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Corporate Welfare

All articles with the "Corporate Welfare" tag.

Published: Sun, 20 Aug 2017 00:00:00 -0400

Last Build Date: Sun, 20 Aug 2017 01:52:17 -0400


Why Handwashing Is Key to Ballpark Food Safety

Sat, 19 Aug 2017 08:00:00 -0400

In an interesting before-you-reach-for-that-hot-dog style report released last week, Sports Illustrated compared and ranked the food-safety climate at every Major League Baseball park in the United States. Seattle's Safeco Field came in first, while Tampa Bay's Tropicana Field brought up the rear. My favorite (and hometown) ballpark, Boston's Fenway, ranked second. Among its conclusions, the report found "almost a third of the league's stadiums had over 100 total violations, including both Los Angeles clubs. One Chicago stadium failed its routine inspection for the second summer in a row. Eighteen ballparks had critical violations in at least a quarter of their concession stands." Some of the violations reported are objectively gross: "Camden Yards had evidence of rodent infestation at eight different food entities and Yankee Stadium had 14 stands overrun with filth flies." The SI report updates the first such study, published by ESPN in 2009. Food safety at sporting events has long intrigued me. The first time I ever really thought about food safety is intimately tied to sports. The year was 1980. I was seven years old. As I watched an episode of Quincy, M.E.—titled "Deadly Arena"—I saw the title character engage in what IMDB characterizes as "a race against time to find the source of" a botulism outbreak at a sports stadium "before the field becomes littered with bodies." Some of the best stadium food I've eaten in the years since has been the Ichiroll (an Ichiro Suzuki-themed sushi roll) and the grasshoppers at Safeco. The worst food I've ever eaten at a sporting event—football, rather than baseball—was a crab and cheese pretzel at FedEx Field in Maryland. But the relative tastiness of a stadium's food doesn't have much if anything to do with the safety of that food. "The real risk, it seems to me at the ballpark, is the handling of food," said UCLA Prof. Michael Roberts—with whom I serve on the board of the Academy of Food Law & Policy—in comments to SI. "That's where you've got handlers cooking the food, handing it out, managing refrigeration and heating. … So it seems that the most important players in this would be local level, the county inspectors, the folks that are there to ensure quality and safety measures are being followed." Others SI spoke with echoed Roberts. And I will, too. He's exactly right. Data back him up. Nearly six out of every ten cases of foodborne illness in this country are caused by norovirus, which is transmitted most often from person to person due to poor handwashing after using a restroom. According to a 2016 article published in the Journal of Food Protection, every state requires workers to wash their hands after using a restroom. Requiring foodservice employees to wash their hands after using a restroom is—in a bubble—smart lawmaking. But other rules may offset the handwashing rule. For example, fire-safety laws requiring that bathroom doors open inward, rather than outward, means in most cases that a person must touch a door handle before they leave a restroom. So a foodservice worker may do everything they're supposed to—washing their hands before leaving a restroom—but their best efforts may be foiled by having to share a bathroom-door handle (and the associated germs) with people who don't wash their hands. The FDA's model food code recognizes the potential for re-contamination after washing one's hands. "TO avoid recontaminating their hands ... FOOD EMPLOYEES may use disposable paper towels or similar clean barriers when touching surfaces such as manually operated faucet handles on a HANDWASHING SINK or the handle of a restroom door," it states. But many foodservice establishments are swapping out environmentally unsound disposable paper towels for efficient, modern air dryers. As more and more restaurants move to fancy Dyson-style air driers, fewer and fewer restaurants even have paper towels in their restrooms, making it difficult to open a bathroom door without touching the handle. Sports stadiums, airports, and other venues that often swap out bathroom [...]

