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.

Samuel R. Staley, Ph.D. is a senior research fellow at Reason Foundation and managing director of the DeVoe L. Moore Center at Florida State University in Tallahassee where he teaches graduate and undergraduate courses in urban planning, regulation, and urban economics. Prior to joining Florida State, Staley was director of urban growth and land-use policy for Reason Foundation where he helped establish its urban policy program in 1997.

Staley is the author of several books, most recently co-authoring Mobility First: A New Vision for Transportation in a Globally Competitive 21st Century (Rowman & Littlefield, 2008). Texas Gov. Rick Perry aid Staley and Moore "get it right" and world bank urban planner Alain Bartaud called it "a must read for urban managers of large cities in the United States and around the world."

He is also co-author, with Ted Balaker, of The Road More Traveled: Why The Congestion Crisis Matters More Than You Think, and What We Can Do About It (Rowman and Littlefield, September, 2006). Author Joel Kotkin said, "The Road More Traveled should be required reading not only for planners and their students, but anyone who loves cities and wants them to thrive as real places, not merely as museums, in the 21st Century." Former U.S. Secretary of Transportation Mary Peters said, "Balaker and Staley clearly debunk the myth that there is nothing we can do about congestion."

Staley's previous book, Smarter Growth: Market-based Strategies for Land-use Planning in the 21st Century (Greenwood Press, 2001), was called the "most thorough challenge yet to regional land-use plans" by Planning magazine.

In addition to these books, he is the author of Drug Policy and the Decline of American Cities (Transaction Publishers, 1992) and Planning Rules and Urban Economic Performance: The Case of Hong Kong (Chinese University Press, 1994).

His more than 100 professional articles, studies, and reports have appeared in publications such as The Wall Street Journal, The New York Times, Washington Post, Los Angeles Times, Investor's Business Daily, Journal of the American Planning Association, Planning magazine, Reason magazine, National Review and many others.

Staley's approach to urban development, transportation and public policy blends more than 20 years of experience as an economic development consultant, academic researcher, urban policy analyst, and community leader.

Staley is a former chair for his local planning board in his hometown of Bellbrook, Ohio. He is also a former member of its Board of Zoning Appeals and Property Review Commission, vice chair of his local park district's open space master plan committee, and chair of its Charter Review Commission.

Staley received his B.A. in Economics and Public Policy from Colby College, M.S. in Social and Applied Economics from Wright State University, and Ph.D. in Public Administration, with concentrations in urban planning and public finance from Ohio State University.