Next month I will be participating in a panel discussion hosted by the DC Bar on the issue of the NFL’s tax-exempt status. In prepping for that event, I can across a good article on the growth in luxury seating in pro sports. The piece, written by Sean Dinces in the socialist magazine Jacobin, does a nice job of explaining the growth in expensive and super-expensive accommodations.
Of course, sports access costs have risen dramatically over the last few decades as player salaries have escalated into the hundred’s of millions in some sports. This labor cost increase drove the teams to find new revenue sources and play-pens for the super-rich were a gold mine apparently:
…by the 1980s, most franchises already enjoyed robust markets of ticket buyers from the professional and corporate classes, who had limited outlets for conspicuous consumption at older stadiums and arenas. Maximizing stadium-generated revenues took on a new urgency for team owners at the end of the twentieth century, as the organization and growing assertiveness of players’ unions (one of the few corners of organized labor that saw gains in this period) placed much stricter limits on the ability of team owners to control labor costs.
However, another major driver of this explosion in premium areas was, interestingly, a peculiarity in the way some leagues “tax” ticket income for the leagues’ revenue-sharing pools but do not tax revenue from stadium-driven activities:
In some leagues, owners rushed to build massive banks of luxury suites not just because they added a new, robust revenue stream, but also because they offered teams a way to evade mandates for revenue sharing. In the NFL, for example, which has long required teams to commit a certain amount of their earnings to a shared pool in the name of competitive balance, league rules have historically exempted money from suite leases from the collective pot. In ceding to franchises the power to totally control money from luxury boxes, the exemption provided yet another incentive to construct as many of them as the market could sustain.
Of course, as critiques of these VIP areas began to mount from the traditionalists (often conservatives) and also left-leaning writers (who resented the social status message these private areas send to those on the outside), the teams started peddling the line that these luxury spaces were necessary to subsidize “affordable” seats for the average working-class fan. Dinces, correctly, has no patience for this cynical defense:
I recently assembled a database that catalogues the number of premium seats (luxury box seats plus club seats) and non-premium seats (everything else) at the current and previous stadiums of 73 out of 92 active mlb, nba, and nfl franchises for which data were available (all 73 inaugurated their current facility after 1987). Even using conservative assumptions and estimation techniques, the numbers tell an unequivocal story: despite massive increases in the average size of major-league facilities during the last quarter-century, franchises have added premium seats in luxury boxes and club levels while simultaneously removing non-premium seats. Across all three leagues, I estimate that the typical franchise occupies a facility that, as of 2013, had approximately 4,900 more premium seats and nearly 6,800 fewer non-premium seats than the one it replaced. These are not trivial numbers. They translate into an average reduction of non-premium seating capacity of 15 percent.
Actually, as the private box trend continues, average ticket prices have risen, making me wonder if perhaps the tens of thousands of “normal” tickets are not in some way helping to pay for the VIP areas:
Moreover, the constriction of supply has fueled a dramatic price spike even for these remaining seats. According to data released annually by the trade publication Team Marketing Report , the nominal cost of an average-priced, non-premium seat at an NBA game (weighted by the number of seats at each price level) rose from $22.52 during the 1991–92 season to $50.10 during 2001-02. After adjusting for inflation, this represents a jump of 73 percent over a period when real wages rose only around 10 percent. Such dramatic price inflation has manifested itself not so much in the stratification of consumers within stadiums, but rather in the near wholesale exclusion of the working class from them.
At this point, you might be wondering why a die-hard capitalist would be worried about leftists arguments against rich people being able to chose how they see sporting events. The answer to that question is that, as we all know, most of these venues were built with some sort of taxpayer subsidy, which is one of the most obnoxious aspects of this whole system: As Dinces goes on to note (echoing what many others have noted elsewhere):
According to data assembled by Judith Grant Long, when we take into account both initial capital costs and thirty years of ongoing upkeep, taxpayers will have contributed, on average, $352 million for each new major league stadium opened between 2001 and 2010. This dwarfs the $223 million average for facilities that debuted during the previous decade. As pro sports venues have effectively slammed the door in the face of all but the most affluent fans, supplicant states and municipalities have unilaterally diverted more and more from public coffers — a third of a billion dollars on average for every new stadium — to pay for them.
There are few exceptions to this trend. Some public funding deals are so lopsided that even the spin doctors in team public-relations departments and local newspapers have trouble finding a silver lining. Miller Park, for example, will have siphoned off an estimated $681 million of local taxpayer money over a projected thirty-year lifespan, while team owners chipped in only $137 million for initial capital costs. But even venues like Metlife Stadium, which the mainstream press reported would be paid for in full by private investors, will cost taxpayers dearly. Long estimates that ongoing maintenance and upkeep costs at Metlife will ultimately leave New Jersey residents with a tab of $376 million.
It’s this final points that I find ridiculous. If the rich and wealthy want to watch other rich guys play sports, then so be it. They can seclude themselves from “ordinary” people to their hearts’ content. After all, professional sports are mostly psychological con games and tax-exempt rackets that manipulate people into feeling a deluded sense of pride and/or enthusiasm for a random collection of millionaires and, in some cases, criminals. That’s all well and good, so long as taxpayer money is not involved. People have the right to enjoy themselves in any way they like, no matter how ridiculous, as long as they hurt no one and do not break laws. But in no way should local and state governments subsidize any part of this circus, especially not the private alcoves of the super-rich paying $1M a year so they don’t have sit next to drunk middle-class fans.
Dinces closes his piece in fine socialist form, lauding (with a caveat, though) one of the two poster-boys of socialist sport fans, the Green Bay Packers (the other being Barcelona’s football club):
Looking further into the future, we need to imagine a system of publicly owned spectator sports that inverts teams’ current prioritization of growth over access. Many point to the Green Bay Packers (NFL), a team operated as a nonprofit and funded by fan “shareholders” who do not collect dividends, as an ideal worth replication in this regard. Indeed, the Packers stand as proof that teams can operate successfully outside the traditional growth model in pro sports. But the franchise’s atypical structure has not precluded an increasingly exclusive stadium experience — last season the average Packers ticket price climbed to more than $82 apiece.
I completely disagree with this conclusion. Socialist professional sports teams are no better or worse than red-meat capitalist teams at providing entertainment in return for cash. If the NFL or the NBA are able to provide entertainment people want to pay for, let them do so in the most revenue-maxizing way possible. My boys and I enjoy the NFL and Formula One, but there is no reason to make someone who thinks these are stupid pastimes pay for them with hard-earned tax dollars. Indeed, governments should never involve tax revenues or subsidies to any professional sporting event, stadium, etc. Period. Leave those who could not care less who wins the next Super Bowl or “World” Series, or who does or does not sits in what air-conditioned box, out of this crazy system.