If MLS Is a Ponzi Scheme, Taxpayers Will Get Left Holding The Bag

Sun, 13 Aug 2017 15:01:00 -0400

Cincinnati, Ohio, has a modestly successful minor league soccer team, FC Cincinnati, which shares a stadium with the University of Cincinnati football team. Within the next two years, though, the club hopes to join Major League Soccer, the top tier professional league in the United States. To get there, FC Cincinnati will have to beat out 11 other cities that have applied for the MLS expansion in 2020. Winning the bidding process will likely require taxpayers to agree to fund a new soccer-only stadium for FC Cincinnati. The price tag: about $200 million, at least half of it coming from public sources, the Cincinnati Business Courier reports. But before Cincinnati—or Charlotte, Detroit, Nashville, Phoenix, or any of the other cities bidding to join MLS—agrees to put-up public financing for a new stadium, officials there might want to take a good, hard look at the financial health of the league they are attempting to join. Because, right now, MLS resembles something a little like a Ponzi scheme. The league is losing money every year, Commissioner Don Garber acknowledges, even though he's declined to provide specifics. Meanwhile, weirdly, the value of individual franchises is climbing fast. The most recent Forbes' analysis of MLS teams found that the average franchise is now worth $185 million, a 400 percent increase over the average value of a team in 2008. "That business model and this financial trajectory suggests that MLS's sea of red ink is either a loss leader or a Ponzi scheme," Neil deMause, author of the book Field of Schemes, writes at Deadspin this week, "and it's not always easy to tell the difference between the two until it's too late. Several sports economists, though, aren't optimistic." DeMause suggests a big part of the explanation might be MLS' rapid expansion. From its formation in 1996 through 2004, MLS had somewhere between eight and 12 teams scattered around the country. By 2010 membership had jumped to 16, and four more teams were added by 2015. With the addition of Atlanta United and Minnesota United (soccer desperately needs a wider selection of team names) this year, there are now 22 franchises in MLS. The league reportedly has plans to expand to 26 teams by 2020—that's where Cincinnati, Charlotte, and the other bidders come in. Each new team pays an "expansion fee" of $150 million to the league, to be split among the other owners. And each new team is supposed to bring its own soccer-specific stadium with it, meaning taxpayers are generally part of the transaction, whether they want to be or not. Since MLS continues to struggle with TV ratings—which drive advertising, which allow other major professional sports leagues to make big money today—and with attracting high-level footballing talent, the long-term viability of the league is questionable, deMause writes. "If you can't make money either of the old-fashioned or sustainable ways, you might as well recruit a new batch of suckers to boost your bottom line in the short run," says deMause. "It also helps to explain MLS's otherwise puzzling insistence on making a brand-new, soccer-only stadium a primary condition for anointing new franchises." Even compared to other American professional sports leagues, Major League Soccer operates with a stunning degree of socialism. While other leagues use salary caps or luxury taxes to impose parity, and all leagues use some form of revenue-sharing to balance smaller and bigger market teams, they at least allow the franchises to negotiate salaries directly with players and try to offer the most money to a prospective free agent. In MLS, players sign contracts with the league and are then allocated to each of the different franchises. No surprise, then, that the best players end up in New York and Los Angeles, or in places like Seattle and Toronto where soccer is weirdly super-popular. All the teams are supposedly equal before MLS. Some teams are just more equal than others. It happens in other sports too. It might be unfair the New York Yankees and Los Angeles Dodgers can [...]

