THE POLITICAL ECONOMY OF SPORTS
“The first retractable-roof stadium built in the major leagues,
It has the unique feature of having a hotel as part of the stadium -- the Renaissance Toronto Hotel, a 348-room hotel with 70 rooms overlooking the field. Robbie Alomar actually lived in this hotel when he played for the Blue Jays, and there has been more than one time when a couple participated in an amorous activity (with the drapes open) during a ballgame.
The SkyDome also features the largest video display board in
The whole NFL business came up recently, though this is far from the only time it has, because billionaire Ted Rodgers bought the SkyDome and Blue jays franchise and promises to upgrade the facility and the MLB team.
SkyDome was originally constructed in 1989 at a cost of $580 million paid for by the taxpayers of
How does it happen, they outsourced the computer and electrical infrastructure for the facility which would end up costing millions in upkeep. Being one of the early P3’s-public private partnerships-during the economic downturn and the regime of Mike Harris, and his hell-bent on privatization Tory Government, the privatize at any cost forgot about the costs of outsourcing and privatization. One of those is cheap materials used in construction, and outsourcing in the computer systems. The collapse of portions of the SkyDome roof and the need to upgrade maintenance of the building after only a decade was one reason for SkyDomes bankruptcy.
Outsourcing has been the mainstay of computer systems for many years, and it works because you have to come back and buy a new system on a continual basis, if you don’t you will get no support for your old one. Ask yourself about how many computers you have had to buy over the last decade to keep up with software. See Canada's Billion Dollar P3 Boondoogle
Now multiple that by millions spent by all levels of government on obsolete stand alone systems and you can guess at the profit that can be made by profiteers at the publics expense.
When SkyDome opened to the public in 1989, several stand-alone computer systems were acquired to manage the profusion of security details:
* A photo ID solution was selected to produce identity cards for the 3,000-plus employees, team members and tenants. * The parking lots and entrances were equipped with 36 rotating and stationary CCTV cameras, integrated to eight monitors. * Magnetic stripe card readers were installed in all elevators to control access to secured floors. * Gates were equipped with door locks and alarms to ward off illegal entry from the street.
Finally, the readers, locks and alarms were wired to a central access control database.
All was state-of-the-art equipment at that time. All was supposed to be expandable. And all, as it turned out, was poorly supported by resellers who would eventually go out of business or lose interest in the service contracts.
When that happened, says SkyDome director of security Kelly Keyes, "things deteriorated very quickly."
"By early 1996," Keyes explains, "we realized our security systems were falling to pieces. We could no longer purchase film or other materials for badging because our only supplier went bankrupt. As for access control, we literally had to shut down all the alarms and door locks whenever the stadium opened for an event.
"To make matters worse, the wiring was not properly installed or maintained, so glitches were popping up all over the place. What we originally thought was an investment in leading-edge hardware quickly became money spent on the upkeep of out-of-date and malfunctioning technology."
Keyes began her search for an integrated security system to include: badging, access control and CCTV solutions linked across one network, using a common database.
When the quotes began to arrive, however, she discovered the all-in-one approach was "too expensive, well beyond anything we would need, and still wouldn't offer the features we were looking for." Reluctantly, she turned again to stand-alone technology.” Toronto Skydome, Jul 1, 1997 by James Whittall
The other reason for SkyDomes bankruptcy besides the costs of maintenance was the fact that those private investors who coughed up $5 million each made sure they made their money off the Dome as fast as they could. So what did the taxpayers as investors get in their ‘public’ stadium, they got a private capitalist boondoggle that made money for the private investors and left taxpayers holding the bag. But hey Torontonians got to cheer for their MBL team and the
Saturday, November 28, 1998
John Saunders And Paul Waldie
The Globe And Mail
It is not clear that it would be profitable even if all differences were settled, but its current management complains of special problems left over from a disastrous public-private partnership that built it in the 1980s.
Private partners who put up $5-million each provided about a quarter of the $600-million construction cost, but got most of their money back in special benefits.
