PLAYING FOR DOLLARS

January 29, 1999
		As the price tags of professional sports teams and stadiums set new records, local governments and fans are having to foot much of the bill. Phil Ponce and guests take a look at the economics of professional football.

Jan. 5, 1999: A look at the National College Football championship. Jan. 27, 1999: The NFL signs a series of television contracts worth $17 billion. Browse the NewsHour's coverage of the sports.   The National Football League Patriots Redskins Superbowl.com Fox Sports	JIM LEHRER: And finally tonight, Phil Ponce examines the super money involved in super sports.
	Super Bowl equals super money.
	PHIL PONCE: Football's championship contest, the Superbowl, is the most popular sporting event in America, with a television audience close to 130 million people. And as always, the game is about big plays and big money. ANNOUNCER: Live from Miami, it's the Superbowl XXXIII pregame, 11 AM Eastern, 8 Pacific, on Fox. PHIL PONCE: The broadcast of this weekend's game in Miami is part of an $8 billion, eight-year deal between Fox and the National Football League. More than 30 companies, eager to reach so many consumers, will pay a record $1.8 million per 30-second commercial, more than $53,000 a second. Football, like all professional sports, is played for big bucks. The value of an N.F.L. team continues to rise. Just last month, the Washington Redskins were sold, subject to N.F.L. approval, for a record $800 million. To earn back their money, owners are demanding lavish new stadiums, and some cities and states are eager to build. Hartford, Connecticut recently lured the New England Patriots away from Foxboro, Massachusetts, with the promise of a new stadium. SPOKESMAN: I personally am not going to rest until we bring a championship trophy back to New England. (Applause) PHIL PONCE: Under the deal, Connecticut agreed to provide a $280 million riverfront stadium with an additional $70 million to acquire and improve the site, 26,000 parking spaces, $15 million for a practice site, $10 million for environment cleanup, and $170 million in a fund for future improvements and assorted state guarantees. Patriots' owner Robert Kraft also receives all stadium revenue from food, parking, and concessions for Patriots events. The state collects a surcharge from each ticket sold, but otherwise, owner Kraft gets the stadium essentially rent-free for the 30-year life of the deal. The agreement drew much criticism, but was passed by the Connecticut legislature in December. Other teams have also recently found new stadium homes in new cities. In 1995, both the Rams and the Raiders left Los Angeles for St. Louis and Oakland, respectively. That same year, the Cleveland Browns headed for Baltimore and changed the team name. And one year later, the Houston Oilers bought one-way tickets to Nashville. Some cities have decided to foot the bill to keep their teams. Denver residents, for example, agreed in November to come up with $260 million towards a new stadium to replace the old one. Payback, at least of the psychological sort, is coming fast for the citizens of Denver. Their team, the reigning champions of the N.F.L., makes its second straight Superbowl appearance Sunday, taking on the Atlanta Falcons.
	An urban revitalization opportunity?
	PHIL PONCE: More now from Connecticut Governor John Rowland, who was instrumental in bringing the New England Patriots to Hartford; economist Andrew Zimbalist of Smith College, author of a recent study on the economic impact of sports teams and stadiums; and writer and commentator John Feinstein, who frequently helps us understand the world of sports. Welcome all. PHIL PONCE: Governor Rowland, your state is spending a lot of money. Why are you doing it? GOV. JOHN ROWLAND, (R) Connecticut: Well, it's more about urban revitalization than it is about football. We were going to do an urban plan downtown anyway. As a matter of fact, we were going to build a dome stadium for the University of Connecticut to go Division 1-A, along with a convention center and restaurants and an entire retail center. So it was our plan to try to attract outside investment. And so once we started what we called Adrian's Landing and the New England Patriots showed owner showed some interest, it made a lot of logical sense to have dual use of the stadium and continue to attract the other urban revitalization projects that we had been planning for. So this is a good public investment because it's a partnership. And as far as the 30-year investment, we'll get that money back and then some to pay off the bonds that we were utilizing in the first three years of expenditures. PHIL PONCE: Professor Zimbalist, a good public investment? ANDREW ZIMBALIST, Smith College: Well, I think that remains to be seen. I don't think that the governor is going to get his money back. I think that the stadium is going to cost and the bond issue and the service on that and the maintenance of the stadium and sanitation costs and environmental remediation costs that all of those costs will be far in excess of any additional taxes that he pulls in. PHIL PONCE: So are you saying it's going to be a net loser? ANDREW ZIMBALIST: Yes, I think so - and in terms of the budget -- and in terms of the historical record of other cities that have built new stadiums, it's not very favorable. You cannot expect there to be a positive economic kick from this.
