How Stadium Subsidies Should Impact MLB Payrolls
Today, one IBWAA member looks at the world of publicly funded MLB stadiums and how much teams should have to spend if their ballpark receives taxpayer funds.
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Did you know…
. . . The Baltimore Orioles recently made news by declining a five-year extension of their lease at Camden Yards, which is now set to expire at the end of the 2023 season, and are rumored to be seeking a longer lease agreement. However, Maryland governor Wes Moore and the O’s put out a joint statement that same day declaring their commitment to continue negotiating a new agreement and dedicating “the necessary time and resources to ensure a shared vision for a reimagined Camden Yards site and revitalized surrounding downtown Baltimore area.”
. . . Last month, the Tampa Bay Rays took a big step forward towards a new stadium plan, as the mayor of St. Petersburg, Ken Welch, chose their plan as the preferred choice for redeveloping the site of and around Tropicana Field for a revamped ballpark experience. The Rays are also still engaged with the possibility of a new stadium in downtown Tampa.
Leading Off
Stadium Subsidies Should Come With (Payroll) Strings Attached
By Dan Freedman
I recently read “Field of Schemes” by Neil deMause and Joanna Cagan, which delves into the decades-long grift wherein billionaire owners bilk municipalities out of billions (it used to be millions) of dollars by having them finance stadiums under the threat of relocation. I read that book after reading Dan Moore’s terrific piece in The Ringer, in which he discussed how Camden Yards “forever changed professional sports.” In the article, Moore stated:
In the 30 years since it opened, in the spring of 1992, Camden Yards has proved, beyond just beautiful or influential, illustrative of the more ignominious side of the political ecosystem that undergirds professional sports. The proof is in the funding. One of the worst-kept secrets in pro sports is that the people who run teams and leagues are sanctioned by the U.S. government to do so the same way kingpins run drug cartels: that is, as monopolies.”
Take The Money And Stay
There are many other thoughtful books and articles written about this topic, but the main takeaway is that public funding of professional sports stadiums does not provide the financial boon that the owners (and city council members, mayors, governors) tout when signing the legislation or cutting the ribbon. These payments are simply a boondoggle. That said, they appear to be here to stay.
As of this writing, there are three MLB stadiums that have not received some form of taxpayer funding (Fenway Park, Wrigley Field, and Dodger Stadium -- but that is only because the City of Los Angeles evicted more than 300 families to clear the land for Walter O’Malley to buy). The amounts and the specifics vary -- there are tax subsidies given directly to the team; tax-free bond issues; taxable bond issues; hotel taxes in and around the park; there are the granting of additional land for parking lots and entertainment complexes; the list is limited only by a legislature and an owner’s imagination. However you slice the pork, there is plenty of it to go around.
As long there are civic leaders in the thrall of professional sports and their team owners, as long as there are mayors who want to throw out the first pitch or sit in a luxury box for Opening Day, as long as there are rich people willing to scratch powerful peoples’ backs, the public at large is going to continue subsidizing -- if not completely paying for -- ballparks.
If we accept that to be true, it raises the following question for me: Do these clubs have a moral, ethical, and/or fiduciary obligation to put a competitive team on the field? Can owners pocket their constituent’s tax dollars, plus their fellow owners’ revenue-sharing money, and continue to underspend and put a suboptimal product on the field? The answer to that question is obviously “yes.” The follow-on question is, “Should they be able to?”
For starters, it is clear that no one can predict with any certainty winners and losers. Teams come out of the woodwork every season or two to shock the world. And, by the same token, money doesn’t buy championships (ask the Yankees). But, dunking on the Yankees’ 13-year fallow period aside, the Bombers nearly always put a viable team on the field.
However, for the last few years, certain teams have failed to even try. True, we live in a world where the Astros and the Cubs proved that “tanking” could be good for long-term success. But, does any bona fide baseball fan truly believe that the Pirates or the A’s are “tanking” to secure a better future?
Orioles
The Orioles have some of the best prospects in baseball, and have for a couple of years now. They made great strides last season, winning 31 more games than they did in 2021. With that improvement, how much have they spent in free agency this offseason? Let’s take a look:
RHP Kyle Gibson (one year, $10 million)
2B Adam Frazier (one year, $8 million)
RHP Mychal Givens (one year, $3 million)
This largesse (roughly half what Justin Verlander will make this season) was spent after the Maryland Stadium Authority offered the Orioles a new lease, and made $600 million in public funds available to improve Camden Yards. Yes, the same Camden Yards that received public funding to be built 25 years ago, and which has cost the state about $450 million in debt service and interest on bonds originally issued to finance the stadium.