"For its $5-million contribution, each consortium member received exclusive advertising rights, promotion rights and preferred supplier rights, rights to a skybox and parking spaces and other rights," laments a 242-page document filed in court by the SkyDome's lawyers. The deals still drain stadium coffers, it says.
The consortium featured interests as diverse as Coca-Cola, Ford, McDonald's, Canadian Airlines and The
The consortium also involved the doomed
Without giving details, the document asserts that some special arrangements compel the stadium "to pay prices or rates for goods and services which are not competitive, or to provide goods and services at prices or rates which are not competitive," threatening its financial survival. The SkyDome's fate depends partly on its ability to cancel or renegotiate the contracts, it says.
However, the biggest issue in the bankruptcy is whether the SkyDome can complete a new lease with its chief tenant, the Toronto Blue Jays baseball club, on terms that demand sacrifices from other interests.
The stadium and the Jays have already reached a tentative deal in which the ballclub would provide a $3.5-million emergency loan (with special priority over other SkyDome debt) and would get a bigger slice of the revenue pie -- an extra $72-million -- over the final nine years of a new 10-year lease.”
After a decade fiscal mismanagement and profiteering by its private investors, SkyDome in order to get out of debt was sold in 1999 to Sportsco International at a fire sale price for somewhere around $80-$110 million. Sportsco is one of several global sports companies of the rich national bourgeoisie in North America, in this case Norman Seagram of Molson’s and his longtime American friend and partner; Alan Cohen (see corporate profile below).
SkyDome was subsequently sold last winter for the bargain basement price of 25 million dollars to another member of the Canadian Bourgeoisie, Ted Rogers of Rodgers Cable and Broadcasting/Rodgers Communications, and his pal Paul Godfrey President of the Blue Jays, and former Publisher of the Toronto Sun, one of the original 5 million dollar investors who profiteered off the stadium leaving it in bankruptcy.
November 29, 2004
Baseball stadiums typically cost upwards of $400 million to build, but what are they actually worth to own? For an answer, look no further than Toronto, where the SkyDome has been sold again, this time to Rogers Communications, owners of the Toronto Blue Jays, for $30 million (Canadian).Jays CEO Paul Godfrey called it "an opportunity for us to acquire a tremendous asset at an extremely attractive price," and he's not kidding: That's a 73% discount from the $110 million that Sportsco paid for North America's first retractable-roofed stadium in 1999, and a whopping 95% off SkyDome's initial $600 million price tag (most of which was footed by the good people of Ontario). Cities that are counting on taking possession of their stadiums in lieu of getting paid back on stadium "loans," take note - you listening, St. Louis? How about you, Washington, D.C.?
What a deal, and now they want to bring in the NFL, is that because the CFL Argo’s will no longer be playing in SkyDome, because they are building their own stadium. The idea is to reduce the size of SkyDome and make it MLB regulation, which would also make it NFL regulation size. Remember like our balls, our football fields are bigger.
Toronto is not the only city to succumb to Stadium fever, build it and they will come is the motto of the business elite who are also the team owners. They want the public to pay and pay and pay for their profitable sports businesses.
We build it they buy it at fire-sale prices, paid for by salary caps on their workers (the players). Expansion cannot happen in the professional sports industry with out salary caps, as Sportsco International VP, Alan Cohen proved when he introduced it into the NBA. It has nothing to do with reducing ticket costs, or reducing operational costs, it has to do with making a profit and reducing the impact of workers wages (player salaries) on the bottom line.
“The findings in this article do not suggest that there is a significant difference between a soft salary cap and a payroll tax as far as placing limits on salary growth is concerned. If a salary cap were enforced as a hard cap, the difference might be greater because this would be a firm and direct limit. Economists know that programs for controlling wages and prices at the national level, sometimes called incomes policies, are not particularly effective. The same might be said of industrial wage and spending controls in sports. Player salaries are mostly determined by market conditions, such as attendance, television revenues, luxury boxes, licensing revenues, league expansion, and stadium deals. Salary caps and payroll taxes may seem beneficial to owners, but their effects appear to be more symbolic and cosmetic than fundamental.” Salary Caps in Professional Team Sports, Compensation and Working Conditions Spring 1998
Edmonton, Calgary, Vancouver, all have built facilities that have been sold off to pay for their maintenance costs at fire sale prices. And still the owners cry “gimme more” as is currently the case with the NHL lockout. What part of “sports is a business” don’t the fans understand?
