TWO THINGS happened this past week that triggered an idea in my hyperactive mind. First came news that the ownership of the Chicago Cubs said that the team would move out of Wrigley Field if the state and local governments did not go along with the renovations the hallowed ballpark so desperately needs. Second, the estranged wife of Clippers owner Donald Sterling indicated that she might sell the team before the NBA owners meet next week, and former Microsoft CEO Steve Ballmer could pay $2 billion for the same team the Sterlings originally paid $12.5 million for. Wow! Has the world gone mad? Two billion bucks for an NBA franchise? Maybe it's true that the 1 percenters really do have too much money.
As most people know, I have long been a strong proponent of using public funding to help finance stadium construction, and I played a role in getting state and city funding for Lincoln Financial Field and Citizens Bank Park (although Mayor John Street deserves the credit for completing the deal, which also gave Pittsburgh money for two new stadiums).
As governor, I put state funds into construction of stadiums in Scranton, Allentown, Lancaster, York, Harrisburg, State College, Chester and Altoona. I did so, because of the economic activity a stadium, particularly one in a downtown location, can generate, which, over time, outweighs the public funds invested.
Now I realize several learned economists disagree with me, but it's really a moot point, because having a sports team in a city produces benefits that are impossible to quantify. Think of our city. Is there anything that unifies the city and its suburbs the way a sports team does? From Pottstown to Deptford, from Swarthmore to Olney - we all bleed green, red and orange. Sports bring all parts of the social and economic spectrum together. The bank president and the shoeshine guy he goes to both have opinions on whom the Sixers should draft.
I remember, as an undergrad at Penn, witnessing the region die a little each day in 1964 as the Phils collapsed that September. And, more recently, how excited we all were during the Eagles' drive to the Super Bowl and the Phillies trips to the World Series. Heck, we were so focused, I could have raised the wage tax and no one would have even noticed because of the euphoria our teams created. You can't put a price tag on what that does for a city, and on how much it causes people and businesses to locate there!
Given my strong feelings on this subject, you might be surprised at my suggestion that any government that puts taxpayer money into the construction of a stadium should receive some percentage of repayment if the team is sold. For example, if a state gives $125 million to help its team build a $625 million stadium, and the team which was purchased for $200 million and is sold for $800 million, the state should receive 15 percent of the profit, not to exceed its initial investment - in this case, $90 million. My rationale behind this is that the stadium, which, of course, is included in the sale, is an asset worth at least 15 percent of the overall value. This is true even when the government technically retains ownership of the facility, as is the case with the Linc and the Bank, because the long-term leases the teams receive and their total operational control is tantamount to ownership.
How would this work for the Eagles and Phillies?
Forbes magazine recently valued the Eagles at $1.3 billion, but let's say in this inflated market, they would sell for $2 billion (I believe even a princely sum like that would not convince Jeffrey Lurie to sell). The original construction for the Eagles stadium was $512 million. The Eagles are just completing renovations to the Linc that are costing $125 million, and it is only fair to add renovations to the overall value. So the full cost of the stadium is $637 million. The city and state together put in $186 million, which is roughly 30 percent. Jeffrey paid $185 million to buy the team, so he would be making a profit of nearly $1.8 billion. Thirty percent of that would be $540 million dollars, but since the city and state put up only $186 million, they would get 100 percent of that figure and totally recoup their investment.
The Phillies were valued by Forbes at $975 million but let's suppose that again, in today's inflated market, they get an offer of $1.2 billion for the team. (I also believe Dave Montgomery has no intentions of selling the Fightins.) The stadium cost the Phillies $458 million to construct and the state and city share was $229 million - 50 percent. The current owners paid $30 million to obtain the team, so they would make more than $1.1 billion in profit. Fifty percent of that would be way over the $229 million that the government put in, so, in this case, too, they would recoup 100 percent of their investment.
Now I realize that as I am writing this, whatever remote chance I had of being named baseball commissioner is probably dead, but in reality it shouldn't be. This idea would be extremely popular with the citizens of the hometown of professional teams.
Often, requests for public funding must be put on the ballot for a voter referendum and, in a number of cases, voters have turned down using taxpayers dollars to fund stadium construction. If those same voters knew that taxpayers would recoup some or all of their original investment if the team were sold at a profit, it would be far easier for such projects to win voter approval.
Additionally, it is simply the right thing to do in this era of ungodly profit taking, and it would enhance the public perception of our professional sport leagues. It really would be up to the states and cities to pass such a law, but nothing would stop the leagues themselves from adopting it as part of their bylaws. What a great PR move that would be, especially for the league that does it first.