What the market will bear---Part 2

I’d originally planned this for part 3 but here goes….

The story of Lucas Oil Stadium. And stadiums in general.

Like many places in this country, Indianapolis is hurting for money. Funding is hard to come by, whether it is to improve the school system or for shoring up roads, bridges and general infrastructure or for providing unemployment and medical benefits or…...you get the picture. Times are tough everywhere. It is hard to find a extra dollar to put toward the public good.

But we certainly can find dollars for our big league teams.

Here’s a breakdown of the financing of the new Lucas Oil Stadium, home of the Colts. Two points before I go further:

(1) The blame game for this mess is a good one. The Colts don't take any responsibility because they didn’t press for a new stadium but the city wanted one for a SuperBowl bid etc. Generally the blame falls at the feet of the elected officials who unsurprisingly sold out the taxpayer. But I don’t care---the point I want to make is that regardless of how it all came to be, this magnitude of ripoff would never happen if not for the people’s infatuation with, and addiction to, big league sports.

(2) Do stick with me till the end of this piece---the story only keeps getting better.

OK. So here are the numbers: (Two primary sources---The official Lucas Oil Stadium website and this article from Forbes.com)

Cost of building Lucas Oil Stadium: $715-720 million

Funds provided by the Colts: $100 million

(Actually, there is some creative accounting here. Some estimate that the Colts may have contributed only ~$40 mil in cash. Apparently approx $45 mil was credited to the Colts as ‘compensation for lease breaking or something like that. The way I understood it, since the city tore up the RCA dome---and moved the Colts to a brand new facility--- the city owes the Colts compensation for breaking the lease on the RCA dome. Yeah, you can’t make up shit like this. Anyway, since I don’t have any documentation handy, let’s just credit the Colts with chipping in a 100 mil. It doesn’t make the entire story any less ridiculous)

Remaining ~ $615 -620 million paid/borne by State of Indiana and City of Indianapolis i.e. the taxpayer.

Estimated annual total football related revenue : ~ $30 mil/year (The Colts get to keep this money).

Revenue from naming rights to the stadium by Lucas Oil: $122 million over 20 years (Colts get to keep this money too)

Annual rent paid to the city by the Colts for Lucas Oil Stadium: $ 0.25 million.

Summary: So the taxpayer shells out $615 million and is guaranteed a return of ~$0.25 million per year. The Colts shell out $100 million and are guaranteed a return of ~$36 million per year.

What was the justification for this wonderful investment by the Indiana taxpayer? Well, you see, the stadium isn’t all there is to the story. We are also updating/expanding/getting a brand new convention center adjacent to the stadium (same set up as was before with the RCA dome and the convention center). The convention center will require another estimated $275 million dollars. So the total cost of the stadium+convention center is close to $1 billion.

But there’s economic benefit to be had! According to the Lucas Oil Stadium website, the new complex is expected to provide about $2.25 billion in economic benefit over the next ten years, and create about 4200 permanent jobs. This is laughable on so many levels---where do I start? Let’s start with the phrase ‘economic benefit’. Notice they don’t even promise revenue, certainly not profit…..economic benefit…a catchall bullshit phrase that politicians can use to show returns that the taxpayer will be hard-pressed to find. Even if it is $2.25 billion in tangible revenue, this works out to (being generous) a 1.25-1.5X return after ten years---who thinks this is a good return for that kind of money?? If I’m not mistaken, historical stock market data predicts that a billion dollars should turn into two billion every eight years if invested conservatively. And let’s look at the job creation---something that you’ll hear a lot about from politicians---4.2 permanent jobs per every million dollars invested? Are you freaking kidding me? If I applied to the state for funding and said that I could turn $1 million into $2.25 million of ‘economic benefit’ after 10 years and create 4 permanent jobs over that period they’d (1) Throw me out of the window (2) Sue me for property damage caused by my being thrown out of the window and (3) Sue me for personal injury caused to the review panel on account of their laughing so hard at my proposal.

But that kinda math is good enough when a sports franchise is involved.

The story gets a bit better: The Capital Improvement Board (CIB; a newspeak-ian moniker if there ever was one) ---the board that runs the stadium and convention center (as well as the Conseco Fieldhouse, home of the Indiana Pacers basketball team) apparently didn’t do their budgets so well. So there is a small shortfall in the monies planned for the upkeep and operations of these stadia---totalling about $47 million! About $30 million of this is for the Colts stadium---so the taxpayers spent $615 million on a new stadium for which they now have to shell out another $30 million in maintenance costs!