“In an interview with the Times, Cohen was asked if it were more important to win a championship or to earn profits for his shareholders. He replied that as a public company, his first priority was to his shareholders: “That’s the bottom line.”
And that’s the deal when it comes to the selling of SkyDome and the musings of it’s owners about getting an NFL franchise in
April 08, 2004
A report by New York City's Regional Plan Association (PDF file available here) says other cities' experience with major stadium/convention center projects shows they're poor catalysts for commercial development - putting a dent in the arguments of Deputy Mayor Dan Doctoroff, whose $5-billion-plus Hudson Yards plan would rely on property taxes from 28 million square feet of new office development to pay off its bonds.
"When clustered together, stadiums and convention centers often make for a successful tourist corridor but as yet, they have not shown the ability to sponsor development of intensive mixed-use districts. There is little evidence of such facilities thriving in districts as dense as the one proposed for the Far West Side."
The much touted social benefit of stadiums is exaggerated if unproven economically. But the ruling class, those with the deep pockets, invests not so much in the infrastructure as in the promotion of building the infrastructure at taxpayer’s expense and then buy it back when it can no longer be supported. The reason it can’t be supported is that these same capitalist fund right wing think tanks and political parties that promote tax breaks and smaller government. The real infrastructure needs of our cities, social housing, roads, sewer and electrical upgrades are forgotten for the need of “sports” infrastructure. It’s Bread and Circuses for the masses and another profitable opportunity for the rich and monied elites.
Typical of the boosters of sports capitalism, they play on the nationalism of the population. Our city versus your city, our province versus your province, our country versus your country, sports jingoism replaces the jingoism of war, but is just as insidious. It builds the We’re Number One, ideology that so quickly can go from fans in the stands, to the marching bands of the war machine of Imperialism.
Sports are Political, and it is ruled by the political economy of capitalism, even amateur sports if there is such a creature any longer. One look at the globalized sports movement of the Olympics shows that amateur sports no longer actually exist, more and more professionals are entering the Olympics as individuals and teams. The old 19th century values of the ruling class, the last of the aristocratic pretensions of the bourgeoisie, have passed on to be replaced with the commoditization of sports and athletes. Athletes even those who are amateur, are workers in sports, whether paid a salary or given time off and collecting sponsorships for their training, it is still ‘work’ and ‘labour’ producing the commodity so valued by the sports nationalist, a win, a medal.
To rephrase Marx, the ruling sports are the sports of the ruling classes. And in North America that market is American Teams and Sports, and the
Rogers plays name game with SkyDome
Keith Mcarthur and Richard Bloom –
Globe and Mail, Thursday, February 3, 2005
Some might say Ted Rogers is toying with the curse of the corporate playground.
There's a veritable graveyard of companies that have shelled out big bucks to have their corporate brand carved into the sides of stadiums and arenas only to become embroiled in scandal or insolvency, such as Enron Field in
Mr. Rogers, chief executive officer of Rogers Communications Inc., announced yesterday that
But sports marketing experts say that despite some naming disasters, the move makes great sense for Rogers -- not only because it competes in an industry where marketing to consumers is paramount, but also because the price is right.
"The question will be how large a
One of the challenges for
"When you're renaming something, it's often very difficult to get the media to call it by the revised name," Mr. Stellick said. "What will people on [all-sports TV network] TSN call it? Obviously they're a competitor."
Bell Globemedia's TSN competes directly against Rogers-owned Sportsnet. Bell Globemedia also owns the CTV network and The Globe and Mail.
Companies look at various factors when calculating the value of naming rights. The most obvious is how often the brand name is used in the media and the local community. But naming deals also include various other rights, from exclusive supplier and advertising relationships to corporate boxes.
