of office presumes this issue is more important than others.

Patrick Emerson said...

It's a good point and yes, that is essentially my take. If this were an isolated phenomenon or one that happened only just recently then I think there is an argument to make that democracy has not had time to act.

But my view of politicians are that they are rational self-propmoters and are unlikely to make these deals if they think it severely damages their re-election chances. I think, given the ubiquity of these deals, that the opposite is more likely true.

But I called the post 'economist's notebook' for a reason: these are my off the cuff thoughts. Plus I am a bug sports fan myself, so I look forward to being disabused of my wayward beliefs.

Dennis said...

I'm not sure I think these deals are important enough to strongly impact re-election chances, or at least I'd want to see evidence of that. The other thing is that it's not like the same group is experiencing a lot of this - separate locations, say each location gets a stadium deal every 10-15 years (across sports). The public has a short memory about some things...

The other part is that even if politicians are rational self-promoters, I don't want to assume they have accurate knowledge of how these deals impact re-election. You can look at a broad level, but I am skeptical there's much polling at the metropolitan level on this question.

Apologies for the typo in the last comment.

Jeff Alworth said...

A bad analogy, Patrick. It's not incidental that arts orgs are not private--it's critical to the distinction. The public is more willing to let money leave their pocket if it's not going into the pocket of very rich owner.

But more centrally, arts orgs don't exist in a protected monopoly with limited members. The reason NFL owners can extort their fans is because of the monopoly. Open the NFL up to all cities in the manner all cities have symphonies, and the balance of power would very quickly shift. How on earth can you say the "market" has spoken? There's absolutely no market here.

Weirdly, I think you're making a cultural argument about the value of professional sports in the public sphere--more the province of humanities types you normally eschew. I agree on this point--arts, sports, they're all professionals worthy of our support. But it seems like an incredible argument to be placing in the context of markets, when the two couldn't have more different structures.

Patrick Emerson said...

There are some senses in which NFL teams are local monopolies, but there have been plenty of competing leagues that have tried and failed. I think what is probably the fact is that these are natural monopolies - most cities could not support two teams. And in this sense I don't think the distinction is very different at all - the same is definitely true for symphonies.

But I think you misunderstand: these two things have social returns that people understand and respond to. I was only suggesting that the media hype about public subsidies of sports seems focused on the millionaire owner angle and misses the obvious fact that communities want them.

We could get into a whole other realm of non-profit local monopolies that receive lots of public support: college sports but that is a whole other discussion.

Mike Jacob said...

If you want a case in which a politician was voted out of office over a stadium deal, look to Milwaukee's Miller Park. A State Senator lost a recall bid launched when he broke ranks with the GOP and voted for the stadium. His own party supported another candidate in the primary.
The Democrats took the seat.

Ninja Trader Guy said...

We have this same situation going on in Atlanta with the Georgia Dome right now. Secrets, lies, and of course, the "sweetheart deals" you spoke of have all been circulating. It's hard to imagine that the monied interests won't win...that just seems to be the usual outcome.

Phil @ http://pennystocksforbigbucks.blogspot.com