Do the Stadium Hustle

Staff

To paraphrase Paul Simon, there are fifty ways to trick the taxpayer when it comes to paying for stadiums and studios.

Legislative Tactics for A’s Stadium Revealed

One ruse for shutting out public input is to enable the legislature to pass a stadium bill with fewer votes than before. Normally, a major subsidy to infrastructure in Nevada requires a majority vote of two-thirds of the legislators. Lombardo proposed a bill for the Athletics stadium that would require only a majority vote because it supposedly did not directly commit tax revenues.  That provision was more apparent than real. The bonds floated by the government must be paid off by taxpayers.

Another trick is to delay a controversial bill until the end of the legislative session when the public won’t have time to comment on it. The bill for the Athletics stadium was delayed until 11 days before the end of the 2023 session, several weeks after the Assembly speaker had said that time was running out.

Steve Yeager, a Democrat from Las Vegas, said in early May: “Until we know what the proposal is, and what the economic impact might be to the state, it’s just really hard to say whether that’s something we’re going to move or not.”  As it turned out, the solons had little choice.

Celebrity Endorsements

A clever strategy is to hire a celebrity to sell your stadium with sizzle rather than steak. Instead of explaining to the public the (sketchy) scheme to subsidize the Hollywood 2.0 movie production site, Sony Pictures Entertainment and Howard Hughes Holdings hired actor Mark Wahlberg, a resident of Las Vegas, to charm the public.

How Taxpayer Exclusions Shape Stadium Financing

Finally, public input may simply be pre-empted by law.  Nevada exempts professional sports teams that play at home from the Live Entertainment Tax, which is otherwise a hefty 9% of the admission charge. For sports teams, the public can’t discuss the use of admission tax revenues simply because there is no admissions tax.

The lack of public input into the Raiders’ Allegiant Stadium financing may help explain why Nevada is still paying off its construction four years after it opened. Nevada committed $750 million to the $1.9 billion stadium.

Oakland sports fans despise the Athletics, who finagled more than $620 million to expand and renovate Oakland Stadium in 2023 and will now abandon the city for Las Vegas. It is thus not surprising that other cities are not falling over themselves to court the As.

Are the A’s Worth the Investment?

What would the Athletics do if Lombardo’s subsidy fell through? Steve Hill, CEO of the Las Vegas Convention and Visitors Authority and chairman of the Las Vegas Stadium Authority, and the man most responsible for bringing professional sports teams to Nevada by building stadiums, said the A’s “will look for other cities.”

Victor Matheson, a former Journal of Sports Economics editor, noted that the Athletics were one of the worst teams in Major League Baseball.  “The fact that anyone in [Nevada] gave them a dime when the team has literally nowhere else to go is the worst bargaining in the world.  Quite honestly, I would have just squeezed them. It’s not about being friendly to the A’s; it’s about looking out for the taxpayer.”

Proposed Exemption from Competitive Bidding

An example of the unconcern of Athletics’ advocates with saving the public money is the proposed exemption from a state law requiring competitive bidding on construction. Hill explained that it “takes a good amount of time to go through a competitive bidding process. There are very few contractors who can actually choose to build either a football stadium or baseball stadium.”

But even if there are only two bidders, they will bid down the amount they demand for the contract until the expected profit to one of them goes to zero, they don’t collude.  And what’s the rush when you save the taxpayers millions of dollars?

There are many ways to exclude the public from a policy debate, but they all lead to misguided policy. If the point of a policy is to serve the public, then the top priority in forming it is to ask the public what it thinks.

The Real Impact of Stadium Investments on the Economy

Stadium competition can also skewer the distribution of income.  Entertainment services, such as the restaurant industry, generate a lot of jobs for the unskilled. Much of the value of a hotel stay or restaurant meal lies in face-to-face services – the charm of the waitress, the courtesy of the maître d’. These services do not require the technological know-how of building a truck with robots. They do not require a Ph.D. Indeed, producing services requires relatively more labor than producing a sports utility vehicle, creating more jobs.

But professional sports are another matter. While a Baltimore Orioles game does create jobs for the peanut vendor, most of the cost of producing the game lies in paying a few millionaire athletes. The shift from restaurants to professional sports implies a shift in income from the many unskilled to the few wunderkind.

What Does the Public Think?

Las Vegas residents seem skeptical of the benefits of stadium competition. In a poll by Emerson College, most respondents opposed the proposed stadium for the A’s.

Kansas City voters, too, are skeptical. On April 2, Jackson County voters rejected by about a 16% margin a renewal of a 3/8-cent sales tax to hang onto the Kansas City Royals and the Kansas City Chiefs for 25 years by subsidizing their stadiums. The Royals owner, John Sherman, said: “We will take some time to reflect on and process the outcome and find a path forward that works for the Royals and our fans.” Hmm. A mailed fist in a velvet glove?

It’s Not Too Late

In this series of articles, we’ve seen that, as a rule, subsidies to stadiums generate no net income for the public and crowd out desperately needed teachers.  Legislators force the subsidies upon a doubtful public at the behest of lobbyists. The winners are billionaire team owners.

But it is not too late to write a happy ending to the tale.  Guarantee the public a say in proposed subsidies to entertainment firms that should fend for themselves. Inform taxpayers of what they give up in education and health care when they cough up for stadiums and studios. And recognize the threats of team owners to pick up their marbles and move on for what they are – bluffs intended to wring more money out of taxpayers.

Let Your Voice Be Heard: Say No To Subsidies for the A’s Stadium



 

References

Ken Belson and Jenny Vrentas.  Pro Sports in Las Vegas Aren’t Cheered by Everyone – The New York Times (nytimes.com). February 10, 2024.

Sean Golonka. Sports economists pan public funding for A’s ballpark deal as ‘standard stadium grift’ – The Nevada Independent.  June 4, 2023.

Sean Golonka, Tabitha Mueller, and Jacob Solis. Amended A’s stadium bill would restrict location, resurrect two vetoed bills – The Nevada Independent.  June 13, 2023.

Tabitha Mueller, Sean Golonka, Jacob Solis, and Howard Stutz.  A’s stadium bill language arrives, caps public financing at $380M – The Nevada Independent. May 26, 2023.

Tabitha Mueller, Jacob Solis, and Howard Stutz.  Assembly leader: A’s stadium deal running out of time in Nevada Legislature – The Nevada Independent. May 3, 2023.

Tabitha Mueller, Howard Stutz, Sean Golonka, and Jacob Solis.  A’s bill backers argue baseball’s worst team can be economic boon for Vegas – The Nevada Independent.  May 29, 2023.

Nevada Commission on School Funding. Quantifying the potential funding need.  PowerPoint Presentation (webapp-strapi-paas-prod-nde-001.azurewebsites.net)  September 28, 2023.

Nevada Department of Taxation. Live Entertainment Tax & FAQ’s (nv.gov)