Handouts to NFL owners have been an absolute failure
Wednesday, 29 June 2011 08:14
BY EVAN WEINER
THE BUSINESS AND POLITICS OF SPORTS
Cory Booker wants a National Basketball Association team in Newark. Tim Leiweke is working the room in Los Angeles trying to get government money to help his company, the Anschutz Entertainment Group, to build a football stadium in downtown Los Angeles. While Leiweke works the room and tries to entice the owners of various football teams—the Jacksonville Jaguars, the St. Louis Rams, the Minnesota Vikings, the Oakland Raiders and the San Diego Chargers—to move to the planned stadium.
Leiweke is going after a football team despite the fact that the National Football League owners have locked out their employees – the players.
Booker wants a new franchise even though the NBA plans to shut down on Thursday night if there is no new collective bargaining agreement between owners and players.
The National Football League business goes on despite the fact that the main product is not available—football games—and could conceivable not be available to consumers this fall. That doesn’t seem to bother Los Angeles politicians who are talking to Leiweke about funding a downtown facility or Minnesota politicians who are trying to figure out a way to spend hundreds of millions of dollars to satisfy New Jersey’s Zygi Wilf and his want for a new stadium for his Minnesota Vikings franchise.
Sports fans probably don’t want to read this, but the team you love or hate doesn’t belong to you. The team belongs to an owner and that owner is looking for government handouts and if he or she doesn’t get a handout from the local government, he or she will look elsewhere and probably find it.
It is about time that people understand that government support of big time sports has been an absolute failure since the 1986 tax reform that changed the way stadium and arena debt were paid. In 1986, President Ronald Reagan signed the tax reform that created a new formula for paying off municipally funded stadiums and arenas and placed the onus on local taxpayers to pay down the debt and gave the owners as much as 92 cents on every dollar generated within a stadium or arena and left just as little as eight cents on every dollar to pay off hundreds of millions of dollars worth of debt.
Despite sweetheart deals, the National Football League owners shutdown the business in March.
What is the real reason for labor strife?
Owners with older stadium such as Wilf’s Vikings and Al Davis’s Oakland Raiders have to invest more and more money into player’s salaries to meet the salary cap and salary floor NFL rules with the proliferation of municipally built facilities since 1986. Since the last National Football League owners and players collective bargaining agreement in 2006, new stadiums came online at the Meadowlands in East Rutherford, New Jersey, Arlington, Texas and Indianapolis and that forced up the salary cap and floor as more revenues flowed into the league.
Apparently the alleged new agreement that is being breathlessly reported by football insiders at a worldwide cable TV sports leader indicates that the very reason that triggered the lockout is not being addressed.
But life goes on in Los Angeles and in the legislative chambers in St. Paul, Minnesota and in Santa Clara, California where local officials are trying to cobble together a money deal to get the Santa Clara football stadium off the ground for the York family’s San Francisco 49ers.
The Santa Clara stadium is also a sore point for the owners. The Yorks have to throw money into the place and the NFL owners want the players to assume some of the costs for the Santa Clara building. The NFL owners basically have told the Yorks don’t seek any funding from the banks to cover their costs and they would try to extract that money from the players.
Meanwhile Booker wants a replacement for the departing Nets in Newark even though the NBA owners are on the verge of closing down the National Basketball Association business.
If the owners and players don’t come up with an agreement by Thursday night, the NBA owners will lockout the players.
Just how important is government as a sports partner? That is easy to answer. NBA Commissioner David Stern will tell you there are three major aspects in running a successful franchise. You need government to supply funding for arenas, you need government to continue the current cable TV rules which forces all consumers to pay for channels they don’t want in a basic expanded tier – where ESPN, TNT and regional sports channels reside because multiple cable systems operators place them there not consumers- and give corporations favorable tax breaks in buying tickets or club seats or luxury boxes.
If you don’t believe David Stern, perhaps Mario Cuomo’s words from 1991 will back up Stern. Cuomo, at that time, was the governor of New York and was lobbying the National League of Major League Baseball for an expansion team for Buffalo.