What the Left Should Like about Public Choice

Sun, 30 Jul 2017 13:58:00 -0400

Although the public choice school of political economy has been demonized in a new work of putatively progressive fiction masquerading as intellectual history, good-faith leftists (if they don't already regard themselves as libertarians) may be surprised by how their cause could benefit from the insights of James Buchanan et al. (For reviews of the book I'm referring to, see among others this, this, and this. To keep up with the daily sightings of misquotations, fabrications, and smears, read Don Boudreaux at Cafe Hayek.) Full disclosure: despite its many valuable insights, I find less to like in public choice theory, at least its most common variant, than many (nonlibertarian) leftists would. For one thing, I (like Murray Rothbard) don't share the view that the state is just another way (along with the market) in which we assert our personal preferences and obtain goods and services. (Public choice versus private choice.) The state is a predator and an exploiter, not a cooperative venture for the production of "public goods." I don't see how a hypothetical social contract or constitutional convention changes that. And I'm underwhelmed by the constitutional contractarian argument that, while the state indeed coerces, we in effect have consented to be subject to the state's threats of violence. On the other hand, I like the methodological and moral egalitarian individualism at the base of public choice—and so should all leftists of good faith. Everyone has the right to be free of aggression; no one is naturally endowed with authority over others. But I am uneasy about the fact that that the consequent unanimity principle in practice becomes something far less than literal unanimity. For me it's not enough that the decrees of legislatures are passed under constitutional rules everyone perhaps would agree to were they gathered at a convention. As Rothbard pointed out, such hypothetical unanimity can easily become a device to legitimize almost anything the government does. I realize that concern about the production of important "public goods," such as security and dispute resolution, underlies much of this, but perhaps this concern betrays an underappreciation for the power of entrepreneurship, technology, and cooperation through nonstate channels. For a long time some heavy thinkers thought lighthouses couldn't be produced on the market. As for the market production of security, a voluminous interdisciplinary literature has become available to show how feasible that would be. (Start here. By the way, it's wrong to think that a stateless society would lack a constitution.) Elements on the left should also be delighted by public choice scholars' development of the theory of privilege-seeking (or "rent-seeking"). It's an old observation, really: when the state's personnel have favors to dispense, people in the private sector will invest resources to obtain them. Such favors are by nature impositions on third parties. They may take the form of cash subsidies, taxes and regulations that hamper or quash competition and raise incomes in a nonmarket manner, and other devices. But the principle is the same: private- and government-sector individuals collude to use the state's coercive power to obtain what they could not obtain through voluntary exchange for mutual benefit. It's a theory of exploitation the good-faith left should embrace. By the same token, the state's personnel, seeing opportunities to sell favors, are just as likely to initiate the privilege-seeking process. In this sense, public choice scholars are right when they see the political arena as a series of exchanges. The big difference with the marketplace, however, is that in the political arena the largest group of people is forced to participate. The bottom line on privilege-seeking, which should interest the left, is this: the people with the greatest access to power will not be those the left cares most about, but those who run Boeing and ExxonMobil and GE and Lockheed Martin. Wealth transfers will tend ov[...]

Trump’s 'Made In America Week' Inadvertently Highlights Corporate Welfare

Thu, 20 Jul 2017 11:05:00 -0400

Even as a centerpiece of his policy agenda—the repeal and replace of Obamacare—was going down in flames in the Senate, President Donald Trump appeared to be having fun. He donned a white Stetson hat. He climbed into the cab of a bright red fire truck parked on the White House lawn. He swung a golf club and admired a baseball bat. It was a made-for-TV moment—"Made In America Week," the White House's celebration of domestic manufacturing—but it wasn't all for show. Trump was promising to implement policies, like a new tax on foreign-made goods and a restructuring of the North American Free Trade Agreement, that will help some companies based in America even as they hurt other businesses and consumers. Trump, surrounded by props large and small, promised he was fighting for a "level playing field" for American-made products. "But," he said, "if the playing field were slanted a little bit towards us, I'd accept that also." As it turns out, some of the businesses invited to the White House this week already have the playing field slanted—in some cases quite dramatically—in their direction. A Reason review of the 50 businesses invited to Trump's "Made in America" event reveals that 21 of them have received some form of government grant, subsidy, loan guarantee, or other economic incentive since 1997, according to records aggregated by Good Jobs First, a union-funded nonprofit that opposes corporate welfare. Running the names of the 50 businesses through the "subsidy tracker" database maintained by Good Jobs First revealed more than 870 records of individual handouts totaling more than $598 million in spending at the local, state, and federal level. Those subsides take several forms. More than 300 of them are direct grants, totaling more than $325 million in pure subsidies that shift tax dollars from government coffers to businesses' bottom lines. Another 144 are loans, in which the federal or state government take on the role of banks and dole out investment cash with taxpayers as the ultimate backstop on defaulted payments. Most of the rest are various kinds of tax breaks, a hidden form of subsidy that doesn't show up on government budgets but rewards certain businesses at the expense of everyone else—and serves as a subtle acknowledgement that taxes are too high. "There are virtually no credits in federal or state tax law that are sensible tax policy," says Chris Edwards, director of tax policy for the libertarian Cato Institute. "The fact that states 'need' special breaks to those taxes is an admission by the politicians that the general tax rates are too high and are scaring away businesses. But then the solution is cutting overall rates, not just cutting for a narrow group of favored businesses." While 21 of the 50 invitees have benefitted from government assistance in one form or another, most have only dipped into public coffers a few times. The Montana-based Simms Fishing Products, for example, has collected more than $400,000 from federal and state subsidy programs since 2011. Ames Tru Temper, a Pennsylvania-based maker of wheelbarrows and other small-scale farming equipment, collected more than $3.3 million in grants and tax breaks since 2003. But the White House also invited some of the biggest players in the corporate welfare game. Take Caterpillar, the Illinois-based manufacturer of earth movers and other heavy trucks. Over the past 20 years the Department of Commerce, Department of Defense, Department of Energy, and various other federal and state agencies have given Caterpillar 200 grants valued at more than $155 million in direct taxpayer assistance. All this to a company that generated $38 billion in revenue last year. A majority of those grants have funded Caterpillar's research and development of new technologies. Caterpillar also received more than $17 million in government grants for a subsidiary company, Solar Turbines Inc., records show, again mostly for research and development. It's not every day you see a [...]

