Sunday, February 07, 2010

Fighting Over Sports Subsidies

Spring Training is a big deal here in the valley. The Cactus League has played here for decades and it's seen as a boon to tourist industry. Most of the teams play in public facilities built (at taxpayer expense) specifically for them. Of course tax revenue must be raised to pay for them. The latest is what to do for the Chicago Cubs.

A bill to help keep the Chicago Cubs' spring-training operations in Mesa ran into strong headwinds Friday even before it was introduced in the Arizona Legislature.

Derrick Hall, president of the Arizona Diamondbacks, told The Arizona Republic that Cactus League teams are united in opposing the legislation, which would raise car-rental taxes and impose a surcharge on spring-training tickets to help pay for a new Cubs stadium and practice facility in Mesa.

A surcharge on tickets is just an excise tax on tickets to spring training games.

It's also interesting to look at the numbers.

The bill seeks to raise $59 million over 20 years to pay off bonds that would be issued by the Arizona Sports and Tourism Authority to build the Cubs complex.

The sports authority was created in 2000, when voters approved Proposition 302 to raise money for an Arizona Cardinals stadium and for Cactus League facilities, with West Valley cities getting the bulk of the funding so far. The sports authority levies a 1 percent bed tax and a 17.75 percent car-rental tax.

With the authority's initial funds now tapped, Mesa and the Cactus League say they need the legislation to keep the Cubs from bolting to Florida. The authority's $59 million would cover 70 percent of the public cost for the new facilities, which has been capped at $84 million. Mesa would contribute the remaining $25 million, Mesa Mayor Scott Smith said.

Investment by private parties, including the Cubs, would push the total cost of the baseball complex to about $119 million.

So taxpayers put up $59 million, Mesa taxpayers another $25 million and private parties put up $35 million.

Just as a point of reference, the Cubs 2009 player payroll (for active players) was $134 million. The local Arizona Diamondbacks were about half that - $73 million.



Blogger 寶貝 said...

This comment has been removed by a blog administrator.

February 10, 2010 at 9:28:00 PM MST  
Anonymous Anonymous said...

Professor: This whole sordid story with the Chicago Cubs has many different and divergent economies at play. There is plenty of hipocracy being spouted from the many representatives of the Cactus League teams.

Florida's economy doesn't have the jack and neither does AZ. I think the city of Mesa should tell the Cubs that now is not the time for asking for any type of public subsidy. It is not going to bode well for the Chicago Cubs goodwill which could suffer extensively here and at Wrigley Field.

The true baseball fan is realizing, through their own discretionary and personal economy that the MLB should really evaluate its entire entertainment product. There are some very astute general managers that are noticing a decrease in their season ticket support and also less amount of fans taking in a ball game.

The Cubs can opt out of their contract next year if they so desire and move their entire operation to Florida to take on more internal costs for doing business; including moving the entire operation; the cost of traveling extensively throughout the State of Florida; marketing to the new customer base; advertising; and trying to entice fans and spectators through their turnstiles.

The economy of the baseball fan only has so much discretionary income.

The economy of the commercial customer has also seen signs of weakness and are not ponying up the usual expenses of doing business by leasing luxury suites.

Consider the following scenerio as an incentive and performance based economy. Mesa should tell the Chicago Cubs organization that they can have any locations within the city boundaries and that all the risk is on them, the Cubs and its organization, to be successful. Mesa could let them know that the city would only take minimal taxes for the cost of doing the city's business. All the other cost and profit centers would be the responsibility of the Chicago Cubs and their organization to encourage and enhance their income statements and balance sheet. With that kind of stipulation and proclamation, the whole Wrigleyville West concept would flourish for both the fans, and the Cubs, including the Cubs employees from management, support, and player personnel.

Thanks for the vine.

AZ Cojones
Chandler, AZ

February 22, 2010 at 11:10:00 AM MST  

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