In 1994, General Motors of Canada Ltd. snapped up the rights to slap its name on the side of
"It's really all about marketing and building your presence and awareness within that community," he said. "It has absolutely worked."
Because of the deal, GM's name is used millions of times each year on media broadcasts, ticket stubs and more, Mr. Low said. But he said companies have to do more than spend money for the name; they also have to leverage the investment.
GM does so by putting car displays in the venue, painting its name on the ice surface, branding the boards around the ice and getting involved in the NHL's Vancouver Canucks' charitable foundation, he said. "It has to be a holistic approach as opposed to just the name on the building."
Keith McIntyre, president of K. Mac & Associates in
But for every deal that works, there are just as many that don't, Mr. McIntyre said. He believes naming rights have become passé because they are now so common.
"At one point it was a unique way to do sports marketing, to get a company name or product out there. But everybody's doing it at all levels now," he said.
Part of the reason there are so many failures among companies who buy naming rights is that fast-rising firms see it as a great way to look big and important. And occasionally, companies that rise fast, fall just as quickly.
"It's a bit of an ego boost for a lot of these companies. It's a bit of an ego boost for these CEOs," Mr. McIntyre said.
Houston's Enron Field has been renamed Minute Maid Park after fraudulent accounting at Enron Corp. led to it filing for bankruptcy protection in 2001. Adelphia Coliseum became The Coliseum after Adelphia Communications Corp. filed for bankruptcy protection in 2001 after a major scandal. And the Canadian Airlines Saddledome became Pengrowth Saddledome after the nearly insolvent airline was acquired by Air
The stadium name game
Rogers Communications announced yesterday that the SkyDome, above, the home of the Toronto Blue Jays, has been renamed the Rogers Centre. Many of
Canadian sports venues with corporate names
n NHL, NBA
Canad Inns Stadium
(formerly Northlands Coliseum,
formerly SkyReach Centre)
(formerly Molson Centre)
The Corel Centre
n Fraudulent accounting led to a filing for bankruptcy protection in 2001.
Canadian Airlines Saddledome Calgary
n Now Pengrowth Saddledome
n Was losing $2-million a day before being acquired by Air
n Now The Coliseum
n Filed for bankruptcy protection in 2001 because of major scandal.
n Now M&T Bank Stadium
n PSINet filed for bankruptcy protection in 2001.
n Now Edward Jones Dome
n Financial troubles at TWA led demise of brand through American Airlines takeover
THE ECONOMIC BENEFITS OF SPORTS STADIUMS ARE EXAGGERATED
A 1996 Congressional Research Service (CRS) report, "Tax-Exempt Bonds and the Economics of Professional Sports Stadiums" concluded that sports stadia represent a small percentage of a local economy. There is little real impact or multiplier effect associated with building sports stadia. That the building of stadia merely transfers consumption from one area or one type of leisure activity to another, and that overall, sports and stadia contribute little to the local economy and instead represent an investment that costs the public a lot while failing to return the initial investment. Hundreds of other studies and books by individuals such as long-time sports economists Arthur T. Johnson in Minor League Baseball and Economic Development, Mark Rosentraub in Major League Losers, Kenneth Shropshire in The Sports Franchise Game, and Roger Noll and Andrew Zimbalist in Sports, Jobs, and Taxes, reach the same conclusion — public support of professional and minor league sports is a bad investment. In practically none of the cities these studies examined did new sports stadia lead to any significant new private investment or provide for any significant economic benefits to the local economy besides the jobs generated by the initial capital construction of the stadia. More importantly, the new stadia generally were not even profitable or self-financing. Sportsfare: The political economy of publicly funded stadiums by David Schultz
Image impacts captures the concept that a city may experience benefits from being a “major league city”, home to a franchise from one of the four dominant sports leagues in North America. Proponents routinely cite image building as one of the primary benefits of building a new stadium or arena. Image related impacts include increased community visibility and an ability to better compete for relocating businesses and households. The status of being a major league city is one that has driven many cities to vigorously pursue major league sports, as cities like
While most analysts agree that there are image impacts following a new sports facility, identifying these and quantifying these impacts has been difficult. To be sure, having a major league sports team allows smaller cities like Green Bay, San Jose, and Memphis to have a national and international marketing presence not likely available to them otherwise. The value of this community visibility remains unknown. Studies of business and household relocation decisions have found sports facilities to be largely irrelevant, as business are usually more interested in factors such as low taxes and a positive business climate, while households too want low taxes, but also good schools and good medical facilities (Danielson, 1997). Finally, while “major league city” status is desirable, there is no evidence that this status conveys any quantifiable benefits to a community.
