The National Football League playoffs begin this weekend, and everyone in America should watch—not simply because football is America’s most popular sport and a host of teams have solid chances to win Super Bowl 50. People should watch because most of them are paying for the league.
Some may ask, “How? Didn’t the NFL give up its tax-exempt status this year?”
While the league headquarters did choose not to file as tax exempt in April, this decision only saves taxpayers about $10 million annually (less than one tenth of 1 percent of the NFL’s revenue for the 2013-14 season). The NFL was right to call the controversy over the league’s tax-exempt status a “distraction.” It was a distraction from the real way the NFL fleeces taxpayers: costly stadium subsidies.
NFL owners are professionals at extracting taxpayer money from local fans to fund generous subsidies for their lavish stadiums. Here are examples from four teams that are playing this weekend: the Minnesota Vikings, Seattle Seahawks, Pittsburgh Steelers, and Cincinnati Bengals.
Next year, the Minnesota Vikings will play in their newly minted, $1 billion U.S. Bank Stadium. Minnesota taxpayers are stuck paying $498 million for the new stadium—and this is before interest on the $462 million in state bonds. Vikings owner Zygi Wilf will get to keep the proceeds from his publicly funded stadium, even though he is estimated to be worth up to $1.3 billion and the Vikings franchise is valued at $1.59 billion.
When trying to push through the funding package, Wilf threatened to move his team to Los Angeles, where he assumed he could get a better deal. The two-decade absence of a team in America’s second largest city has consistently served as a bargaining chip for NFL owners.
Even with talk of the San Diego Chargers, St. Louis Rams, and Oakland Raiders moving to Los Angeles as early as next season, it is unlikely NFL owners will vote to give away their favorite piece of stadium-funding leverage.
Since 2001, the Pittsburgh Steelers have played at Heinz Field, a beautiful place to watch football nestled on the shores of the Allegheny River and Ohio River. Even though the Steelers would never leave the city where they won an NFL-best six Super Bowl titles, the public provided 61 percent of the stadium’s $281 million cost. (Full disclosure: I am a life-long Steelers fan).
As if this were not enough, the public also had to pay to retire the debt from the Steelers’ previous home, Three Rivers Stadium. Three Rivers cost $35 million to build in 1970, but by the late 1990s its outstanding debt still stood at about $25 million. Even though taxpayers had to cover the majority of the cost of the Steelers’ move, the Rooney family (the team’s owners) can pocket the $2.9 million Kraft Heinz Company pays annually for the stadium’s naming rights.
CenturyLink Field, the home of the Seattle Seahawks, opened in 2002, with Washington State taxpayers providing $390 million of the $560 million in construction costs. The public’s share of financing for CenturyLink Field was 64 percent ($300 million).
Local Seahawks fans had to pay for CenturyLink Field even though they were still paying for the team’s last stadium. The Seattle Kingdome was occupied for just 24 years before the city agreed to build the Seahawks a new stadium. Even though the Kingdome was demolished in 2000, taxpayers were still responsible for nearly $180 million to cover its outstanding debts. The last of the debt was finally paid off this year.
Perhaps the worst example of local governments putting NFL owners’ wallets over those of their residents can be seen in the Cincinnati Bengal’s Paul Brown Stadium. In the mid-1990s, the Bengals followed the familiar playbook of threatening to move unless they were given a new stadium. Hamilton Country (where Cincinnati is located) was so panicked it agreed to finance nearly the entire cost of a new stadium—without help from the rest of Ohio.
Public construction costs soared to around $550 million, but the bill did not end there. The county also agreed to pay for all operating costs and future capital improvements—even for technologies that have not been invented yet (such as a holograph replay machine). Paul Brown stadium debt and operating costs ate up $50 million from Hamilton County’s 2015 annual budget.
With 18 percent of Hamilton County residents living below the poverty line, it takes little imagination to think up ways that stadium funding could have been put to better use.
The Bengals have repaid Hamilton County residents by failing to win a playoff game ever since the new stadium was opened. At least the residents of Pittsburgh and Seattle have seen their teams win Super Bowls in their new stadiums.
This Is Just the Tip of the Iceberg
Although only four teams are profiled here, I could have listed many more. Getting taxpayers to pay for stadiums (while owners keep the profits) is all too common in American sports. As University of Michigan professor Judith Grant Long shows, the average public bill for each of the 121 U.S. professional sports stadiums operating at the end of the 2010 season was $259 million—78 percent of total average costs. American taxpayers lost $31 billion for professional sports stadiums—even if they never watched a game.
Some—mostly team owners—argue that these massive subsidies pay for themselves. Economists disagree. Studies have consistently shown that public financing for sports stadiums does not pay off. Proponents of these taxpayer subsidies fail to realize that people will spend their money on other things besides $86 tickets (average price in 2014) and $7.42 beers (also the average price).
The small bump in tourism and economic activity does not come close to covering the millions in associated costs the public pays. Promises of neighborhood revitalizations rarely pan out. Subsidizing a stadium either means that taxes have to increase or public services must be cut. There is no way to wave a magic wand and avoid this reality.
The average NFL franchise is worth $1.97 billion, higher than the average for any other professional sports league in the world. Taxpayers should not subsidize large, successful businesses such as the NFL. Cities and states need to resist the urge to shower NFL owners with public subsidies and, if necessary, call their beloved teams’ bluffs on moving to Los Angeles. Regardless of who wins this weekend, taxpayers are the losers.