[Congressional Record Volume 142, Number 124 (Wednesday, September 11, 1996)]
[Extensions of Remarks]
[Page E1565]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




[[Page E1565]]



                         ``PITCHING SOCIALISM''

                                 ______
                                 

                        HON. JOHN J. DUNCAN, JR.

                              of tennessee

                    in the house of representatives

                     Wednesday, September 11, 1996

  Mr. DUNCAN. Mr. Speaker, many taxpayers around the Nation are being 
ripped off by mega-millionaire sports team owners who are getting 
lavish stadiums built largely at public expense. We do not do this for 
other businesses and should not for sports teams either.
  To show how bad these deals are for the taxpayers, I would like to 
urge my colleagues and other readers of the Record to read the 
following National Review article, ``Pitching Socialism,'' by Raymond 
J. Keating.

               [From the National Review, Apr. 22, 1996]

                           Pitching Socialism

                        (By Raymond J. Keating)

       As a federal prosecutor and now mayor of New York, Rudy 
     Giuliani has taken on Wall Street, the Mob, even a number of 
     powerful city unions. But when it's time to talk baseball 
     with George ``The Boss'' Steinbrenner, Giuliani goes weak in 
     the knees.
       That's because Steinbrenner is threatening to move the 
     Bronx Bombers to New Jersey unless he gets a new, taxpayer-
     financed stadium. In a city that has already endured the 
     traumatic departure of the Dodgers and Giants for the West 
     Coast, this bit of brinkmanship is taken quite seriously. The 
     mayor's office, in fact, has suggested the city might be 
     willing to shell out as much as $1 billion for some choice 
     real estate and a new stadium.
       The New York Mets like the sound of this action. They are 
     suggesting that a mere $100 million, to help fund a new 
     stadium with a retractable dome, would keep them from moving 
     out to the Long Island suburbs.
       While no other city--or state, for that matter--has even 
     considered forking over $1.1 billion to subsidize multi-
     millionaire owners and athletes, stadium socialism is a 
     serious problem across the nation. Maryland taxpayers, for 
     example, are being socked for almost $300 million--some of 
     the money to partly finance a new stadium for the Washington 
     Redskins, and some to fully finance a new stadium for the 
     former Cleveland Browns.
       The public in general does not support such plans, despite 
     the popularity of professional sports. A national poll 
     conducted by Media Research & Communications recently found 
     that 80 percent of Americans oppose the use of their tax 
     dollars for sports stadiums and arenas.
       The politicians, however, mesmerized by the glamour of pro 
     sports and the prospect of increased revenue, seem determined 
     to have their way. Very rarely do elected officials schedule 
     referenda on government financing and ownership of sports 
     facilities. And in some instances, when they have done so and 
     the votes have not gone their way, they have changed the 
     rules in mid game. Last September, Seattle voters turned down 
     a proposal that would have hiked taxes to pay for a new 
     stadium for the Mariners and for repairs to the Kingdome, 
     home of the Seahawks. A month later, state and local 
     officials ignored the vote and approved a $320-million plan 
     for the Mariners' park.
       The economic justification for government-financed sports 
     facilities has always been based more on spin than on 
     substance. First, the team or elected officials will hire a 
     consulting firm to produce studies predicting substantial 
     economic benefits from a new stadium or arena. These studies 
     rely on the Keynesian notion of an ``economic multiplier''--
     the justification for every government ``stimulus project'' 
     in the past half-century. The calculation works by taking the 
     dollars ``invested'' in building a facility, adds an estimate 
     of money to be spent by spectators at each event, and 
     multiplies the results by an additional number to arrive at 
     an estimate of increased economic activity.
       The problem is that the multiplier effect is all but 
     impossible to measure accurately. Judgments about the 
     catalytic effects of dollars moving through the economy 
     amount to nothing more than statistical guesswork (a dirty 
     little secret of the economic profession). Indeed, it is 