	Bringing people back.
	PHIL PONCE: Govern Rowland, no positive economic kick? GOV. JOHN ROWLAND: Well, forget economic kick and I'll put that aside for a moment. Typical a lot of northeastern cities, we've been in the doldrums for the last 20 years. We're trying to attract young people to come back to our community. It's not about creating jobs. Our unemployment rate is 3.1 percent. What we really are trying to do is attract young people in the next generation to our community. And so what we're going to have in a very short while is a beautiful New England community with a little slice of the city life, something that I think that young people want as they see in Boston, New York and Washington, D.C. and Philadelphia. So it's going to have with a huge spiritual impact. It's going to have an urban impact. As a matter of fact, public supports it overwhelmingly; the legislature and the Senate passed it by a 3-1 margin. We passed it in the House by a 2-1 margin. And so there's great public sentiment for this proposal, with a handful of people that are naysayers. But we feel very confident. We know the 10 percent tax on the tickets will pay off the bonds. All the studies have concluded that, and so there's really - there's nearly no downside to this type of an investment. PHIL PONCE: John Feinstein, what does it mean to a group of fans to get a new major sports franchise like this? JOHN FEINSTEIN, Sports Author: Well, Phil, I think it's a good news-bad news deal. Obviously, when a professional team moves into your city -- now, the situation in Hartford is a little different because I think many of the same fans who went to the games in Foxboro will go to the games in Hartford, because it's not that far a trip from one to the other. But when a team moves from Cleveland to Baltimore, or from Los Angeles to St. Louis, obviously you're talking about an entirely different group of fans. And I think the good news about it is, is that you have a team, you have something to rally around. The newspapers have something to cover on a regular basis. The bad news is that the way these stadiums are being funded these days, the average guy isn't going to have much chance to take his family to a ball game because these personal seat licenses that have been set up in many towns, where you to pay for the right to pay for a ticket, they become known - PSL's -- as personal stealing licenses around the country because that's in essence what they are because you're paying for the right to pay again. For a lot of people, there's no point because you're not going to be able to afford to go to the ball games. PHIL PONCE: Professor Zimbalist, what's been the experience in other municipalities? Has that happened, has the "average fan" been priced out of the ticket market? ANDREW ZIMBALIST: Yes, indeed. The average price for an NFL seat is about $50. PSL's are not the reason, however. PSL's are up-front payments for ticket rates, but they actually reduce the payment that you make later on, so I wouldn't put the burden on the PSL's. The problem is that you build new stadiums in order to generate new revenue. You have fifteen, twenty thousand seats that are club seats that go for two or three thousand dollars a year; they're going to try to sell them for four thousand dollars in Hartford. You have a hundred and fifty/a hundred and eighty/two hundred and eighty luxury boxes in the case of the Washington Redskins, and then the other seats are selling for $40 or $50. The average family really can't afford that.
	Too costly for the average family?
