Do cities gain from subsidizing sports teams?
by Neil deMause
The National Hockey League season doesn't start for another three weeks, but already hockey fans in Glendale, Ariz., are counting an unexpected victory. Four years after the Phoenix Coyotes went bankrupt and were taken over by the league, prompting endless rumors that the struggling franchise would relocate to Quebec, Seattle or parts unknown, new owners were approved this month who have promised to keep the team in Arizona.
It's a victory, though, that will come at a high price. To secure the sale, the Glendale city council agreed to a new lease that requires the city to pay the Coyotes' owners $15 million a year as an "arena management fee." If the deal runs its full 15-year course — not a given, because the new lease allows the team to leave town if it’s losing money after five years — the Coyotes' new owners, a pair of Canadian investment bankers, will end up collecting more from the city of Glendale to run the team than the $170 million they're spending to buy it in the first place.
City officials say they had little choice. Glendale mayor Jerry Weiers, who in his acceptance speech last fall warned the Coyotes, "Glendale is not your cash register," has now resigned himself to paying for pro sports, saying, "The council made its decision, and my job at this point is to do everything in my power to make this thing a success." His predecessor, Elaine Scruggs, insisted that paying the Coyotes was cheaper than letting the team leave: "What shall we do — lock it up, turn off the lights and then pay the debt on the arena?"
The answer, say many economists and sports business experts, is very likely yes. There's no way a city like Glendale will see enough of a boost to its local economy to make lease subsidies pay off. And, they warn, the Coyotes deal is a sign of a new trend in the sports industry: After a 20-year period during which, according to Harvard researcher Judith Grant Long, about $18 billion in public money was spent on a wave of new stadiums and arenas, team owners looking for a leg up on their competition are now demanding additional cash to run the buildings they got for free.
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http://america.aljazeera.com/articles/2013/8/21/pay-to-play.html
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