How Taxpayers Keep the NFL Rich
The league has long taken advantage of public dollars to pay for stadiums, hotel suites, and exorbitant salaries. The sport—and fans—would be better off if that ended.
Gregg Easterbrook Dec 8, 2015
Over three marvelous spring days in 2015, the National Football League threw itself a party otherwise known as the annual draft. The NFL took over Chicago’s storied lakefront Grant Park, where, in November 2008, Barack Obama had addressed a vast throng to accept the presidency of the United States. Some 200,000 football fans, including parents with kids, milled around in Grant Park, temporarily renamed Draft Town. Gigantic letters spelling out “NFL” ran down the side of the world’s largest marble-clad structure, the 83-story Aon Center.
Both Obama’s 2008 acceptance speech and the 2015 NFL draft were huge successes for the civic spirit of the City of Big Shoulders. Both drew enormous crowds and were nationally televised: Both made Chicago seem an exciting, vital place to be. But there was one difference. Obama covered the cost of his event. The NFL was mooching off the taxpayer.
Obama’s campaign committee paid Chicago about $2 million as a rental fee to use Grant Park, and to cover police overtime costs for maintaining order. By the moment he stepped to the microphone on November 4, 2008, Obama was president-elect, and since Obama was appearing in Grant Park both as a hometown hero and as the first African American president, his acceptance speech engaged a clear public interest. But Obama took the high road, believing it would be unfair for city taxpayers to be saddled with the expense.
The NFL’s billionaire owners preferred the low road, arriving in Chicago with their hands out. While negotiating to hold the draft in Chicago, the NFL said it would come only if it were awarded free use of Grant Park. The city waived the $937,000 fee normally charged for large events there—the sole time, the Chicago Tribune reported, a for-profit enterprise received use of Grant Park without a fee. The Auditorium Theater was provided free as well, with taxpayers picking up utility costs for all the lighting and television-transmission facilities. The NFL provided no security deposits against damage to either venue. Had damage occurred, taxpayers would have been left on the hook as NFL owners boarded their private jets to depart.
The league’s agreement with Chicago specified the city would pay for police overtime, firefighter and ambulance calls, and for any “weather mitigation” necessary, while “the NFL will retain all revenue from tickets and advertising” sold. Chicago gave the NFL the right to close streets in the Loop and along the lakefront, and to remove any signs the league did not like: Essentially Chicago suspended the First Amendment, so protesters couldn’t raise banners that mentioned domestic violence, tax subsidies, or brain harm. As if the House of Romanov were touring to review the peasants, the NFL demanded free stopped-traffic police escorts “in and around the city” for “certain NFL dignitaries.” Certain NFL dignitaries.
The corporate welfare the NFL received in Chicago is just a small slice of a much larger problem with the league, which is highly subsidized by taxpayers and elaborately protected by government. Here, surely, is another way in which America’s biggest sport holds up a mirror to American society: The very rich receive too many publicly funded favors, while celebrities are treated as above the law.. Taxpayer support for the NFL draft combined with police escorts for NFL “dignitaries”—dignitaries!—shows both problems.
The league’s primary subsidies flow to construction and operation of stadia. All are at least partially publicly funded: some, entirely so. Judith Grant Long, a professor of sports management at the University of Michigan, estimates that taxpayers provide about 70 percent of the cost of building and operating the fields where NFL teams play. Yet the NFL’s owners keep more than 90 percent of revenue generated at their subsidized facilities, while AT&T, CBS, Comcast/NBC, Disney/ESPN, Fox, Verizon, and Yahoo profit through transmission of the copyrighted NFL images produced in publicly subsidized stadia.
The NFL is on the dole in numerous other respects. Most of the league’s facilities either pay no property taxes (such as Texas’s AT&T Stadium, where the Cowboys perform) or are taxed at a far lower rate than comparable local businesses (such as New Jersey’s MetLife Stadium, where the Giants and Jets cavort). Stadium construction deals often involve significant gifts of land from the public for NFL use (such as Levi’s Stadium in Santa Clara, California, where the “San Francisco” 49ers play).