	PHIL PONCE: Governor Rowland, how do you respond to that? Is it going to be basically a playground for the rich, as some people have called it? GOV. JOHN ROWLAND: No, not necessarily. We don't have PSL's, number one. Number two, we get use of the stadium for not only the U.Conn. games, but also any other types of use. The other question that all of us have to ask, especially those of us who are public officials, is what's the alternative? And in discussions with our legislators and with the public and even with people that were vocal critics, there is no other alternative for us here in Hartford. And I think the big difference, as the sports announcer alluded to, we're bringing a fan base from out of state into Hartford, so there is some economic impact. We've probably got about 60,000 people already on the waiting list. So the question and the talk of guarantees is really a moot point. And it's going to bring some real excitement to our community. It's going to give us something to rally around. It's actually going to be the first thing we've put public money into that pays for itself. We build schools and bridges and we do highways, we build prisons we get no economic return or financial return. This is a good business plan because we actually get enough money back from the 10 percent tax to pay off the bonds over the next 30 years. So it does not put the burden on the public; it puts it on the person buying the ticket. PHIL PONCE: Professor Zimbalist, my understanding that once upon a time the municipalities would own a stadium, they'd rent it out to with a sports team and then when this joint partnership began between cities and teams, the city would kick in 20 to 30 percent. Now it's, what, it has flipped and the equation has gone in the other direction, where the city pays for all of it, or up to 70 or 80 percent? Why -- what caused that change? ANDREW ZIMBALIST: Well, actually, it's interesting that, in this particular case of Hartford, the city is -- the state, rather, is -- or public entity is paying for 100 percent. That's my main problem with this deal. I this think it's perfectly reasonable for the governor to try to promote economic development. I think that the idea of increasing community cohesiveness of public spirit is a fine goal. And it's possible. But he didn't have to give away the store to Mr. Kraft to do this. Mr. Kraft was playing in the worst stadium in the NFL It was situated a whole hour's drive outside of Boston. Mr. Kraft himself called it a high school stadium. This is the richest deal in NFL history, and it's fine to put out some public subsidy. You have to do that in today's market, but the governor and the legislature in this case just went much, much too far. And the studies that he's talking about that have affirmed that they're going to get their money back out of this are studies that make totally unrealistic assumptions, such as that 90 percent of the people are going to be coming from out of state to the ball games. The Peat Marwick study that he's relying on actually assumes a negative real interest rate over 30 years and with a 5.7 percent annual rate of inflation. If you make realistic assumptions, it's not going to pay off economically. Maybe it will pay off socially. PHIL PONCE: Governor, quickly, how does a governor, how does a mayor know if he or she has gone too far? GOV. JOHN ROWLAND: Well, first of all, our city does not have to put any money into this particular plan. And if you think of it, the state is acting as a banker. We're actually floating the bonds, paying off the bonds. So that whole aspect of it is a no-brainer. And the positive attributes of bringing in the stadium, bringing in this facility and having an attractive force to bring from bringing young people back to our community makes it all worthwhile. In addition to all the other exciting features of having an NFL team and a relatively small market. We are not a large media market. Hartford is a relatively small market, which is why we had to make it very attractive.
	The moveable franchise.
	PHIL PONCE: John, is it simply a new reality that fans now know that, just as they can't necessarily rely on a local superstar to stay with that franchise, that now they can't rely on franchise itself sticking around forever? JOHN FEINSTEIN: Well, of course not because baseball is the only sport that has protection through antitrust from teams moving. That's why no baseball team has moved since 1971. And the problem you have is when you have politicians like the governor making statements like, "the public won't be paying for this. The ticketed-buyer will." Well, who are the ticket buyers? Last I looked, ticket buyers are the public. And that's the problem in all. The politicians who vote for these things are going to go sit in the luxury boxes and it donated mater to them who pays the taxpayers should be the ones voting on this, not politicians. PHIL PONCE: And you talked about the experience of losing a team. Amplify on that personally. JOHN FEINSTEIN: It's an absolute -- it takes everything out of you emotionally because you put so much emotionally into rooting for a team. You get attached to these individuals, you get attached to the teams, and when a team moves from one city to another, like the Browns leaving Cleveland for Baltimore, that was a horror show because they were a part of that team's soul. And when a team moves like that, it rips part of your soul out. PHIL PONCE: Governor Rowland and Professor Zimbalist, I'm going to have to stick with the professional here - get a call on the Super Bowl this Sunday, John. The Broncos are favored. What do you think? JOHN FEINSTEIN: Well, I really think -- I think that the Falcons are the team of destiny here. The Broncos are probably a little better team. Dan Reeves seems to be working miracles both with his heart and with his team's heart. PHIL PONCE: Gentlemen, that's all the time we have. I thank you both. I thank you all very much.