Political impacts refer, not surprisingly, to the political costs and benefits that flow from a sports facility. Because sports facilities are high profile projects, they offer opportunities for politicians to rally a community around redevelopment efforts, in the process catapulting a leader to higher political office. For example, William Donald Schaeffer’s efforts to redevelop downtown
In their case study of
Identifying the Real Costs and Benefits of Sports Facilities Tim Chapin © 2002 Lincoln Institute of Land Policy Working Paper
What Ruth Built, Let George Tear Asunder
By Neil deMause
What has really changed, though, is the financial structure of baseball. When the owners and players finally settled on a new collective bargaining agreement on August 30, 2002, forestalling a strike that had seemed all but certain, one of the key provisions was an expanded revenue-sharing system among rival clubs: henceforth, on each new dollar earned, about forty cents would be sent back to the league for redistribution to other teams. And while, in general, revenue-sharing payments were to be paid on gross revenue, not net—no deducting (as Steinbrenner has done) that $20 million payment to yourself for negotiating your own cable deal, in other words—teams would be allowed to deduct "stadium operations costs," including debt payments on construction bonds.
Nobody noticed it at the time, but this was a huge bombshell in the world of stadium finance—in effect, an enormous "tax break" for spending private funds on stadium construction. The St. Louis Cardinals were apparently the first to take advantage of it: within months of the new CBA, Cards management was offering to shoulder two-thirds of the cost of a new $387 million stadium—without mentioning that by doing so, they'd be reducing their revenue-sharing payments to the rest of the league by about $6 million a year.
As far as taking advantage of the new revenue-sharing deduction, though, Steinbrenner's plan would dwarf that of the Cardinals. By spending $750 million on a new stadium, the Yankees would reduce their reported revenue by about $40 million a year; multiply this amount by their 39 percent revenue-sharing "bracket," and you get an annual revenue-sharing break of $15 million. Over time, about $300 million worth of Steinbrenner's new pleasure palace would come straight out of the pockets of the other twenty-nine teams.
The implications of all this for baseball are staggering, and a bit of a mixed bag for fans. First off, the fact that the revenue-sharing plan encourages private spending would be a huge boon to taxpayers—the Cardinals' new stadium will be only the second ballpark in the last forty years to be funded primarily through private sources, and the new CBA no doubt deserves much of the credit.
For fans of baseball's few remaining historic ballparks, however, the Steinbrenner dodge could be a disaster. Because while it creates an incentive for owners to fund new stadiums with their own money, it also creates a huge new incentive to subject old parks to the wrecking ball.
A simple thought experiment shows why. Say a team—let's call them the Red Sox—is weighing renovations to its existing park versus building anew. Suppose that the Red Sox have crunched the numbers for the two options and determined that they can either spend $50 million on renovations that would, over time, bring in $100 million in new revenue, or spend $500 million on a new stadium that would bring in $400 million in new revenue. Easy choice, right? Renovations make a moderate profit; building anew turns a large loss; so renovation wins out.
Now let's apply the revenue-sharing deduction and see what happens. The $50 million in renovation now creates a $20 million revenue-sharing savings, meaning the effective cost to the Sox is $30 million; new revenue remains the same, so profits from renovation are now $70 million. Meanwhile, the $500 million build-new option creates a $200 million deduction, so its effective cost is $300 million; new revenue remains $400 million, so building anew now turns a $100 million profit. Suddenly a new stadium means a bigger profit, even though, in pure economic terms, it would be a money loser.