Cuomo was hardly a reluctant lobbyist as he told this reporter when he was asked if the Cuomo name—Mario Cuomo was considered a favorite for the 1992 Democratic Presidential nomination—would help get Buffalo a franchise.
“When you say enormous, you mean length?” joked Cuomo in response to the question. “Ah like Willie Sutton (the legendary bank robber). That’s an excellent question and it is a question I thought of before you did frankly.
“From the beginning I have said to (Buffalo mayor at the time) Jimmy Griffin, you know we have been very supportive from the beginning and it is not because I am a baseball fan. It is because this is a terrific investment for a strong part of the state.
“Pilot Field (the baseball park built in the late 1980s and a facility that is now known by yet another corporate name—the fourth since the stadium opened in 1988) was a great idea. I am proud of the judgment I made in giving nearly $22 million (to pay for the project). It wasn’t a gift, it was an investment and a very good investment and Buffalo proved that by setting (attendance) records for a few years and by qualifying by being this high up in consideration (for an expansion team).”
Buffalo was in the hunt along with the Miami area, St. Petersburg, Florida and Denver, Colorado. While Cuomo was a big name, he didn’t have the same clout as Florida Senator Connie Mack III and Colorado Senator Tim Wirth. Those two lawmakers could have played havoc on Major League Baseball by starting legislation that stripped Major League Baseball of antitrust protection from United States business laws which gave Florida and Colorado a leg up on Governor Cuomo.
But sports owners cannot afford to turn their collective backs on politicians of any stripe who can help that get a sweetheart lease for a team.
“But I said to Jimmy Griffin and Rich, Bob and Mindy, (the people pursuing the franchise for Buffalo) in the beginning. I am not sure exactly what role you should want me to play. How do they feel about politicians? If it is better for us to stay away, I will go nowhere near this thing. If you think it is helpful for me to talk to (National League President) Bart Giamatti, may he rest in peace, I will. But you tell me what your sense of how the owners feel about talking to politicians.
“Under some circumstance, your political identification could be a negative. I don’t know what these baseball people feel about it. Bob and Mindy came back to me and said we will tell you when and how you think you can be most affectively supportive. And they have from time to time. I spoke to Bart Giamatti, again may he rest in peace, he was a terrific, terrific human being. I knew him when he was president of Yale and I knew him as Commissioner.
“And they said when it is time to make the presentation; we would like you to be there. We understand other governors will be there. Their judgment is, it does not hurt for the political person to be there.
“I think from the owners point of view, they need to know what the governmental units, upstate New York. It is important for the owners to know that we are going to contribute to the stadium’s expansion. They want to hear you say it. They want to see you on the record. They want to know the money will be there, that the support for infrastructure will be there. That when you have a World Series, the police will be there. The security will be there. That is all a very important part in running a major sports franchise.”
Cuomo wasn’t done yet. He spoke the words that politicians that elected officials understand when it comes to government-sports partnerships.
“It is one of their stated criteria,” Cuomo said of what sports leagues want. “Indeed it is their first criteria. To what extent do you have sport and government?”
In the end, the National League did expand to the Miami area and Denver and the threat of having the antitrust exempt being pulled was gone.
Major League Baseball still has portions of the 1922 Supreme Court of the United States ruling that granted the industry an antitrust exemption in place. The 1922 decision is felt to this day in the New York City area.
New Jersey cannot get a Major League Baseball franchise because the owners of the game can block anyone from bringing a third team into the area. Oakland A’s ownership cannot move to San Jose because of the exemption.
Government has invested billions into helping sports reach a level that no one who played in the NFL or the NBA in the 1940s or 1950s could ever envision. The stadiums, the cable TV act, the 1986 tax reform, the Sports Broadcast Act of 1961, the 1966 American Football League-National Football League merger, the tax hikes for car rentals, hotel, motel rooms, and restaurant bills, sewer and water, alcohol, cigarettes (the so-called Sin Tax in Cleveland) and various tax hikes to build stadiums and arenas and yet, it is not enough.
