Sunday, 18 February 2007
Subsidy for a risky venture Print E-mail
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It's a common scenario played out around the country: Professional athletic team owner threatens to take his players and go somewhere else if local government won't cough up money for a stadium.

It happened in Washington, D.C., where voters agreed to pay $611 million to build the Washington Nationals a new stadium. In San Francisco, residents paid $200 million to keep the Giants and 49ers in town.

More recently, Dave Checketts, owner of Real Salt Lake, threatened to move the professional soccer franchise to St. Louis if he didn't receive public funding to build a 20,000-seat stadium in Sandy.

Real Salt Lake is playing at the University of Utah until it can get a permanent venue, a dream that was momentarily placed in doubt when Salt Lake County Mayor Peter Corroon withdrew the county's promise of $30 million to help Real relocate to Sandy. Corroon had been warned by financial advisers that it was a risky investment.

An alternative proposal from Utah County was snubbed. Anderson Development offered to buy the team and base it at the former Geneva Steel site in Vineyard. Checketts insinuated that we're second-class citizens down here and rejected the deal.

In the eleventh hour, the Utah Legislature, goosed by Gov. Jon Huntsman Jr., came through, pledging $35 million in public money. The cash is supposed to come from taxes on hotel rooms and rental cars.

House Minority Whip Brad King, D-Price, called it a chance to promote Utah to the world. "This is worth millions and millions of dollars we will never commit from state coffers to promote us," King said.

Checketts is not the first sports team owner to get help from state government. Utah Jazz owner Larry H. Miller leases the land under the former Delta Center for $1 a year until 2040. Salt Lake City is also using taxes to pay off the center's $25 million bond.

There may be times when it's proper for government to help a business get started, but we are not convinced this is it. A soccer stadium hardly qualifies as an economic kick-start.

This is a subsidy for a special interest, in our view.

We console ourselves with the fact that $35 million is a small amount compared to other stadium deals. But that doesn't change the principle.

Salt Lake County's financial advisers said that revenue projections by Checketts were "too optimistic." Likewise, economists Roger Noll of Stanford University and Andrew Zimbalist of Smith College -- co-editors of the book "Sports, Jobs and Taxes" -- say that stadiums are more of a consumption expense than an economic booster.

The economists argue that rather than generating new money, athletic stadiums merely attract dollars that would have been spent on other entertainment activities, such as movie theaters or restaurants. A stadium is not likely to create a net gain for a local economy, they say, and may actually push other businesses out.

Jobs created by professional sports facilities come at a higher price than other forms of economic development. Noll and Zimbalist found that each job created by the construction of Baltimore's Camden Yards cost $125,000, compared to $6,000 to create a job through other urban redevelopment programs in Baltimore. And they were talking about major league baseball and football stadiums in cities where the teams already had a significant following.

Soccer is another kettle of fish -- even more so in Utah, the nation's smallest market for professional soccer.

While there may be intense interest around here for youth soccer, that's a participation sport. Youth league or high school participation won't necessarily translate to spectators at professional soccer matches. Americans still prefer baseball, basketball and football.

This could be a case of "If you build it, they will come." But the whole enterprise is just as likely to fizzle. Taxpayers could be left holding the bag.

It's too late to go back on the Real Salt Lake deal, but Utah should tell sports impresarios in the future that they need to secure private funding for their stadiums.

This story appeared in The Daily Herald on page A6.
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