Matt Welch Interviews Sen. Mike Lee, Kmele Foster, James Kirchick and More from 9-12 AM ET

Mon, 10 Jul 2017 08:32:00 -0400

This morning I am sitting in the guest-host chair for Stand UP! with Pete Dominick on Sirius XM Insight (channel 121) from 9-12 am ET. The guests are scheduled to include:

* James Kirchick, author of The End of Europe: Dictators, Demagogues, and the Coming Dark Age, who will talk about President Donald Trump's trip to Europe last week.

* Nina Khrushcheva, author of The Lost Khrushchev: A Journey Into the Gulag of the Russian Mind. She will talk about Vladimir Putin and the continuum of Russian political leadership.

* Sen Mike Lee (R-Utah), author of Written Out of History: The Forgotten Founders Who Fought Big Government, who will talk about that book and also the prospects for Obamacare reform.

* Denny Dressman, author of Heard but not Seen: Richard Nixon, Frank Robinson and The All-Star Game's Most Debated Play. We will discuss Pete Rose knocking the shit out of Ray Fosse in 1970.

* Kmele Foster, impresario of FreeThink Media and The Fifth Column podcast (speaking of which, here's last week's, including a memorable lil' 4th of July rant from Kmele). We'll talk about, I dunno, race, media…maybe a little Austin Petersen.

Please call the show at any time, but especially in the Kmele hour: 1-877-974-7487.

Brickbat: It's Just Not Cricket

Tue, 27 Jun 2017 04:00:00 -0400

(image) Indian officials have charged 15 men with sedition and criminal conspiracy for celebrating Pakistan's win over Indian in a game of cricket.

Detroit Council Dunks on Taxpayers, Will Use School Funds for Basketball Arena

Sun, 25 Jun 2017 13:15:00 -0400

Taxpayer-funded bonds sold to raise revenue for parks and schools in cash-strapped Detroit will instead be used to lure its professional basketball team back into the city. The Detroit Pistons have played out in the suburbs (first in Pontiac, now in Auburn Hills) since 1977, but will relocate to a new downtown arena thanks to $34 million in incentives approved by the Detroit City Council. Taxpayers are already on the hook for more than $300 million of the $900 million construction cost for new Little Caesars Arena, built to host the Detroit Red Wings of the National Hockey League. The additional spending will make the arena suitable for basketball and help pay for new practice facility and front office for the Pistons. Michigan Radio reported this week that "some Detroiters are unhappy with the deal because the bonds are taxpayer funded with money originally intended for schools and parks." As well they should be. In a city still recovering from bankruptcy, local officials might have found better ways to use $34 million. It's a fair question whether government should be spending money on parks and schools, but it's certainly a more core function than throwing cash at billionaire team owners. Tom Gores, who owns the Pistons, is worth an estimated $3.3 billion. But it gets worse. As the Detroit Free Press reported earlier this month, local activists filed a lawsuit to block the stadium spending. The city asked the judge to dismiss the case, making several laughable claims about why it was essential to spend money on the stadium project, instead of using the money to help fund the city's public schools (which are $500 million in debt, by the way). Stopping the project, the city's attorneys argued, would be "devastating" to Detroit's "remarkable comeback story." "Post-bankruptcy, the city cannot expect lenders to extend unsecured credit at reasonable rates, so its debt has been limited to secured transactions, tied to specific revenue streams," the attorneys write. "The default on any of that debt would significantly affect the ability of the city to attract investors. The city is currently engaged in a bond offering to raise funds to rebuild neighborhoods. A default on DDA's debt would certainly increase the costs and could possibly derail the plan completely." As Deadspin noted this week, this is disingenuous nonsense. The city's attorneys are essentially arguing that not giving millions of dollars to the Pistons' billionaire owner would jeopardize Detroit's entire economic recovery. A federal judge dismissed the lawsuit. The next time you see a headline about how woefully underfunded Detroit's schools are or hear about appeals for additional state and federal funding, think about how its city leaders prioritize a finite amount of tax revenue. Detroit's rickety fiscal situation is the result of decades of poor choices, from which it appears the current leadership has learned nothing.[...]

