Sports Pork: Deal to keep Kings in Sacramento announced
Politicians have an edifice complex, and subsidies to sport teams are corporate welfare at its worst. In yet one more “Field of Schemes,” a deal was announced today to build an arena for the Kings in downtown Sacramento. Love professional basketball or not, it’s a rotten deal for the taxpayer.
It all started last year when the Maloofs – owners of the Sacramento Kings – were set to bail on Sacramento for the sunny skies of Anaheim, California. Sacramento Mayor Kevin Johnson, convinced the league to block the move for another year so that the city could make one more push for arena. With an NBA imposed March 1st deadline, the Kings and the City have reached a tentative agreement. Here are the general details, courtesy the SacBee.
The Maloofs will:
- contribute $75 million upfront (which includes proceeds from the sale of the current arena)
- pay off their outstanding $67 million loan for the current arena with the city (and will obtain a new, longer term loan, using the team and arena-related revenue as collateral)
The city of Sacramento will:
- contribute $200 million to $250 million, primarily from leasing its parking garages to a private operator. Other contribution money will come from cell phone tower leases and electronic billboards, but is not to include a hotel tax.
In exchange for giving a wealthy NBA team owner piles of cash, the City will collect a 3 to 5 percent surcharge on every ticket sold at the area, for both sport and non-sport events. The revenue will go to the City’s general fund as is expected to bring in millions annually –to offset part of the $9 million it will lose annual in lost revenues from leasing its downtown parking garages.
The supposed benefit of this arrangement is that it will revitalize Sacramento. That economic success will rain down on Sacramento’s scorched economic landscape, causing prosperity to shoot up. Unfortunately, all the evidence suggests that economic recovery is not in the forecast. Study after study, has shown that the presence of arenas and sports teams has no positive economic impact. Several years ago researchers looked at a dozen metropolitan areas and found no net employment hike; and reviewed 36 cities and found no net statistical increase in economic growth.
Despite the evidence, politicians persist. While cities consistently fail to reap the promised benefits, owners continue to reap substantial benefits and profits at the taxpayers’ expense. With the current state of the economy, perhaps its times we started to tell them to pay the cost of their own admissions.