The Public Dollars Fueling the NFL Dispute
June 10, 2011
Through rich stadium subsidies and cartel powers granted to professional football by our representatives in Congress, we have helped to bankroll the gains in revenues that are now at issue in the NFL players-owners clash. In particular, as Vanderbilt University economist John Vrooman argues in a chapter from a forthcoming book about the NFL, increases in local revenues spurred by government-subsidized stadiums lie at the heart of the dispute, says Steven Malanga, a senior fellow at the Manhattan Institute.
- The NFL and the players' union negotiated a collective bargaining agreement in 1993 that set the stage for the current impasse.
- The players gained free agency, but in exchange the league won the right to cap salaries at 64 percent of revenues.
- But those revenues included in the cap are calculated in a complex formula that allows teams to exclude certain local income from the shared pool.
- Over time, team owners naturally have tried to maximize those revenues that are unshared, including lucrative income from luxury boxes and club seats.
Taxpayers enabled much of this.
- Shortly after the 1993 bargaining agreement, the NFL embarked on an aggressive era of local expansion that included adding new teams in cities where politicians were desperate for a franchise.
- The end result was an addition of 25 new venues each boasting on average some 150 luxury suites and between 8,000 and 9,000 premium club seats.
- The first group of 13 stadiums, built before the NFL created its own loan fund to help finance new stadiums, cost $3.3 billion, of which only $888 million, or 27 percent, was private financing.
- Stadiums in St. Louis, Oakland (which was renovated, not constructed, for $128 million), Baltimore, Tampa Bay, Cleveland and Cincinnati were among those built primarily with public funds.
Source: Steven Malanga, "The Public Dollars Fueling the NFL Dispute," Real Clear Markets, June 1, 2011.
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