Skip to content

Notes on the Valley: Cities should not subsidize sports teams

BLOGGER_Monith Ilavarasan
The "Notes on the Valley" blog is written by Monith Ilavarasan (pictured).

I’ve never been a particularly big fan of baseball. I didn’t grow up playing catch with my dad or hitting dingers in Little League. Basketball and football were more exciting to watch and the appeal of watching a sport just slightly more exciting than golf just wasn’t there.

That all changed when the film Moneyball came out in the early 2010s. Based on the book by Michael Lewis, the film has a charismatic Brad Pitt and a chubby Jonah Hill take a scrappy Oakland A’s team to finish first in the American League West.

I was amazed at the idea of how you could literally use math to gain an advantage in a sport dominated by big men and vibes. My dreams of becoming an NBA point guard stalled with my height, but I began to have dreams of using my applied stats degree to one day work in professional sports.

I started following baseball more closely and officially signed on to A’s fandom from that point on. The tickets were cheap and it was fun to roast Giants fans on the rare occasion we had the better record.

One of the reasons the tickets were cheap was the state of the stadium itself. The stadium was, quite frankly, one of the worst arenas I’d ever been to. At one point there was a sewage malfunction and literal poop flooded the lower levels of the stadium. Still, to me (and many others) this was actually a positive as it kept prices down to be one of the last affordable professional sporting events in the Bay.

However due to these issues, the Oakland A’s have been trying to relocate out of the Coliseum for decades. This year might just be the year they start making the move. Reports over the past few months indicate that the A’s organization has been buying land in Las Vegas and getting significant concessions from the new city. In addition, the Oakland mayor has confirmed that negotiations for a new waterfront ballpark and housing at Howard Terminal are dead.

In their latest attempt to stay in the Bay Area, the Oakland A’s proposed an 11 billion dollar project including housing, hotel rooms, commercial and retail space. This proposal included over one billion dollars in public subsidies to ready the site for development and ensure transportation (i.e. increased road capacity and public transportation networks) were in place.

There have been reams of reporting on this particular proposal. To drill it down to its essence, the Oakland A’s ownership group followed a playbook followed by many sports teams before it. They asked for a public handout and argued that the economic revitalization would generate enough taxes to pay back any money spent by the public.

The only issue with that reasoning is that these promises made by sports teams have never actually come true. Publicly subsidizing sports stadiums owned by private, for-profit entities do not have a track record of boosting enough economic vitality to pay back the original subsidy.

study by economists at the Brooking Institute on newly constructed subsidized stadiums shows that they have a very limited and possibly even negative local impact. The Federal Reserve Bank of St. Louis analyzed ten instances of publicly subsidized stadiums and came to a similar conclusion. Finally an article published in the Berkely Economic Review came to the following conclusion.

"Sports teams are supported by successful owners who are capable of funding stadiums themselves. The owners will be compensated handsomely through the profits received through ticket sales, corporate advertising, and concessions over the next several decades.

Public subsidies are an unfortunate power play used by these influential teams on local communities that are emotionally attached to sports teams, and a shift to making these projects private is going to be important moving forward.”

It also, frankly, is common sense. Sports teams and stadiums are consumption goods. When a new sports team comes into town local residents simply have one more option on how to spend their discretionary income. If I spent a hundred dollars a month on eating out with friends I can now make a choice to spend that hundred dollars on a ticket to the local ball game. I don’t magically have another hundred dollars to spend on both the ball game and eating out.

The economic pie of the surrounding community stays the same size, but the distribution of spending simply changes and shifts. This explains why in some cases large stadium expenditures result in negative economic impacts.

Discretionary income is pulled out of local businesses that rely on local spending and is instead directed to the new arena. The difference here being that the local government doesn’t go out of their way to give these smaller businesses free startup and operational money in the form of subsidies.

Public spending also contracts as money is now being used to pay down the municipal debt used to subsidize these private team groups instead of investing in local government services. Subsidies directed to a privately owned sports team prioritize corporate interests over public welfare. Such deals often neglect pressing social needs, exacerbating income disparities and diverting funds from education, healthcare, and other essential services.

There are people in the Bay Area that loved the Athletics far more than I can imagine. Many memories were created throughout the years as family and friends would journey to enjoy baseball in the beautiful Bay weather. My heart goes out to these die hard fans. Thousands of them even showed up to the stadium in full force to conduct a reverse boycott, with full support of the players themselves.

Sports owners leverage this passion to push cities to make unwise financial decisions with public money. Cities should stand strong and ensure the most pressing priorities of their constituents are being addressed.

Editor's Note: The "Notes on the Valley" blog is written by Monith Ilavarasan, who grew up in Pleasanton. After a career in tech, he took a sabbatical to be a community organizer. He has continued to work in tech and shares his thoughts on the people, places and events that make up and shape the Tri-Valley.

push icon
Be the first to read breaking stories. Enable push notifications on your device. Disable anytime.
No thanks