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Smarter Voters Reject Tax-Funded Sports Stadiums

Thursday June 8th, 2017   •   Posted by Craig Eyermann at 6:45am PDT   •  

Empty plastic seats at stadium, open door sports arena What do the citizens of San Diego, California and St. Louis, Missouri have in common?

In the world of professional major league sports, both cities have recently lost their National Football League franchise, with the billionaire owners of both the San Diego Chargers and the St. Louis Rams decamping for the “greener” pastures of Los Angeles.

But after those actions were announced, both cities’ passionate sports fans have had the opportunity to vote to increase taxes on themselves and specifically targeting any tourists visiting their towns to spend on fancy new sports stadiums.

Having learned from their experiences in dealing with billionaire sports franchise owners, voters in both cities sent those ballot measures down in flames. The San Diego Tribune‘s Dan McSwain weighed in on the outcome of the November 2016 vote in San Diego, where the city’s voting residents sent a clear message to the moneyed-interests looking to tap public tax dollars to fund their stadium scheme.

To be sure, the Charger’s Measure C was far from perfect. It may not have withstood legal challenge, because it came perilously close to the state’s constitutional prohibition against raising taxes for a specific private purpose.

Politically, however, its core strategy was deft. It would have raised taxes on hotel guests only. Because hotels are subject to robust rate competition on most nights, in economic terms this means hotel owners ultimately would absorb the higher cost in the form of lower profits.

That’s why the Chargers attached a convention center to the project. The team could share or avoid big costs on common slabs of concrete foundations, concourses and such.

And this wouldn’t be some empty stadium used just 10 days a year. Tourism dollars would flow from conventions. Why, the project would pay for itself, consultants projected.

Indeed, Measure C effectively offered a $1.8 billion convadium with $1.15 billion coming from hoteliers, indirectly, and $650 million coming directly from the Chargers, its fans, and the NFL.

Fatally for the measure, the team failed to convince the hotel industry, which preferred a waterfront expansion of its existing center. In the late 1990s, the industry had convinced politicians to bill taxpayers directly for the last expansion through the city’s general fund. If hoteliers were going to pay this time around, they wanted to run the show.

Yet the death blow was delivered by voters, 57 percent of whom rejected Measure C in November. We can safely infer that ordinary people understood that tax dollars, even those effectively paid by hoteliers, are tax dollars. Once hiked, taxes can just as easily go to roads, pensions and the poor in San Diego instead of further enriching the NFL.

Indeed, we can probably rule out “not-in-my-backyard-ism.” Voters who lived in downtown precincts — the very people who would live amid the traffic jams and reveling conventioneers from a 15-acre convadium — supported the project by 52 percent to 48 percent, according to data from the county registrar.

No, this was a vote against handouts to billionaires. With, perhaps, a message to the hotel industry.

The story in St. Louis is a little different. There, in April 2017, voters had the opportunity to vote to tax themselves and their visitors to fund the construction of a soccer stadium as part of an effort to bring Major League Soccer to the city. Sports Illustrated reports:

It looks like St. Louis will remain a two-sport town after voters defeated a measure that would have helped pay for a stadium as part of an effort to lure a Major League Soccer franchise.

City voters turned down Proposition 2 on Tuesday by a 53 percent to 47 percent vote. It would have provided $60 million from a business use tax to help fund a soccer stadium.

MLS leaders have expressed strong interest in St. Louis, but only if voters agreed to public funding. The league is expected to award two expansion franchises this fall, both of which would begin play in 2020.

With the vote’s outcome, St. Louis, a city where soccer has long been a hotbed for the sport, effectively pulled itself out of consideration to have a major league professional soccer team, having learned from the bills that the city’s taxpayers will still have to pay for another 10 years to its creditors for building its professional football stadium that no longer hosts a professional football team.

Eventually, voters learn when they’re being played by billionaire team owners looking to profit from getting taxpayer financing and respond accordingly.

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June 2017