     doubtful that any real multiplier effect occurs at all, 
     because of something called the ``substitution effect.''
       Simply put, the substitution effect holds that leisure 
     dollars--that fairly limited amount of income that a family 
     will devote to entertainment--will be spent one way or 
     another. If there is no ballpark for a family to go to, then 
     it will spend those dollars on some other activity, like a 
     movie or a concert. Government-funded stadiums, then, turn 
     out at best to be zero-sum games--a simple shifting of 
     limited resources.
       This larger economic picture, however, is usually lost on 
     politicians bedazzled by the bustling markets for red hots 
     and frozen yoghurt in places like Camden Yards and Jacobs 
     Field.
       The politicians are also oblivious to the negative effects 
     of the higher taxes needed to pay for these facilities--like 
     rising private-sector costs and diminished incentives for 
     working, investing, and risk-taking. Government ventures 
     usually wind up being net economic losses in the long run.
       The Toronto Skydome, opened in 1989, is a prime example. A 
     recent report from the Pioneer Institute notes that as the 
     Skydome was constructed, cost overruns boosted the Ontario 
     taxpayers' portion of the total bill from $120 million to 
     $322 million. The government's share in the Skydome was 
     eventually privatized in 1992 for $120 million--a 
     considerable loss.
       A spate of books, as well as independent studies from 
     groups like the Heartland and Pioneer Institutes and the 
     Brookings Institution, have expressed skepticism about 
     economic growth owing to taxpayer-funded sports facilities. 
     The most recent study, a 1994 Heartland Institute analysis 
     conducted by economist Robert Baade, concluded that 
     ``professional sports is not statistically significant in 
     determining economic growth rates.'' There is ``no support 
     for the notion that there is an economic rationale for public 
     subsidies to sports teams and stadium and arena 
     construction.'' Sports teams and their facilities are largely 
     byproducts, not sources, of economic growth.
       Two other negative effects of government-owned sports 
     facilities have become painfully obvious. First, because 
     teams rent rather than own their stadiums, they are turning 
     into transients, tearing up community roots (witness the 
     Cleveland Browns) in a dash for new taxpayer-financed 
     stadiums, relocation payments worth tens of millions, and 
     even taxpayer-guaranteed profits (as in the deal that enticed 
     the Los Angeles Rams to move to St. Louis).
       Second, team owners and players, insulated by taxpayers 
     from the cost of stadium financing, are doing extremely well 
     without having to exert themselves to meet the demands of 
     their market. Fans know intuitively that something is wrong 
     when mediocre ballplayers sign multi-million-dollar deals, or 
     ticket prices remain the same when the team is forty games 
     out of the playoffs.
       Despite general public disapproval and a lack of supporting 
     economic arguments, even a number of conservatives have 
     pushed for government financing of sports facilities. Leading 
     welfare reformer Gov. Tommy Thompson of Wisconsin has kept 
     the Milwaukee Brewers on the dole, lobbying hard for a new 
     taxpayer-financed ballpark. And Massachusetts Governor 
     William Weld's support for a government-financed stadium/
     convention center in Boston calls into question his self-
     proclaimed supply-sider status. Even George Will has gone 
     native. In the January 22 Newsweek, he wrote favorably of the 
     state-built home of the Baltimore Orioles.
       While real conservatives have to love the tradition of the 
     ballpark--the game, the hot dogs, the chatter--sentiment 
     shouldn't dim our rationality. Markets work. If new stadiums 
     and arenas have economic value, individuals acting in the 
     marketplace will see that such facilities are built without 
     any government intervention. San Francisco voters, in fact, 
     have held fast. They have voted down taxpayer-funded stadiums 
     on four separate occasions, and now the Giants are privately 
     financing a new ballpark. Rudy Giuliani and his counterparts 
     across the nation should take note, and stand up to Boss 
     Steinbrenner and the other owners. When it comes to corporate 
     welfare, just say no.

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