Ralph Nader - Baseball in DC–YES! Public Financing–No!

Nader: “Lucrative deal for fat-cat owners is corporate welfare run amok”

Washington, DC: Ralph Nader called on the city council of Washington, DC to reject a proposed public financing plan for bringing baseball back to the nation’s capitol. Nader pointed to the extreme generosity of the plan, the likely negative economic impact and the unanswered questions regarding other costs.

“Baseball and Washington, DC are a great match, the capitol area is wealthy, has a large population with lots of potential fans and television marketing. There is no need for DC to provide the most expensive public financing for any team in the country. Mayor Williams has given away the store and will do long-term damage to the district’s economy if his proposal is approved by the City Council,” said Nader.

Highlighting the expensive nature of the plan Nader pointed to:

- At a cost of $440 million, a stadium would be a huge public works project. Unfortunately, research has consistently shown that sports stadiums do little to create new jobs or raise incomes. Even the most successful stadiums, such as Camden Yards, do not generate enough revenues to justify a substantial public subsidy. (See Would a Publicly Financed Baseball Stadium Pay Off for DC? Economic Research Suggests the Answer is “No” — DC Fiscal Policy Institute, June 2003)

- The mayor’s own analysis shows that a stadium will create just 380 jobs for DC residents, which means the city would spend more than $1 million for every job created. The main benefit of a new stadium thus would be its cultural and entertainment value.

- Every independent economic analysis of the impact of stadiums has found no predictable positive impact on the economy or employment – some have found negative economic impacts.

- The mayor’s proposal includes $21 million to $24 million from a tax on business, $11 million to $14 million from taxes on sales at the stadium, and merely $5.5 million in lease payments from the team owners (these funds would used to pay off 30-year stadium construction bonds).

- In DC 85 percent of the stadium costs would come from DC taxes. Other cities have required new stadiums be built primarily with private funds. For example, San Francisco’s new stadium was built with only a five percent public contribution. The St. Louis Cardinals’ new stadium is being built with only 15 percent public financing. Other cities typically have demanded that teams pay 33 percent or more of construction costs, according to the Sports Business Journal.

- If a stadium were financed privately, all taxes generated at the stadium would flow into DC’s general fund and be available to support services across the city.

- The district also gives away 100% of the revenue from naming rights – worth millions of dollars annually.

- The deal is a windfall for major league baseball which paid $120 million for the Expos just two ago, and now they want to sell it to the new DC owners for $300 million–this demonstrates the value of the DC sports market.

- Subsidies for sports stadiums do not “Pay for Themselves.” Even the most successful stadiums do no generate enough economic activity to justify large public subsidies. Orioles’ Camden Yards stadium, one of the more successful ventures, generates $3 million in annual economic benefits each year but has $14 million in annual taxpayer costs.

- The stadium is being sold as part of the economic development of Anacostia. But the experience in Arlington, TX, Chicago, IL, Detroit, MI and Milwaukee, WI where similar promises of rehabilitating blighted neighborhoods was made shows that the failure of rebuilding around a stadium.

- The deal offered by Mayor Williams is better for the club owner and baseball than the last 10 agreements made by other cities with their ballclubs.

The hidden costs of the new stadium are not being discussed:

- Cost overruns are almost a certainty. What happens if it costs $600 million instead of $400 million? Who will pay for these overruns?

- The new stadium will be paid for by a tax on tickets and concessions, and by taxing the city's largest businesses, those that make more than $3 million in revenue a year. What happens if the projected tax burden grows? Who pays?

- What happens if the DC team losses popularity, attendance drops, concession sales drop resulting in the tax revenue to pay for the stadium dropping. Who will make up the difference?

- Who will pay for the transportation, transit and neighborhood upgrades related to the stadium? Does that come out of the general fund of the DC government?

- Other hidden costs include businesses raising their prices to pay for the new stadium tax.

- The cost of going to a ball game for a family of four is approximately $150, spending money at the stadium – which creates taxes to pay for the stadium – means that families will not be spending that $150 elsewhere in the city and generating a sales tax that goes to much needed city services.

Nader said: “In a city with a 37 percent functional adult illiteracy rate, 20 percent living in poverty, subway fares rising rapidly, drinking water problems surfacing, the mayor's public giveaway offer for the pride of having a baseball franchise is hard to understand, while the District's 27 woefully underfunded neighborhood libraries have fallen to 51st out of the 50 states and the District and where the gap between rich and poor is as wide as any other major U.S. city. Is hundreds of millions for baseball DC’s first priority?”

Nader agreed with Councilman Fenty that the new deal should not only have a new financing package focused on rehabilitation of RFK Stadium, at much less cost, but also should require:

- Local ownership of the team

- A long-term commitment to keep the team in the District

- An agreement that at least 50 percent of all construction renovation work will be by Local, Small, Disadvantaged Business Enterprise (LSDBE) contractors

- The District's retention of naming rights to the stadium

- An agreement that the team should be responsible for cost overruns in construction.

“Mayor Williams negotiated a bad deal. His offers of public subsidy swelled from $200 million, to $275 million, to $300 million, to $339 million, to $383 million and finally to $440 million. The city council should reject this giveaway and start anew,” said Nader.

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Founded by Ralph Nader, League of Fans is a sports reform project working to improve sports by increasing awareness of the sports industry's relationship to society, exposing irresponsible business practices, ensuring accountability to fans, and encouraging the industry to contribute to societal well-being.

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