Sports Subsidies, Crony Capitalism and the Fleecing of Taxpayers

Congratulations to elected officials in Columbus, Ohio! They finally figured out a creative way to do an end-run around the decisions of voters and do what they’ve wanted to do all along: have a government run and operated sports arena. Columbus officials announced this week that they have figured out a way to purchase the privately owned and funded arena that hosts the NHL Blue Jackets for $42.5 million dollars. They’re using future tax revenues from voter approved casinos to finance the project.

I guees it didn’t matter that voters in Columbus, Ohio went to the ballot box and turned down initiatives to publicly fund professional sports stadia and arenas in 1978, 1981, 1986, 1987, and 1997. Fed up with taxpayer’s resistence to publicly fund something the business community felt was so vital to the local economy, Nationwide Insurancy Company and the Columbus Dispatch Publishing Company built the arena for $150 million, opening in 2000.

Now, officials say it’s different because they aren’t asking for a tax increase. Since the revenues are coming from taxes on the casinos, they seem to think that voters would be okay with it. Hardly. (I was there at the the time and part of the public debate while on staff at The Buckeye Institute.) The initiatives that failed at the ballot box were asking voters to approve tax money going to publicly fund professional sports facilities. They weren’t just referenda on raising taxes. (Indeed, voters approved initiatives to fund public purchases of farmland as open space, sales taxes to fund roads, and money for brownfield redevelopment during the same era.)

This is just another version of crony capitalism. The Blue Jackets are threatening to leave Columbus because they claim they are losing $10 million to $12 million per year on the arena lease. What is interesting is that Nationwide (who owns the arena) is not renegotiating the contract. They’re selling the stadium they spent $150 million to build a decade ago for 28 cents on the dollar to the local government. In addition, Nationwide is committing to spend another $50 mllion on the Blue Jackets and take an equity interest in the team.

It’s the taxpayers who lose on this. They are getting a facility they voted down a decade ago, they’re paying for a facility that can’t hold its value, and their tax revenues are being redirected to underwrite a failing enterprise.