Hidden costs may include city or county government paying electricity, water, and sewer charges for a stadium (such as First Energy Stadium in Cleveland, where the Browns perform), the city paying for a new electronic scoreboard out of “emergency” funds (ditto First Energy) or the issuance of tax-free bonds that divert investors’ money away from school, road, and mass-transit infrastructure (Hamilton County, Ohio, issued tax-free bonds to fund the stadium where the Cincinnati Bengals play, and has chronic deficits for school and infrastructure needs as a result).
Professional football fields are a capital-investment double whammy—the dearest kind of sports facility to build, then used the least.
Wherever the NFL’s “dignitaries” tread, they expect taxpayer-funded special treatment. The league’s proposal to stage the 2018 Super Bowl at the new publicly funded Minnesota Vikings stadium in Minneapolis included a demand that NFL owners stay in free presidential suites at the best hotels, that the NFL keep all proceeds from ticket sales and that NFL owners and headquarters officials receive police escorts, at public expense, as they move around the city, including to parties. Supposedly the latter was for “security” against “terrorism.” But the owners and top executives of the NFL are private business people. If they desire security beyond what is normally accorded in public places by law enforcement, they could pay for it themselves.
The NFL even accepts subsidies for honoring the U.S. military. Games often are preceded by color guards, or the display of various military banners. This promotes the NFL, not the military, by suggesting professional football somehow is related to national security. The NFL stages an annual “Salute to Service” event during Veterans Day weekend, in which coaches dress up in fatigues as if they were military officers, again trying to create the impression the NFL has some relationship to defense of the nation.
At least the league is showing appreciation to service members, right? If only. In 2015, Senator John McCain of Arizona disclosed that the Pentagon pays the NFL about $2 million per year to stage what appear to be displays of patriotism. Included in 2014 was $675,000 to the New England Patriots to honor National Guard members at halftime: Most other NFL teams received payments for introducing color guards, and for similar bunting-dressed activities. As for that “Salute to Service,” in 2014 the NFL donated $412,500 to wounded-warrior projects, and was lavishly praised by partner networks for doing so. The amount is about one-20th of one percent of the league’s annual public subsidy.
In addition to subsidies to build and operate stadia, and to taxpayers’ money channeled through the defense budget, the NFL enjoys many special forms of government protection: prominently, a congressional waiver that exempts the league from antitrust laws. Basically the waiver allows the NFL to enforce monopoly pricing in television contracts. Without this special deal, the cost of pro-football broadcast rights would fall and cable-carrier fees charged to consumers would go down.
At this writing, competing projects in the near-Los Angeles cities of Carson and Inglewood were angling to land relocating NFL teams. One would be funded by $1.4 billion in public borrowing, with the NFL throwing in a mere $200 million. The other would use bookkeeping hocus-pocus to appear to be privately funded: Taxpayers would be on the hook to repay capital costs to the stadium developer down the road.
Documents supporting the Inglewood plan claim that a $1.9 billion NFL stadium, mostly funded by taxpayers, would cause $3.8 billion in local economic expansion. This “magic multiplier” fails the giggle test. Many studies have shown that for any dollar of civic investment, building roads, bridges, mass transit, and other infrastructure has far more multiplier effect than building NFL fields.
Baseball fields can pass a multiplier test, because they cost so much less than NFL stadia and are used so much more often. Professional football fields are a capital-investment double whammy—the dearest kind of sports facility to build, then used the least. Glendale, Arizona, where the most recent Super Bowl was played, funded most of the stadium in which the Arizona Cardinals perform, after receiving magic-multiplier promises. Today the city has trouble hiring police officers and EMTs because 40 percent of its budget goes to retiring stadium debt. The promised magical economic boom did not occur.
In a 2015 study, Ted Gayer and Alex Gold of the Brookings Institution concluded, “Despite the fact that new stadiums are thought to boost local economic growth and job creation, these benefits are often overstated. Academic studies typically find no discernible positive relationship between sports facility construction and economic development. Most evidence suggests sports subsidies cannot be justified on the grounds of local economic development, income growth, or job creation.”
