With Lockout Looming, NFL Owners Downplay Economic Benefits Of Football
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WASHINGTON -- In the past two decades, National Football League owners have received at least $5 billion from local governments to build and maintain football stadiums for their lucrative franchises. The argument was almost always the same: With a little taxpayer investment, the city would get a big boost in economic activity. With no investment, the team would up and leave.
With three days until the owners lock out the players for refusing to give up their claims to $1 billion of the sport's $9 billion in annual revenues, local officials and players are raising concerns that a canceled season could deprive cities of needed economic activity -- as much as $160 million per city, according to the NFL Players Association -- at the worst time possible. But now that the argument is working against it, the NFL calls such concerns "fairy tales."
Economists have debunked claims that a shutdown would devastate a stadium's host city, or that a new stadium offers the kind of windfall that would justify significant public contributions. But NFL Commissioner Roger Goodell had a different take in 1997, when he was a league executive. "A new stadium provides more than just a new place to watch a game," Goodell said at the time. "It can revitalize and stabilize both a team and a city."
"For them to be dismissive of the NFLPA's claims now is sort of ironic," said Dennis Howard, a business professor at the Lundquist College of Business in Oregon. "Many of them have used the economic benefit argument as a way of extracting significant public support for new stadiums."
Twenty-eight of the league's 31 stadiums (the Jets and the Giants share the New Meadowlands Stadium) have been built with some amount of public financing, according to the National Sports Law Institute at Marquette University's law school. Eleven have been 100 percent publicly financed. Taxpayers have put up more than $5 billion since 1990.
In Indiana in 2004, the president of the Marion County Capital Improvement Board argued that a new publicly-funded multi-use venue would keep the NFL's Indianapolis Colts from leaving town, which would "create 1,500 full- and part-time jobs and annually produce $104 million in economic benefit." The $750 million Lucas Oil stadium went up in 2008, with the public bearing 50 percent of the cost.
In Ohio in 1995, a Hamilton County commissioner argued that a study showed the Cincinnati Reds and Bengals were worth $160 million a year to the city's economy, according to the Pittsburgh Post-Gazette, and that the town should pony up. Paul Brown Stadium was built in 2000 as a $453 million gift from taxpayers.
The Maryland Stadium Authority, which successfully poached the Cleveland Browns and renamed them the Baltimore Ravens in the mid-1990s, estimated that a football stadium inhabited by Cleveland's team would add 1,400 jobs and $123 million annually to the city's economy. The state of Maryland coughed up $200 million for a stadium, built in 1998. The city of Cleveland, meanwhile, ponied up 76.5 percent of the $315 million used to build a new stadium for a new Browns team in 1999.
Now, the NFL's owners are threatening to scrap the coming season if the players, who currently receive 50 percent of the $9 billion revenue pie, don't cede $1 billion of that revenue. The owners say they need the money for stadiums, but the players union is skeptical because the owners have refused to open their books to show how they spend the cut of revenue they already receive.
Owners also want limits on rookie pay and two additional regular season games. The players, for their part, have been happy with the status quo, and say more regular season games will lead to more players with grievous injuries.
The NFL owners' threats of abandoning host cities or a whole season are probably more trustworthy than the economic arguments in favor of public financing for stadiums or the players' claims of an economic calamity precipitated by a work stoppage, both of which have been deemed false by academics.
Analyzing economic data from local Florida economies during professional sports strikes and lockouts -- like the one that may be at hand for the NFL -- economists Robert A. Baade, Robert Baumann and Victor A. Matheson concluded in a 2006 paper (PDF), that a team's presence or absence does not have a measurable impact on the surrounding local economy, despite the estimates by "sports leagues, franchises, and civic boosters" using "league and industry-sponsored studies."
"An analysis of taxable sales in Florida cities demonstrates that none of the 6 new franchises or 8 new stadiums and arenas in the state since 1980 have resulted in a statistically significant increase in taxable sales in the host metropolitan area," they wrote. "In addition, using the numerous work stoppages in professional sports as test cases, again no statistically significant effect on taxable sales is found from the sudden absence of professional sports due to strikes and lockouts."
Mark Rosentraub, a sports management professor at the University of Michigan, told HuffPost that the NFLPA overreached with its $160 million estimate of the economic impact of a lost season. "It fails to account for the fact that people spend money anyway," Rosentraub said, noting that people will spend their disposable income at places like movies theaters and restaurants if not football stadiums.
Rosentraub said, however, that while a canceled game won't have a big effect on a region as a whole, it could have big effects within that region. And smaller cities would suffer more without a season, he said, than larger cities would. "It's gonna matter a whole lot to the city of Cleveland," he said. "It won't even be perceivable in San Diego."
It could also matter a lot to some of the individual people who work at or near stadiums. John Marler is a beer vendor at professional hockey, baseball and football games, as well as special events, in Detroit. Marler, 25, told HuffPost that if there's no football season, he'd lose about 15 percent of his income.
"Basically, you're just taking money, you're taking revenue away from businesses that provide jobs," said Marler, a member of the AFL-CIO-affiliated union Unite Here, which has partnered with the players' union to fight the lockout. "The people that lose -- it's the businesses, it's the people that work in casinos, the people that work in stadiums. Those are the people that lose out."
And Jerry Watson, owner of a bar near Lambeau Field in Green Bay, Wis., told HuffPost that without an NFL season, his business would lose a third of its income. "It's going to hurt the state of Wisconsin," he said.
The Baltimore Business Journal estimated that the state of Maryland stands to lose $3.8 million in revenues just from ticket sales.
When HuffPost first asked the NFL to respond to various mayors' complaints that a lockout would hurt their cities, a league spokesman sent a link to a story in the Atlanta Journal-Constitution that rate the $160 million claim "false." The story suggested Baade's more modest estimate of a $16 million impact would be more accurate.
Nevertheless, several experts seemed to find the NFL's "fairy tales" position deeply ironic in light of the arguments used to win taxpayer dollars for new stadiums.
"This is a classic case of the NFL talking out of both sides of its mouth," Tim Chapin, an associate professor in the department of urban and regional planning at Florida State University, wrote in an email. "The economic benefits are HUGE when the NFL needs a stadium built, but the benefits are minuscule when the numbers don't reflect well on the league. The truth is that the economic benefits are relatively small, but they are almost certainly in the millions."
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First Posted: 03/01/11 12:08 PM ET Updated: 05/25/11 07:35 PM ET