Friday, December 27, 2013

When it comes to building minor league ballparks, "politicians will promise anything", says story on FBI probe into ballpark financing

Reading this report on the business of minor league ballpark construction gives me pause to wonder what kind of racket Nashville might be getting itself into with the "public-private partnership" at Sulphur Dell. Bloomberg shares the historical context within which the ballpark bubble has emerged:

From 1993 to 2003, at least 86 minor-league baseball stadiums collectively costing almost $1.5 billion opened in the U.S. and Canada with at least partial public funding, according to public documents and local news reports. It was the biggest boom in the more than 100-year history of minor-league baseball, almost 60 percent more than the number that opened in the 1930s, when President Franklin D. Roosevelt used ballpark construction to create jobs during the Great Depression.

Almost $1.3 billion of the funding for the construction was backed by taxpayers, according to the documents and reports. The average price of the stadiums almost doubled to $21.5 million in the last six years of the boom, from $12 million in the first five years.

The price rose as localities dueled for teams that follow the profits generated by new stadiums, said Andrew Zimbalist, an economics professor at Smith College in Northampton, Mass., who studies stadium financing. To get taxpayer support, politicians too often make promises that don't come to fruition, leaving localities to cover debt payments and maintenance costs that sap funds that could be spent on parks, schools, or police, he said.

"If taxpayers are supporting a stadium because they believe it'll help their city socially and culturally, then fine," Zimbalist said. "If they're doing it because they've been sold a bill of goods that it'll be a boost to the economy, then no, it's not a good expenditure of funds."

That part about FDR needs a caveat: his administration was building ballparks as public works projects to create jobs, and it was federally funded and more accountable to constituents than businesses would have been. Today's "public-private partnerships" operate with little accountability to taxpayers because while public wealth may transfer to private businesses, the latter are not directly answerable to voters. When government goes wrong we can kick the bums out. When big business chooses not to live up to bargains, those of us affected by their failure have little power to stop them. These partnerships give politicians deniability since they can point fingers at private corporations for not realizing their own promises to their constituents.

Ballparks built nowadays rise within a vicious circle of unfettered irresponsibility and unchecked greed.

Within that circle, Nashville is actually behind the curve given the historical context. In coming late to the crap shoot has Hizzoner opened us up to undue risk? The Mayor's Office went all in, hawking the ballpark myths of economic growth to what is impugned as a decaying Jefferson Street corridor. He is making more promises that cannot be sustained. He is out of office in a couple of years and will not be held responsible for any aftermath.

But according to Bloomberg the costs eclipse the promises of growth:

Of the 86 stadiums built from 1993 to 2003, at least 26 used taxpayer funding to pay for debt service and maintenance when elected officials said they wouldn't, failed to meet economic-development projections or lost the teams that said they would play there, the documents and news reports show.

The 26 collectively cost $490 million, with 90 percent of that backed by taxpayers.

Almost a third of all new minor league stadiums built over a decade failed to pay the debt service as promised, did not spur economic growth or lost the teams they were built for even as almost all of the projects were subsidized by taxpayers. There is a distinct chance, then, that one or more of these problems could visit the heavily subsidized Sulphur Dell ballpark. That would be calamitous for Jefferson Street and bad for Nashville.

But few here seem interested in talking about the risks, which would inevitably require us to also talk about ways to shelter ourselves against the risks, which provokes powerful people like Jerry Maynard to cry that we scare ball clubs and developers off. Asking realistic questions about counting the cost of our behavior is labeled as "negativity"; but only labeled as such by irresponsible people.

Minor league money pit watchdogged at Preserve Ramapo
If you are fearless and open to cautionary tales about publicly subsidized ballparks, you should read the rest of this sobering Christmas Day report on the New York minor league town that bought the promises, replicated the major league experience with a minor league park and then watched their credit rating cut and a crisis ensue, which prompted the FBI investigation into the mess.

It may represent an extreme scenario, but it is obviously within the realm of possibility for any minor league town, along with other probabilities of risk short of any extreme.

No comments:

Post a Comment