LA To OC: Resist NFL’s Siren Call

Team owners should build stadium if they want to enter market

Another National Football League season is about to kick off without a franchise in the nation’s second-largest media market. The NFL, upset with its inability to get a new stadium built in Los Angeles, is now encouraging Anaheim to construct a stadium and chase the NFL dream. While taxpayers across the country continue to be fleeced by leagues and team owners demanding new stadiums, Los Angeles’ mantra should continue to be “build it yourself.”

Team owners and private investors will step forward: The $375-million Staples Center was largely privately financed (the public commitment amounted to less than 20% of the total cost). Likewise, the Anschutz Entertainment Group, owners of the Los Angeles Galaxy, privately financed a state-of-the-art complex featuring a soccer stadium, tennis stadium and track-and-field stadium in Carson.

Contrast that with what’s going on in Sacramento, where city leaders agreed to pay $175 million, half the total price, for a new arena for the city’s pro basketball team, the NBA’s Kings. But team officials have made it clear they want the city to foot the entire bill. The Kings haven’t threatened to leave — but you can see the writing on the wall.

Dallas Cowboy owner Jerry Jones, an advocate of putting an NFL team back in Los Angeles, is seeking public funding for a new stadium. The city of Irving, Texas, the Cowboys’ current home, balked at his demands. But local politicians are now worried because another city, Arlington, Texas, is considering asking taxpayers to cough up $325 million to help build Jones a $650-million stadium.

And city after city knows the same pain because they’ve dumped hundreds of millions of dollars into professional sports, underwriting huge portions of the business in the process. A new football or baseball stadium has become enormously expensive.

The Philadelphia Eagles’ stadium, which opened in 2003, cost $512 million, primarily from taxpayer funds. The total for the San Diego Padres’ new baseball stadium was about $449 million, also mostly taxpayer money. In fact, stadiums paid for with taxpayer dollars tend to cost substantially more than privately built arenas. That was the case in Columbus, Ohio. Private investors built Nationwide Arena for 75% of the cost that voters turned down when they were asked to build the facility with public money.

The amazing thing is that these “public” investments have virtually no effect on a city’s economy. Studies show that although a few new restaurants might open near a new stadium, they would probably have opened somewhere else in the city anyway. That means that jobs and dollars are simply reshuffled: No new money for the city is being generated.

Additionally, sports teams rarely account for much more than 1% of a county’s jobs or payroll. In fact, most teams meet the size criterion used by the U.S. Small Business Administration. They typically earn under $100 million annually, although premier NFL franchises, like the Dallas Cowboys, can double that. In 2003, Forbes magazine admitted that revenues weren’t the point of team ownership: “Many Forbes 400 members own big stakes in professional sports teams. Profits are few and fan loyalty fickle, but the thrill of victory makes it all worthwhile.”

In the end, when taxpayers take on the cost of building stadiums, they’re doing little more than helping already wealthy team owners become richer and young athletes become instant millionaires.

Los Angeles, which has flirted with schemes for stadiums and teams since the Rams and the Raiders left town after the 1994 season, shouldn’t be swayed in its thinking by the league’s new interest in Anaheim. Its economy has done fine without one. The NFL needs L.A. more than L.A. needs the NFL. Strong markets will continue to attract teams whether stadiums are publicly or privately financed.

In fact, Anaheim’s taxpayers and elected officials would be wise to learn from L.A. By requiring professional sports teams to finance the full weight of their business, just like other businesses, cities will help restore the accountability and performance that make enterprises outside the sports world thrive.

Samuel Staley is director of urban and land use policy at Reason Foundation and co-editor of the book “Smarter Growth: Market-Based Strategies for Land-Use Planning in the 21st Century.”