Subsidies-Topic-Lecture-DDI-14.pptx

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Resolved: On balance, public

subsidies for professional athletic

organizations in the United States

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Why this topic?

“Since 2000, 28 new major league stadiums

have been built costing over $9 billion

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Important Terms in Resolution

On Balance – just to create a broader resolution and to

prevent cherry picking

Public subsidies – money from the government (specifically

tax payers) to a organization, specifically for this resolution –

a sports team, for something that benefits the public.

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Framework Arguments

Cost Benefit Analysis

Pro – Only non economic impacts must be weighed

“…one cannot answer the question ‘Is it worth it?’ solely by focusing on economic data. The

ultimate value of a sports facility or event is more or less than its net economic impact.” (Johnson and Sack, 1996)

“the focus on economic impact, both by its advocates and critics, misses the true source of public support of subsidies to sports stadiums.” (Owen, 2006)

Con – Obviously you want to weigh economics

Weighing in terms/perspective of the local community

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Pro Arguments on the Topic

Spin Off Development– Defining the topic as an tool for infrastructure, therefore

you gain benefits for infrastructure. Think of these stadiums as multi-use arenas.

“Major league teams have become a critical talisman of the status of cities and metropolitan

areas because of the popularity and visibility of professional sports. Art museums, symphony

orchestras, theaters, and zoos are all marks of major cities, as are libraries and universities,

leading law firms and banks, and great commercial and industrial corporations, but big

league teams are seen by many as more easily and widely recognized symbols of a place’s

importance.” (Danielson, 2007)

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Jacobs Field

Cleveland, Ohio

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Pro Arguments on the Topic

Community Pride – Pro teams will have to look at intangible benefits, like

‘psychological income.’

“The justification of subsidies tends to be based on the concept of ‘psychological

income,’ that is on the effects of identification or stimulation and on the feelings created

within the community. Thus subsidies are justified by their internal rather than their

external effects.” (Szymanski, 2005)

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Pro Arguments on the Topic

Property Values Increase with Sports Facilities

“the presence of both facilities has a significant positive effect on the

value of surrounding houses and this positive effect decreases as the

distance from the facilities increases” (Feng, 2008)

“these results suggest that there were expectations of amenity effects

of a Cowboys stadium but these benefits were outweighed by the

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Nationwide Arena

Columbus, OH

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Pro Arguments on This Topic

Human Capital

“As a result, linking real estate development and revitalization efforts to the building of big ticket amenities has the potential to eliminate negative impact of subsidies and avoid conflict based approaches to negotiations with team owners.” (Rosentraub, 2010)

“Instead of choosing one approach or another, perhaps the evidence is that a balance between big-ticket images and neighborhood scenes is key to human capital attraction.” (Rosentraub, 2010)

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Pro Arguments on the Topic

Regionalism – subsidies require governments to work

together

“The big-ticket projects were undertaken to maintain some degree of

centrality and vibrancy for Cleveland, but were financed at the county

level requiring cooperation for development from residents of 57

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Consol Energy Center

Pittsburgh, PA

An Answer to Civic Pride using

CVM (Contingent Valuation

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Pro Arguments on the Topic

Community Visibility – remember though ‘local community’

“Professional sports increase community visibility given the magnitude of media coverage

that is showered upon major sports franchises. When a major sports franchise is

mentioned throughout the print, television, and electronic media, the host city is typically

given positive exposure.” (Shwester)

Since direct expenditures result in indirect expenditures, the direct expenditures

are said to “multiply” through the economy. Economists attempt to quantify this

effect by calculating a “multiplier.” For a given level of direct expenditures,

higher multipliers indicate higher levels of economic impact.”

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Con Arguments on the Topic

Sports Economics – A strong con argument, since every study concludes

neg.

"In no instance did a positive, significant correlation surface among stadiums,

professional sports, and city income as a fraction of regional income.” (Baade, 2000)

“Increased export sales result from attracting net new inflows of spending from outside

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Con Arguments on the Topic

Subsidies Harms Economies – focus on local economy

“Many public subsidies do little to promote economic equity, and rather than correcting for

market failure, they induce distortions in economic decisions and behavior; such programs may justifiably be scaled back or terminated when they come under increased scrutiny” (Treist, 2009)

“it creates lost tax revenues that under normal circumstances would be assessed and paid. To

illustrate the effect, consider the following: for a stadium completely financed with tax-exempt bonds, costing $225 million, and built today, it is estimated that the lost federal tax revenues will total $75 million over the life of the bonds.” (Jensen, 2000)

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Con Arguments on the Topic

Gentrification/Eminent Domain – this is offense against the ‘economic

revitalization’ theory.

When a new stadium is financed with public dollars, the lower-income citizens of a host city are nonetheless the first to have their wallets raided (Cagan and deMause 1998)

“The inability of average working families to go to a game--and let their children watch famous athletes in the flesh--has eroded interest. Professional sports is becoming so "gentrified" that only upper-income people can afford to go to the games, and these fans--with the many choices of activities that wealth brings--tend not to be as die-hard in their support as their middle- and lower-income counterparts. "The middle-lower-income and lower-lower-income fans are being priced out of the game," says Andrew Zimbalist, a professor of economics at Smith College. "It threatens the mass character of sport, and over time there is a gradual loss of interest, which hurts TV ratings and licensing

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Barclays Center

Brooklyn, NY

Watch “Battling for Brooklyn” to

see the local communities

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Con Arguments on the Topic

Taxpayer Tradeoff – other things that get public subsidies are not as

controversial, lets think why?

“In addition to cuts to parks, transit and other services, she notes, the city police force has stopped recruiting new officers because of budget cuts, and murders have risen dramatically this year. ‘The basic services of the city are suffering at the same time the Simons and [Colts owner Jim] Irsay are making out like bandits.’” (DeMause, 2013)

"Our police and fire departments were the first ones that started seeing their budget cut back," says Ken Jones, a Glendale resident who led several unsuccessful attempts to force a public vote that could have overturned the Coyotes lease deal. "Libraries were hit pretty hard. They raised our water bills 80 percent, our sales tax was raised, and our property tax was raised. They have robbed the things that people really expect to get from their taxes in order to keep supporting sports.“

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Con Arguments on the Topic

Team Extortion – Threats to move cities makes the

professional sports in control of the sports team.

“The leagues carefully control entry, artificially maintaining scarcity

and enhancing bargaining power” (Abrams 2013)

Tampa Bay Rays

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Tropicana Field

St. Petersburg, FL

Figure

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References

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