Thursday, January 29, 2015

If Nashville really wants to keep its sports teams, why not eliminate the middle man, namely the team owner?

If a pro sports team is such a unique expression of a city's identity, a unifying force and an engine of economic expansion, then why aren't cities assuming control of them to keep them from bolting to other cities?

It is not like it would be unprecedented:

You're probably familiar with eminent domain as the means by which the government forcibly takes private land to make way for a highway or public building or hyperspace bypass, having only to pay whatever a court decides after the fact to be fair market value.The legal principle goes back hundreds of years, and doesn't have a great rep, especially as courts have expanded the notion of "public use" to include taking people's houses to hand over to private developers so long as it would promote "economic development"—even if there was no guarantee that the development would stick around more than a few years.

In the eyes of the courts, though, there should be no legal difference between a few acres of dirt and other private property such as, say, a pro sports franchise ....

Say you're a city council with a pro sports team demanding $200 million or so in public cash for a new building—let's call them the "Milwaukee Bucks"—under threat of leaving town if its owners' demands aren't met. Instead of reaching for your municipal checkbook, you respond by drawing up eminent domain paperwork.

In the best case scenario, the mere threat is enough to force the team owners to lower their subsidy demands. In the worst, yes, you're stuck paying close to $600 million for an NBA franchise, but keep in mind two things: first off, that's how much the current Bucks owners just paid on the open market for the franchise, so presumably somebody thinks they'll bring in enough revenue to make that worthwhile. Plus, if you don't want to be stuck with the risk of the Bucks not earning back your investment, you can always re-sell the team to new private investors—even if you need to sell for $50 million or $100 million less in order to get new owners to agree to an ironclad lease, that's still cheaper than handing over $200 million for nothing.

In my opinion, the Metro Nashville mayor's office and the metro council both failed to do their due diligence in exploring the possibility of filing eminent domain in response to Sounds' and Brewers' (the Sounds' previous parent club) insinuations that they could always go elsewhere if they did not get a new ballpark. We already saw them back off the west bank downtown when Karl Dean made it clear that a new amphitheater was going in there. I will forever hold against Hizzoner and whipped council members that they did not call the team's abandonment bluffs.

Public ownership of sports teams is not such a radical proposal. Local sports reporter, J.R. Lind, proposed public ownership for when the Nashville Sounds deal was announced in 2013:

[Karl Dean's plan] also includes $750,000 from a $50 million mixed-use development the Sounds owners — developers by trade — promise they will build.

Promise based on what? According to Mayor Karl Dean, little more than their word. There is not, and will not be, a contract pledging the Sounds to build this project. Pressed on that, Dean said if the Sounds didn't build the development, somebody would. Probably.

For the city — any city — to make a three-decade, $65 million [now $70 million and rising] commitment based on a handshake arrangement with absentee ownership is head-scratching at best and mind-numbing at worst.

But if that's the level of commitment the city is already willing to make, why not go whole hog?

Why not just buy the team?

The value of the Sounds is hard to pin down (though, presumably, it's gone up with the promise of a new stadium). But Forbes' recent estimate of the 20 most valuable minor league teams did not include the Sounds. The 20th ranked team on that list — the Oklahoma City RedHawks — came in at $21 million.

For, say, $20 million, the city gets the team ... and it gets the revenue. Not just the increased sales taxes budgeted in the financing plan — all of it. Ticket revenue, beer money, parking costs. All of it.

And if the mayor is to be believed, the city doesn't even need the Sounds for the $50 million ancillary development. It's going to happen anyway.

Right now, the city is spending at least three times the total value of the Sounds — that's being generous — to build a stadium. Doesn't it make more sense to own the entity outright?

Instead all of the pie-in-the-sky Jefferson-Street-rejuvenation wishful thoughts they have been spreading around in PR campaigns, Metro government could have been working on ways they would start spending the revenues that have already started rolling into team owner Frank Ward with season ticket sales and merchandising profits.

Despite the option that taking the Sounds by eminent domain or buying them would have been a more financially responsible act on Metro government's part than subsidizing their private enterprise, the Mayor likely never would have considered public ownership because he might have angered wealthy campaign donors who have financial stakes in the Sounds' ownership team. A deal that would have been more financially responsible to and more demonstrably lucrative for Nashville taxpayers probably never surpassed his own self-interest. Angering the special interests might risk Hizzoner's future political aspirations for higher office.

Things could have been done differently. But they were not. And Nashville missed its shot at a title.

No comments:

Post a Comment