That’s pretty rich, isn’t it? But fear not dear reader, we are not quite done yet. There is one last tasty morsel I saved for the end---a superb end to this bountiful repast that we’ve served up. Indeed, before you say “Fuck off, I cannot eat another bite” I hasten to add that this last treat is ‘ a waffferrrre thinnn….’ Enjoy the story of the RCA Dome.

The RCA dome was, amongst other things, the home of the Colts. (The complex also included the Indiana Convention Center--- I don’t know whether the costs I’m about to list cover the ICC but I’ll include the center anyway, even if gratis, in any economic benefit the ICC has brought to the people). It was completed in 1984, and the estimated cost of building it was ~$80 million. Almost half of these costs were covered by donations from the Lilly Foundation and the Krannert Trust; the taxpayer bore about $47 million of the burden. In 1999, the taxpayer bore another $26 million in debt for changes/renovations/upgrades to the complex. So the total burden to the taxpayer was $73 million. Now, the RCA dome and the convention center have hosted a plethora of revenue-generating events. Conventions of every kind, monster truck rallies, NCAA tournaments and Final Fours....basically, over its 24 year life the RCA dome must have generated a ton of revenue. In December 2008, the RCA dome was torn down (demolition cost of about $3.5 million).

Where am I going with all that?

Well, even after 24 years of ‘economic benefit’, it turns out that the taxpayer still owes $69 million on the now non-existent building.

Hey, it’s what the market will bear!

Alright Falcons!

The Atlanta Falcons got Tony Gonzalez.

Sweet!

With Gonzo and White catching passes, Turner and Norwood in the backfield and Ryan at QB, they are freaking SET on that side of the ball. They can now load up on defense (which is Mike Smith's strong suit anyway)....

This was a team that went 11-5 last year and lost on the road to what turned out to be really good and really hot Cardinals team (and that was a road game due to the quirky seeding system---The Cards only finished 9-7 in the reg season but were NFC West champs---if that game had been played in Atlanta the result may have been different).

Anyway, ah do believe that the Jawjuh Dome weeyill be hostin some playoff games this yeahh.

PS: CPP, I still can't believe that your Iggles didn't step up and give up a 2nd round pick for Gonzalez....he's got at least two more pro-bowl years left in him and he's a pro's pro to boot.

/

What the market will bear --- Part 1

"What the market will bear"

This is the phrase that has been used, for at least the past couple of decades as far as I know, to justify unconscionable excess. It has been a favorite phrase used to justify why a CEO should take home roughly 400 times the compensation that the average worker does. And it has been a favorite phrase used to justify why someone with an above-average ability to throw, catch or hit a ball should make more money in one year than the average doctor does in twenty. “Hey, it’s what the market will bear!

So what they tell you every day, with this phrase, is that you the consumer has signed off on this excess. What they claim is that their particular skill is so valuable and so rare, and so necessary or important (or at least so much in demand) that they deserve to retire in luxury for a few years (if that) worth of ‘effort’. The excesses of the financial industry is now evident to most people, but I think that the obscene financial excess in big time sports is less evident to average person, even in this economy.

Anyway, who is ‘they’? This ‘they’ includes anyone who makes money off the system as it is. As it pertains to sports, the ‘they’ includes, of course, the owners and the players who make incredibly large amounts of money. But it doesn’t stop there---the ‘they’ also includes other conflicted parties such as the ‘journalists’, ‘analysts’, sports talk idiots, broadcasters, telecasters etc . Basically, the ‘they’ includes anyone who talks about, writes about, broadcasts or telecasts (and makes insane amounts of money from you because of) big time sports. And finally, the ‘they’ also includes millions of idiots who like to think of themselves as ‘true loyal fans’ and who therefore walk around mindlessly parroting the shit that they absorb from the mainstream media (such as ‘It’s what the market will bear’), without pausing to consider that they are actually only rationalizing their own exploitation. Yes, this whole thing is a lot like big time politics.