Athletics
The A’s may be the worst offenders in the history of sports. They are currently in protracted “negotiations” with both the City of Oakland and Las Vegas about the team’s future. Candidly, the concept the A’s have designed for Howard Terminal is beautiful, and may bring many benefits to a city that needs some urban renewal. But at what cost?
According to CBS Sports, “the project includes a $1 billion privately financed ballpark, plus another $12 billion in private investment for residential and commercial space in the waterfront neighborhood. The A’s are also seeking $855 million in public funds for infrastructure and to develop land around the ballpark.”
Said differently, the A’s are looking for nearly a billion dollars of public money. What have they done to deserve such a charitable gift? Well, they have been in the bottom six of payroll for 11 of the last 13 seasons. They have been about an 82-win team over those 13 years (which is helped considerably by two 97-win seasons), and have had three below-70-win seasons (including last years’ 60-win debacle). Any scout or front office executive will tell you that the A’s are a Quad-A team, at best. And, for that, they want $855 million in public funding.
Pirates
PNC Park in Pittsburgh is one of my favorite places to visit. It is sheer beauty. When it opened in 2001, it did so on the back of public funding to the tune of $216 million. The Pirates’ lack of spending has become known in baseball as “Nutting,” named for parsimonious team owner Bob Nutting.
In the past 13 seasons, the team has been in the bottom six of payroll eleven times, while averaging about 76 wins (which is skewed by seasons of 98 and 94 wins). At what point do the fine people of the Steel City have the right to demand that Nutting field a competitive team; to try to win more than 63 games (their average over the past four seasons); to give a little joy to Yinzers to go along with their tax bill? When does MLB have the right to make the same demand?
Salary Floor?
I was heartened when, at the beginning of the labor negotiations last year, MLB presented a salary floor (initial offer: $100 million). Unfortunately, they tied it to a ridiculously low luxury tax threshold. The players dismissed it out of hand.
According to The Athletic, there were seven teams with Opening Day payrolls under $100 million in 2021; but according to Spotrac, that number was actually 12. Either way, you had to know that those seven (or 12) billionaires (except Stuart Sternberg ($700 million) and Bruce Sherman ($500 million) didn’t want to be required to spend additional sums. Suffice it to say, none of the seven (or 12) privately funded their parks.
This is truly a conundrum: Boycott the team, and the owner will claim less ticket and television revenue, and will use that as an excuse to spend less on the team, or demand more from the city (or another city). Continue patronizing your favorite club, and thus continue to put money in these miserly owners’ pockets in an (often futile) attempt to insure that the team doesn’t leave for more lucrative environs.
I believe I have a solution. If MLB can have an antitrust exemption (Congress is currently looking at that . . . again), then they can also be subject to a federal law that states that if you receive any form of public subsidy for your ballpark, you are required to spend at least $X million on salaries for a period equal to the length of any public funding. The $X million could be calculated by taking the average MLB salary in a given season, multiplied by 26. Last year that would have been $114.66 million ($4.41 million x 26). Problem solved.
I know Kevin McCarthy has a lot on his plate, but one more congressional bill wouldn’t kill him. Get to work.
PLAY BALL!!
Dan Freedman is the Executive Vice President of Business & Legal Affairs at Lionsgate Films. His writing about baseball stems from his unique (?) perspective on the game, his desire for people to love the game as much as he does, and how the game often relates to life. His musings can be found at www.baseballcraziness.com. Follow him on Twitter @dffreedman or write dffreedman@hotmail.com.
Extra Innings: Watch O’s Star Adley Rutschman Get Ready For The Season
This is currently a big topic in KC, as John Sherman has announced his intention to move the Royals downtown to a new stadium and complex. I love Kauffman, but I think there are a lot of benefits for both the Royals and the city to having a stadium and connected entertainment district downtown. I don't love the idea of paying taxes to help out billionaires, but the city could really benefit from it, so I get the argument that it's in its interest to help make it work. That said, the Royals are a small market team that has traditionally been on the lower end of the league when it comes to payroll, and with the exception of a brief run nearly a decade ago (which, admittedly did result in a title I wouldn't trade for the world), their performance has often reflected their reluctance to spend. No owner wants to be handcuffed to a number, and spending money doesn't necessarily guarantee success, so I don't know how you iron out the finer details and make an official agreement, but if public money is being invested in the team's stadium, it only makes sense that the team is required to match that invest in the product itself. Like I said, the devil is in the details with something like that, and there are a number of ways it could go wonky, but I'm all for it in general principle.