Since baseball's new stadium boom began in 1989 with
It's a dangerous moment for classic ballparks, as the four remaining holdouts to the mallpark boom are all publicly mulling tearing down and starting fresh. Wrigley Field was recently granted city landmark status, but after this summer's falling concrete incidents, the once-unthinkable talk has begun around
None of these parks, nor Yankee Stadium itself, is doomed just yet. Even at sixty cents on the dollar, new stadiums remain staggeringly expensive to build—and nearly impossible to make work without appeals for public cash. It will be interesting to see if the rave reviews continue for Steinbrenner's plan once that $400 million in public "infrastructure" cash hits the city council docket. Moreover, the remaining owners, those who'd be footing the bill for their rivals' new parks, could yet revolt and eliminate the construction-debt deduction when the next CBA is negotiated in 2006.
If not, though, baseball's attempts to level the playing field between teams could end up creating a windfall for rich teams at the expense of their less-rich competitors—and destroy much of baseball's remaining heritage in the process. In the long, sad history of baseball ownership, that could be the bitterest irony yet.—EFQ
SPORTS: THE RULING CLASS GENTLEMAN’S ENTERTAINMENT (AND INVESTMENT)
Professional sports were organised in mining and industrial towns and cities as businesses, while amateur spectator sports, particularly "American" football, were introduced on university campuses. Because
The Pivotal Role Played by Elite Groups in Canadian Cricket
Cricket was the most popular summer game in independent schools which used English public schools as their models and were often predominantly staffed by English teachers.
Many cricket clubs in the nineteenth century copied the trend that had been established in
As the nineteenth century drew to a close, Canadian-born or –educated cricketers began to play a more prominent part in determining the future of the game. They were usually educated in an independent school and came from a selectgroup of male middle- and upper-class Canadians who were either first- or second-generation immigrants from
Professionalism in late nineteenth-century
Later in the twentieth century, cricket enjoyed the support of two prominent Canadian citizens who invested their personal wealth in promoting Canadian teams both at home and abroad. Norman Seagram, who was born in 1879 in Waterloo and was part of the Seagram family empire built on distilling and horse racing, financed a private cricket tour to
A Brief History of The Toronto Cricket Club By Edgar A. Brach 2003 “The Club became a vagabond club and in the early 1920s, to the rescue came a group of benevolent cricketers spearheaded by Norman Seagram, one of the most prominent and generous players of the time. This group which included George Wm. Gooderham, Edward F Seagram, Thomas W .Seagram, Norman Seagram and Robert A Laidlaw showed great foresight and purchased from the Kendrick Land Company a parcel of land in the outskirts of Toronto near the Armour Estate at Wilson Ave and Avenue Rd. for $ $40,880 and build a cricket pitch and club house for and additional $24,495.”
Norman M Seagram
Chairman of the Board at Hydrogenics Corporation (
Norman M. Seagram was elected Chairman of our board of directors in July 2000. Mr. Seagram was President of Sportsco International LP from February 2001 to March 2003. From September 1996 to May 1997, Mr. Seagram was President and Chief Executive Officer of Molson Inc., a company that he had previously served for 24 years in a variety of senior management positions. From October 1992 to August 1996, Mr. Seagram was Chairman and Chief Executive Officer of Air Liquide Canada, Inc., a producer of industrial gases. Mr. Seagram is a trustee of
This investment will make an important contribution to the Greater Toronto Area. The Honourable Maurizio Bevilacqua, Secretary of State (International Financial Institutions), the Honourable David Tsubouchi, Ontario Minister of Culture, Bob Moffatt, President and CEO, Tennis
The Government of
"The Government of Canada's investment will ensure that our tennis community has first-rate infrastructure to support the training of our many talented Canadian athletes. This new centre will improve recreational infrastructure for the community, and will enhance
Alan N. Cohen, sports and entertainment executive, Purchase, N.Y., and
Cohen was born in 1931 and graduated from the