So what they tell you is that this whole thing is driven by you and your need to consume what they alone can produce. And this pisses me off because (i) It is true and (ii) It is only partly true, i.e. there is a part of this sports economy that John and Jane Q Public are directly responsible for driving, but there is an even larger part of this obscene economy that is allegedly driven by the Publics but over which the Publics have little meaningful control in reality.

The discussion about money in sports comes up regularly over the airwaves in the form of questions like “Do (pick a big sport) players make too much money?” or “In this economy does it look bad that Itchy McBallscratcher is being paid 25 million dollars a year?” And since the discussion is led and carried by our beloved conflicted ‘they’, it will never end up raising key questions or issues. For instance, people spend weeks discussing whether ballplayers should make more or less than the owners or who deserves what share of this obscenely large pie. But they never substantively address the issue of why, in a country where 50% of families are living 2 paychecks away from financial disaster-- where schools are woefully underfunded and so many already underpaid schoolteachers spend their own money for classroom supplies — and I could go on but you get the idea--- do two sports leagues (the NFL and MLB) alone manage to rake in about 11 billion dollars a year?

So my point is not about the raw numbers involved, as in X team or player makes Y million dollars; rather my point is to examine how and why X is making increasing millions of dollars at a time when the average American is making effectively less and less. My point is to examine whether it is really necessary that a major league minimum salary needs to be what an average American makes in a decade or more. My point is about balance. We show where we are as a society by what we choose to patronize and to what extent, in the context of the state of the common human of the times. When you take a good look at the sports economy it seems to provide yet more evidence (like we needed it huh?) that we are a society firmly in decadent decline.

The discussion should be about whether, not just in these economic times but at any time, we can afford to spend so much on professional sports, when it is coming at the cost of essentials such as education, healthcare, civic services etc. Sadly, far too many people aren’t even aware of how much of their money gets funneled into big time sports without their realizing it. And of course, far too many people don’t care. It is what the market will bear.

Consumption of big-time sports---it is the new opiate of the masses.

Coming up:

In Part 2 we’ll try and deconstruct some stupid ideas like “Support your local big-league team” and “Sure he makes $20 million a year but it is OK because his earning years are so limited”.

In Part 3 we take a good look at how a sports team can leech off a city in particular and the public in general. Yes, there are some cool numbers involved. We’ll see how, much like in the financial sector, big-time sport has its share of ‘welfare’ multimillionaires.

Update: What the market will bear-Part 2 is now up and available here.

Contrast

What reportedly happened in Denver or Portrait of a whiny-ass titty-baby:
Shanahan and the O-Coordinator get fired. Cutler starts grumbling and asks to be traded. Mgmt says no. Patriots are trying to unload Cassel, they contact Denver about a 3-team trade. Denver thinks, “Well, Cutler wants to leave, our new coach knows Cassel well, maybe this can work out for everyone, let’s explore it”. Deal falls through; now Cutler gets all extra- petulant, goes to his room, slams the door and holds his breath. He demands a trade and will have nothing to do with the Broncos. He doesn’t even have the courtesy to take phone calls from the owner of the team that drafted him and paid him millions of dollars. Great. This is the professionalism that the likes of Eli Manning have wrought.

Let’s contrast this with the portrait of a professional:
Kansas City, 2008-09 season. The team sucks, they’re not going anywhere, and it is pretty obvious that they aren’t going anywhere for a while. Stud TE/receiver Tony Gonzalez, a potential first-ballot hall-of-famer who is getting on in age, asks to be traded so that he can play for a title contender while he still has a good year or two left in him. The KC GM (at that time) Carl Peterson makes a verbal deal with Tony that if KC gets a third-round pick for him they'll trade him. Two different teams offer KC a third round pick for Tony. Then Peterson decides he wants to up the asking price to a second round pick. He gets no takers and the trade deadline comes and passes. Tony Gonzalez is left to languish in KC. He is clearly and openly disappointed that the organization didn’t do the right thing by him after all that he has given them. Then he gets on the field the next week, actually for the next 11 weeks, and racks up another 75 catches for 865 yards and 8 TDs. He finishes the season as the team’s leading receiver. Tony totaled 96 catches, 1058 yds and 10 TDs for the season. On a bad team that went 2-14.

Cutler, Manning, TO, and other crybabies that go “Waaah! I wont play here! Waaaaaah!” could learn a thing or two from pros like Tony Gonzalez.