When NFL Teams Dump Their Fans
With football season now underway, most NFL fans have already gotten comfortable on their couches or neighborhood bar stools. One thing fans may not realize is that they are paying for other seats, too—those at pricey football stadiums across the country. Fans in St. Louis know this all too well.
Earlier this year, St. Louis was dumped by the Rams for Los Angeles. And it was a bad breakup for the city.
In addition to heartbreak, Rams fans also get to shoulder a hefty financial load in the team’s absence. The City and County of St. Louis, as well as the State of Missouri, still owe more than $100 million in debt to pay for the old stadium, which was financed exclusively with $280 million in taxpayer money. On top of this, taxpayers are responsible for annual rent and other maintenance costs.
St. Louis tried unsuccessfully to make its 21-year marriage with the Rams work. St. Louis and the state spent $18 million on a high-profile task force that proposed a new, $1.1 billion stadium to keep the team in the city. While this last-ditch effort lined the pockets of politically connected contractors, it was a costly fumble for taxpayers and gave false hope to fans.
Shortly after the plan’s unveiling, the NFL had a message for the city: It’s over. The league voted 30-2 to allow the Rams to move the team to a younger, prettier stadium in Los Angeles.
It had been a rocky relationship for years, held together by a contract that may have been doomed to fail. In short, the Rams were allowed to exit the agreement if the stadium was no longer ranked in the top quartile of NFL stadiums. Often called a “state-of-the-art” (SOTA) clause, it set a particularly high bar for St. Louis, considering the caliber of modern NFL stadiums. A 2010 Marquette Sports Law Review publication rightly notes that SOTA clauses “set the stage for an escalating facilities arms race that cannot be won.” Accordingly, it shouldn’t come as a surprise that when they were asked to estimate the cost of renovations for the dome, the Rams came up with a number that was $575 million higher than the city’s.
You might be wondering why government officials in St. Louis would sign off on such outrageous lease terms. The answer is, they wanted an NFL team. Like other sports leagues, the NFL has a virtual monopoly that restricts the supply of teams and allows team owners to extract large concessions from local municipalities eager to “win” a scarce commodity. In other words, the system is rigged to favor the league and its team owners.
Furthermore, if you think this type of situation is unique to St. Louis, think again. Similar clauses have been written into numerous contracts. The Cincinnati Bengals’ contract, for example, requires the county to pay for almost the entire cost of ongoing stadium renovations. In general, it is unclear exactly how many of these clauses exist, because not all leases are publicly accessible, even those with substantial taxpayer funding at stake.
So, how can taxpayers be assured that government officials negotiating these contracts are making good decisions with their money? The short answer is, they can’t. Unlike private investors, government officials don’t have to worry about losing their own money. And they are willing to accept faulty data to cite the economic gains from stadium subsidies.
Roger Noll, an economist at Stanford who has analyzed the issue for decades, maintains that NFL stadiums don’t grow the local economy and don’t raise enough tax revenue to recoup the city’s investment. In fact, according to The Wall Street Journal, economists familiar with the issue are “near unanimous” in the view that stadium subsidies are not worth the cost. Despite these cold, hard facts, NFL owners have benefited from more than $7 billion in taxpayer handouts over the past two decades.
Being dumped is never easy, but if there is a silver lining to the breakup of St. Louis and the Rams, it is that the team has promised Los Angeles things will be different. Following the example of the New York Giants and New York Jets, the Rams are building a new stadium without upfront taxpayer funding. Despite this signal to other teams that taxpayer funding is not necessary, politicians across the country continue to talk about subsidizing sports stadiums—including one for the Washington Redskins.
Before moving the ball another yard down the field, fans—and, indeed, all taxpayers—would be wise to heed the lesson of St. Louis: Despite spending millions, money can’t buy true love.