‘Field of Schemes’ Co-Author Neil DeMause Explains the Problem with Public Subsidized Sports Stadiums

Live from Music Row Tuesday morning on The Tennessee Star Report with Michael Patrick Leahy – broadcast on Nashville’s Talk Radio 98.3 and 1510 WLAC weekdays from 5:00 a.m. to 8:00 a.m. – host Leahy welcomed co-author of the book Field of Schemes and creator of fieldofschemes.com, Neil DeMause, to the newsmaker line to weigh in on the public subsidy of sports stadiums.

Leahy: We welcome to our newsmaker line. Neil DeMause, who’s a co-author of the 2008 book Field of Schemes: How the Great Stadium Swindle Turns Public Money into Private Profit.

He also has a website called fieldofschemes.com. Has a great article up yesterday. Titan Stadium could require $1.3 billion in public subsidy. Maybe all numbers just melt into the air. Welcome, Neil. Thanks so much for joining us today.

DeMause: Glad to be here.

Leahy: Neil, tell us about your criticism of this. I thought it was very interesting. Now the proposed deal would include $700 million from the Titans ownership, of which Amy Adams-Strunk is the majority owner right now.

And the Speaker of the House, Cam Sexton here said yesterday the state was trying to put up a $500 million dollar bond. That’s before the Tennessee General Assembly.

It’s likely to pass. We don’t know. That leaves an $800 million funding gap. He also said that the city of Nashville, which is virtually broke, by the way, is going to come up with $700 million somewhere, somehow.

Yes, Every Kid

You had some very interesting criticisms of this deal and others, particularly how they count that $700 million, the Titans’ contribution comes up. Tell us your thoughts about this.

DeMause: Yes. Sure. We’re all sort of guessing at this point, right? We don’t know how much a new stadium would cost. Two billion is a guess based on other stadiums that have been built or are being talked about being built.

The $500 million in state bonds seems like it’s pretty solid. We don’t know if it’s limited to that. And then there’s this talk of $700 million coming from the team, which is certainly possible.

One of the issues here is that typically team owners like to count all sorts of revenues as the team contribution even if they aren’t necessarily coming out of their own pocket. So naming rights, for example.

All over the country, you’ve got stadiums that are owned by the state, the city, the county, whatever. But the naming rights gets given over to the team owner, and then they get to count it as part of their contribution, even though it’s basically a big billboard being put on a stadium that they don’t own.

Same thing with personal seat license sales, and fans, where you have to pay up front or have the right to buy season tickets. And there are all sorts of different ways under the table of sort of sneaking in public money.

You can have free or undervalued land sales. You can have tax kickbacks. You can have all sorts of different things. So in general, when these deals get proposed, I’m always trying to be very skeptical and not take too many of the numbers at face value, because the actual deal winds up being very different than usually what’s discussed upfront.

Leahy: Now you’ve been writing about this for about two decades. If you look at all of these publicly subsidized stadiums out there around the country, and it looks like virtually 90 percent of stadiums are publicly subsidized for NFL, NBA, Major League Baseball, they don’t seem to really turn out that well for the taxpayers.

          But all the people like owners and the developers seem to make a lot of money. Do I have that right?

DeMause: Yes. And that’s by design. One of the little secrets of stadiums is that most of them don’t make a ton of money or even necessarily pay back their construction costs.

You have to imagine most of these teams are playing in stadiums that are, if not completely state of the art, up to the last possible minute. They’re at least functional.

So it’s not like they’re making no money there. So the idea that you are going to move to a new stadium and somehow it will increase your revenues by so much that you’ll be able to pay off a $2 billion, even a $1 billion construction bill is a little far-fetched.

On the other hand, if you can reduce that construction bill, the private construction bill, to half a billion dollars or $300 million or something like that, then it becomes more reasonable. Really what you’ve got here is a 30-year-long, let’s call it a business model to be nice. (Laughter)

Leahy: That’s a good way to put it, Neil. (Chuckles)

DeMause: That involves trying to privatize the profits from stadiums and socialize the cost.