In most instances of public subsidies for NFL stadia, state and local politicians are the bad guys. Mayors, governors, and county commissioners know that if they oppose giveaways to the NFL, they will be accused of being “against football”—while if they spend the public’s money lavishly, the painful invoices will not fall due until after they have left office.
The whole assumption that taxpayers should support stadia traces to earlier generations when the economics of sports were very different than today. California’s Rose Bowl and Los Angeles Memorial Coliseum were built in the 1920s, at a time when progressive-era politics contended that civic improvement would help bring the country together. Because there was no way to watch games on television, stadia of the period were huge compared to the contemporaneous population—when USC and UCLA faced off at the Los Angeles Memorial Coliseum in 1939 before 103,303 spectators, this was like playing before 1.1 million Californians today.
Football stadia of this era were conceptualized as being akin to libraries and parks: College teams would be performing for the public’s benefit, and tickets would be cheap so anyone could attend. Bearing in mind that all money figures in this book are stated in today’s dollars, 50-yard line seats at the 1939 USC-UCLA contest cost $38. Through the 1930s, football facilities such as Buffalo’s War Memorial Stadium were built in large part to create construction jobs to counter the Depression, and were priced as public goods. When I attended Bills games at War Memorial as a boy, the bleachers were $7 per head, and the best seats in the house were $45.
After the 1930s came World War II, with all economic activity diverted to military materiel. During the 1950s, the primary concern of nearly all levels of government was building housing and highway infrastructure for returning veterans; the secondary concern, expansion of state university systems.
By the 1960s, interest was growing in a new wave of stadia for professional football. There still was relatively little television money in NFL coffers: Most owners could not have afforded to pay for a field on their own, and lacked the clout to arrange financing. Government help was required. This situation—the NFL can’t afford to build a new stadium on its own—persisted through the 1970s or into the 1980s, depending on the franchise in question.
By the current generation, every NFL owner could pay for his or her new stadium, and now capital markets can arrange financing unassisted. Yet the many-decades-old assumption that taxpayers should support football stadium construction continues. Owners take advantage of the belief, on the part of taxpayers, that public money ought to be employed to build or upgrade NFL stadia. In the 21st century, this belief is archaic nonsense. But so long as politicians act as if the assumption were still valid, why should NFL owners dissent? Local pols and civic leaders are more to blame for the situation than NFL owners.
Taxpayer subsidies for NFL fields are offensive both because the league can now afford to pay its own way, and because ordinary people are paying to build facilities so nice that they’re priced out of ever using them. In September 2014, when Fox staged its initial 49ers telecast from the gleaming new Levi’s Stadium, the play-by-play man Joe Buck marveled, “They spared no expense on this stadium.” They being California taxpayers who were watching on TV because they couldn’t afford to come in, with 2014 season tickets selling for $2,850 to $14,000 per seat.
In 2014, the average NFL ticket cost $85, twice the inflation-adjusted cost of a generation ago. Parking at $25, beer at $12, and soft drinks at $9 are common, with nearly all concession revenue kept by NFL owners. Team Marketing Report, a Chicago consultancy, calculated that in 2014 a family of four spent $635 to attend a Dallas Cowboys home game sitting in regular seats, not in a suite or on a premium concourse; $625 for the same family to attend a Patriots home game; $600 for a Washington home game. That typical people are taxed to fund NFL facilities, yet only the expense-account set can afford to enter, ought to be a source of populist uproar.
There’s no law of nature that says the NFL, or any professional sport, must be publicly subsidized: No law of nature that says every pro-sports franchise owner must be a billionaire. If the NFL paid its own way, income to owners, and salaries for players and coaches, would decline. Owners would still be rich, just not super-rich at public expense. Players and coaches would still be highly compensated, just not instant millionaires. Taxpayers would no longer be fleeced. Less-dazzling amounts of money for a privileged few, combined with a better deal for taxpayers and average fans, would be good for the long-term prospects of the National Football League. (The same reasoning applies to the NBA and MLB.)
Having the NFL pay its own way would lead to a healthier relationship between Americans and their favorite sport. Fans might find they are prouder of their favorite NFL teams than they are today.