Electorates Are Rightly Sick of Subsidizing Sports Teams
Let wealthy team owners pay for their stadiums and arenas
Last night, the voters of Tempe, Arizona rejected their own City Council’s proposal to divert millions of dollars of sales tax revenue to the Arizona Coyotes hockey franchise, so the Coyotes could build a publicly financed, privately owned sports arena to house their relatively unsuccessful professional hockey team. (You will notice Sun Belt cities dominate the NHL, with Tampa Bay appearing in the Stanley Cup Final from 2020-22, and teams from Dallas, Las Vegas, Raleigh, and Miami remaining in the tournament this year. But one team you never see in that mix is Arizona. They consistently miss the playoffs.)
The history of the Coyotes is, in a certain way, a microcosm of how taxpayers are held up to finance sports arenas and stadiums in the United States. The Coyotes have never been successful. They started out as the Winnipeg Jets (not to be confused with the current team that bears the same name) and played in a publicly financed sports arena that was built in the 1950’s. Meanwhile, in Phoenix, they did not have an NHL team (most Sun Belt cities did not until the 1990’s), but they had a multi-purpose publicly financed sports arena of their own, Veterans’ Memorial Coliseum, which still stands north of Downtown Phoenix and which long hosted both the NBA (the Suns) and minor league hockey.
In the 1970’s and 1980’s, however, it became clear that sports owners could make a lot more money if they were able to sell luxury suites to rich people and corporations, which precipitated a new stadium building boom. The Suns, seeking to capitalize, built what is now called the Footprint Center in Downtown Phoenix in the early 1990’s, using taxpayer money, and have hit up the taxpayers several times since then to finance improvements. The Footprint Center was full of money making luxury boxes, and, of course, the Suns, not the City, pocketed the profits.
The Suns, however, stood to make even more money if they had a hockey tenant, so they lured the Winnipeg Jets to move to Phoenix, become the Coyotes, and play in the Footprint Center. Almost immediately, the Coyotes started pushing for a new arena of their own, where they could clear all the revenue from the suites and not share it with the Suns. Phoenix, however, didn’t want to build another sports arena at taxpayer expense, so the Coyotes went to nearby Glendale, Arizona, and that suburb built the Desert Diamond Arena, a palace for the Coyotes to play in. And everyone was happy except the Glendale taxpayers, right? Wrong.
The Coyotes weren’t bringing in enough revenue to cover Glendale’s significant costs in building the arena, so the City terminated the Coyotes’ lease. In response, the Coyotes moved out to a temporary facility and looked for another nearby municipality to build them a third luxury suite filled sports arena. This time, Tempe, home of Arizona State University and another Phoenix suburb, was the target. However, the Tempe deal required voter approval, and as it turned out, the voters have gotten sick of this sort of thing. Just as voters in San Diego and San Francisco had done before, the Tempe voters said “no” and now it looks like the Coyotes will move.
Obviously, if you are a hockey fan in Arizona, this is bad news and I don’t mean to minimize it. But the reality is, the voters of Tempe (and the previous electorates that have done the same thing) are right. Look at Los Angeles. LA is an interesting example in that voters told their politicians long ago that there wasn’t going to be public funding for stadiums. When the original deal to build Crypto.com Arena contained $70 million in public financing (a far lower sum than what most cities are expected to contribute), a voter revolt almost killed the entire project until the Los Angeles Kings ownership backed down and paid the $70 million out of pocket. Similarly, we did not get the NFL back for 22 years after losing it as stadium proposal after stadium proposal failed because the public made clear we weren’t spending any taxpayer money on stadiums. Finally, SoFi Stadium was built by the Rams (at a cost of $5 billion!) with their own money.
And here’s the thing: LA did just fine without the NFL. Remember, there’s 15,000-20,000 seats in a typical sports arena and between 30,000 and 70,000 seats in a typical stadium. In other words, in any city of any size (not just Los Angeles), the vast, vast majority of residents are not using the arena or stadium. This point gets lost because professional sports get so much publicity, but vast, vast numbers of people don’t care about sports or may care a little bit but don’t care about attending a game. So why should they have to pay for it? There’s plenty of other things to do in the City.
And also, have you ever seen who owns these franchises? Here’s a hint— the type of people who, like Phil Anschutz of the Kings, can easily go into pocket and write a check for $70 million whenever one is needed, or the type of people who, like Stan Kroenke of the Rams, can get rich friends and banks together to put together a $5 billion financing package if that will get their stadium built. They don’t actually need taxpayer money.
The reason they take such money, and seek it out, is because they can. Even though a tiny number of people actually care about the local sports team enough to attend the games, the ones that do include a lot of elites— politicians, corporate leaders, and municipal boosters. Plus the local news media, which gets into the games for free under the guise of “covering” them. So there’s a huge constituency of rich and powerful people who absolutely want the local government (usually funded by regressive sales tax revenues that they do not pay their fair share of) to pony up the money to ensure that their Bread and Circuses continue, and who will blame the politicians who lose a major sports franchise. This creates a situation where voters will act very sensibly and reject stadium financing deals that are put to them, but politicians do everything they can to keep these issues off the ballot so they can spend the money and please their donors and backers while sitting in the nicest seats at the games.
But the voters are right and the elites are wrong. The reality is that while obviously franchises do move, the sports often come back to town (as we have seen with the original Winnipeg Jets, whom we started with— a new team bearing that same name moved back up there from Atlanta a number of years after the original Jets decamped for Phoenix). And even if they don’t, there’s still plenty of other things to do in the city. The NBA has treated the city of Seattle terribly, not only moving the Sonics to Oklahoma City but conspiring to prevent another team from moving there, but seriously, Seattle is a really nice place to live and nobody is actually moving out because the NBA doesn’t have a franchise there. Cities need to stop writing checks to billionaires who don’t need the money.