The owners and players cannot figure out how to split up $9 billion in annual NFL revenue. The NBA owners want major salary givebacks because they claim they are losing money despite sweetheart leases because they cannot generate enough in arena revenues for many franchises.
The National Football League lockout allegedly will have an impact on communities that will not be hosting training camp this year regardless of whether there is a settlement or not in July. Yet Cuomo’s son Andrew has not said a word about the lockout as New York’s Governor even though the Madison, New Jersey based New York Jets will not hold training camp as planned in central New York State at the State University of New York – Cortland. The Baltimore Ravens franchise will stay at the team’s training facility instead of traveling to McDaniel College in Westminster, Maryland. Maryland Governor Martin O’Malley is quiet about the NFL Lockout even though his state seduced Cleveland Browns owner Art Modell to Baltimore with a generous lease offer and helped Modell through a tough financial situation in 1995.
Maryland spent more than $100,000 per jobs created at the Ravens football facility. New York is kicking in about $3 million a year at the Orchard Park football field for the Buffalo Bills. Louisiana finished paying a $186.5 million bill to New Orleans Saints owner Tom Benson to keep him in town between 2002 and 2010 and renegotiated the contract that gave Benson a building (he is renting office space to the state) for about $10 million and reduced the state’s contribution to the team to as much as $6 million annually along with tax breaks.
Louisiana Governor Bobby Jindal has said nothing about the NFL lockout and the upcoming NBA lockout. Louisiana pours millions of dollars in NBA’s New Orleans Hornets. Mitch Daniels is Governor of Indiana, a state that is basketball crazy. But the NBA’s Indiana Pacers cannot make money in what was a new building in 1999 and the team under the right set of circumstances could move in 2013. The Pacers ownership is paying virtually nothing to use the city’s municipally built arena and sucks out every nickel from the building.
Daniels is mute on the subject of sports. The NFL’s Indianapolis Colts are taking virtually every cent out of the city’s new stadium. Sports is costing Indiana residents millions upon millions of dollars.
Media anointed political superstars like New Jersey Governor Chris Christie is a heavyweight at putting down his bosses — the public — but he along with a lot of elected officials who pay the bills for sports are more like Harpo Marx or Marcel Marceau and are lightweights when it comes to solving lockouts that have been caused in part by using public dollars to build arenas in areas that should never have major league sports.
Christie inherited a bill of hundreds of millions of dollars for the now departed Giants Stadium and the Meadowland sports complex. New Jersey also supplied hundreds of millions of dollars for infrastructure for the New Meadowlands Stadium and provided property tax taxes for the Giants/Jets stadium. He should be vocal and pressure John Mara and Woody Johnson, the Giants and Jets owners but publicly he is not.
Cuomo never reviewed the property tax break that various owners of Madison Square Garden have enjoyed for nearly three decades. His son Andrew apparently doesn’t want to put the Garden back on the New York City tax roll either.
The public has a stake or an investment in stadiums and arenas and by extension sports franchise. The elected officials across the country should have stepped up and pressed NFL owners to get a new collective bargaining agreement done if having sports teams are important and if stadiums and arenas are economic engines. Elected officials should be all over David Stern and NBA players to get a deal done. The NBA has shutdown summer leagues due to the pending lockout.
If sports is so important and adds billions to the economy—like politicians who pitched voters to approve sports facilities—where is the pressure on keeping the games going?
Cuomo and Stern have let people in on a secret that sportswriters seem to blissfully ignore and that the worldwide leader in sports doesn’t want to talk about. By the way, the worldwide leader in sports owes its very existence to federal legislation in 1984.
Sports depends on government to survive. But do the politicians and the public know that? The answer seems to be no.
Evan Weiner, the winner of the United States Sports Academy's 2010 Ronald Reagan Media Award, is an author, radio-TV commentator and speaker on "The Politics of Sports Business." His book, "The Business and Politics of Sports, Second Edition" is available at bickley.com, Barnes and Noble or amazonkindle.