For most of the year one of the hot topics of conversation around the water cooler has been do the Royals need a new baseball stadium? If so, where should it be built? While I certainly have opinions on this topic. It will not be the subject of this article. The question I hope to answer is who should pay for it.
The idea of publicly funded stadiums really started in the 1950’s when MLB Commissioner Ford Frick began arguing that cities benefitting financially from the existence of these ballparks should help pay for them. This led to one of the saddest days in sports history, when in 1957, the Dodgers announced they would be moving the team from Brooklyn to Los Angeles because LA had promised to be pay for a new stadium there. https://en.wikipedia.org/wiki/Dodger_Stadium
Since that time, many cities including ours, have regularly offered various sports franchises subsidies to either stay here or come here. This practice isn’t limited to sports. Many types of attractions are often subsidized by cities under the belief that the additional revenue they will generate will more than pay back what the municipality invests financially.
But is that really true? Here in the area, large public investments were made into entertainment venues such as the Power and Light District and 18th & Vine. Both cost taxpayers millions due to their lack of success in generating their anticipated tax revenues.
Here we are again, this time with the Royals crying poverty and asking the taxpayer to shoulder a large portion of the cost of a new downtown stadium for the team. At a recent press conference Royals CEO John Sherman proposed state and local governments pay for an undisclosed portion of the stadium, while the entire cost of the surrounding Royals Village and the remaining cost of the stadium would be paid for by the team and other private investors.
At first glance, this proposal probably sounds fair and equitable. The city and state do receive money and prestige from having a major league sports franchise located with its borders. For that reason, it is understandable why the team would be asking for certain accommodations from the public. But upon a deeper analysis I believe this proposal shows itself to be far more potentially lucrative to the Royals than to we the taxpayer.
Why do I say this? First, by focusing the bulk of the private dollars being invested in the Royals Village, they can essentially have the public pay for the construction of a venue that will increase the value of the undeveloped land they purchase around it for the Royals Village. Then once developed, they can sell this property at a huge profit, while the portion that the public has invested in, the stadium itself, doesn’t appreciate at the same rate. Any way you look at this the Royals will win, at least financially. The monetary returns for the taxpayer are far less assured.
I am a huge Royals fan, and certainly want to see them stay in Kansas City. However, I am even more of a fan of capitalism. If the organization is going to stay here long term, it needs to be because they have a viable business model. Not because they have been given loads of corporate welfare.
Sadly, corporations have discovered that attaining public money is often easier than private. Because of this, they will sometimes focus more of their attention convincing politicians of their value than the customers they are supposed to be serving.
One of the best things about capitalism is if a business makes poor decisions or does not provide value to their customers they go out of business. This survival of the fittest system is the lifeblood of progress and advancement.
On the other hand, government involvement in private enterprise has the complete opposite effect. It can keep businesses alive that shouldn’t be, and can slow the progress of successful ones.
Regardless of your views on the new ballpark, I would strongly encourage you to consider the cost to you and our city before supporting a significant public/private partnership with the Royals or any other company with their hand out. If a company can’t afford to do something on their own, perhaps it doesn’t need to be done.
(Past performance is no guarantee of future results. The advice is general in nature and not intended for specific situations)