Leahy: Now let me ask you about this. I think I read that the new SoFi Stadium that the L.A. Rams owner owns, and a group of private investors, is primarily privately financed. Is that correct?

DeMause: Yes, that is correct. And it’s a little bit of an outlier. I think a lot of people took this as wow, maybe the days of these massive subsidies are over because the Rams and the Chargers are paying for their own stadiums.

It was a little bit of a special case where Stan Kroenke really wanted to get out of St. Louis and move to Los Angeles for reasons best known only to him.

And took on what looked like it was going to be a couple of billion dollar stadium in order to do that. And it wound up being more like $6 billion.

Whether he thinks it’s worth it or not is up to him. But I think that as a model for future stadiums, most other team owners around the league are looking around and saying, well, we don’t want to be saddled with that kind of debt.

Let’s see what we can get in terms of public money, which is why you have the Buffalo Bills and the Washington Commanders and the Baltimore Ravens and team after team after team, Chicago Bears, all looking at trying to get public money for new stadiums.

Leahy: Neil, in the studio with us is our co-host, Grant Henry. He has a question for you.

Henry: Hi, Neil. For a guy like me who just really dislikes the idea of using public money for something like this, where does Nashville, or whether it’s Titans team, where does it rank in the national scheme of things? Is it an egregious violation, or is this sort of a normal run-of-the-mill-type package here?

DeMause: Oh, can’t it be both?

Leahy: (Laughter) That’s a great response, Neil.

DeMause: That’s the problem. The baseline for most of these deals is egregious. So when you get a deal that is less egregious, it suddenly looks really great, where it’s like the city or the state or whatever is only putting up a quarter of the cost, right.

Which again, is still an awful lot of money. It could be hundreds of millions of dollars and is almost certainly not going to earn back any kind of return on taxpayers’ investment, right, in terms of just new tax revenue.

I would say it’s routinely egregious, the Titans proposal. But again, we don’t know exactly what it’s going to be. So it could end up being something that involves a decent amount of genuinely private money from the team owners and you only have to kind of grit your teeth and say, oh man, this is bad but it could be worse.

Or it could be sort of legendarily bad where it’s over a billion dollars in public money and breaks all kinds of records. We’re going to kind of have to see.

But the early signs are not great, given that the state immediately was like, well, let’s kick in half a billion dollars and see where it goes from there.

Listen to the full interview:

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Tune in weekdays from 5:00 – 8:00 am to the Tennessee Star Report with Michael Patrick Leahy on Talk Radio 98.3 FM WLAC 1510. Listen online at iHeart Radio.

 

 

 

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3 Thoughts to “‘Field of Schemes’ Co-Author Neil DeMause Explains the Problem with Public Subsidized Sports Stadiums”

  1. Jay

    No is a good answer.

  2. John Bumpus

    I am now in my seventies. As I think back, there have only been a ‘handful’ of times in my life when I have been given advice by those who were both senior to, and interested in, me which I thought when I first heard it was so profound that I have NEVER forgotten what was said. One of these sayings came from my Mother, and I think that it is applicable here–learn to say NO! I assure you, this is not always easy to do. Some never learn how to do it. And I must confess, I have not always done so myself when I should have (to my regret).

  3. Wolf Woman

    So the state of Tennessee and Metro Nashville are going to help fund a new stadium whose costs is unknown! While our country is in an economic decline with galloping inflation and in a precarious geopolitical situation! Why? Well we need a new hi-tech version cause we’re a big city now you know and we need a huge debt hanging over us.

    It seems that the governor and the mayor and the powers that be don’t ever consider the citizens who won’t be able to afford to go to the games but will have to shoulder the burden of the stadium’s (unknown) cost. Do they care? They get their photo op, a pat on the back and some hog trough slop and we get a tax increase. Why do we, the people, stand for this time after time after time?

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