Congress Could Make It Harder for Local Pols to Blow Your Money on Stadiums

Thu, 15 Jun 2017 09:34:00 -0400

When New York City agreed to build a new stadium for the most valuable baseball team in the country, the Yankees, they partially paid for the project by issuing more than $1.6 billion in municipal bonds. That means Red Sox fans in Boston ended up indirectly helping to build their rivals' new home. A bipartisan bill introduced this week in Congress proposes to close the federal tax loophole that made that possible. The bill, sponsored by Sens. Cory Booker (D–N.J.) and James Lankford (R–Okla.), would not be the end of government-subsidized stadiums, but it would stop local officials from shoveling part of the cost onto the backs of taxpayers well outside their own jurisdictions. The $1.6 billion in municipal bonds issued for the construction of the new Yankee Stadium is a record. But New York isn't the only city to take advantage of a loophole that ropes taxpayers from all across America into subsidizing stadiums. According to a recent analysis by the Brookings Institution, a centrist think tank, since 2000, 45 major professional sports stadium projects have been financed in part by more than $13 billion in municipal bonds. Those bonds are meant to be used to pay for roads, sewer systems, schools, and other municipal infrastructure needs. They are exempt from federal taxes as a way of encouraging investors to buy them at lower interest rates, saving cities money. Those $13 billion in untaxed bonds for stadium projects have reduced federal tax revenue by $3.2 billion since 2000, according to the Brookings' estimate. "It's an unseen subsidy," Victor Matheson, a sports economist at the College of the Holy Cross, told Reason on Wednesday. "It's a tax break that we never get to vote on, and it's one that don't even think about and don't see." The bill introduced by Booker and Lankford would end the federal tax exemption for municipal bonds issued for stadium projects. Bonds issued to pay for infrastructure and other public projects would still be sheltered from taxation. "It's not fair to finance these expensive projects on the backs of taxpayers, especially when wealthy teams end up reaping most of the benefits," said Booker in a statement. He pointed to the fact that decades of economic research shows little or no correlation between stadium projects and overall economic growth. On that point, Booker is correct. The last three decades have been a sprawling cross-country experiment in the grand promises of economic growth spurred by building stadiums. The reality is you can build it, but the promised payoff rarely comes. The Yankees got $492 million through the backdoor subsidy created by the federal tax exemption for municipal bonds, the Brookings study says. The New York Mets scored the second largest subsidy from taxpayers, $214 million for the construction of Citi Field, which opened in 2009 at a cost $815 million, more than $600 million of that funded by the public. "Using billions of federal taxpayer dollars for the subsidization of private stadiums when we have real infrastructure needs in our country is not a good way to prioritize a limited amount of funds," said Lankford. "Everyone likes free federal money to build their expensive stadiums, but with $20 trillion in federal debt, this is waste that needs to be eliminated." President Barack Obama proposed eliminating tax exemptions for municipal bonds attached to stadium projects as part of his 2015 budget plan, but Congress didn't bite. There are plenty of reasons to be skeptical that Booker's and Lankford's proposal will get through the legislative process—sports teams and wealthy bond-buyers are likely to lobby against it—but bipartisan support is a step in the right direction. Even if the bill does pass, though, it won't be the end of subsides for sports stadiums. It will just make it more expensive for cities to hand-over millions of taxpayer dollars to billionaire te[...]

Turkey Seeks Arrest of NBA Player, Says He Belongs to a 'Terrorist Organization'

Fri, 02 Jun 2017 10:00:00 -0400

A Turkish court has reportedly issued an arrest warrant for Oklahoma Thunder center Enes Kanter, charging him with "being a member of a terrorist organization." The 25-year-old Kanter, a Turkish national who has been living in the United States since 2009, has been an outspoken critic of the increasingly authoritarian Turkish government. He is also a supporter of Fethullah Gulen, a former imam and former ally of Turkish President Recep Erdogan. Gulen, who has lived in the U.S. since 1999, is the spiritual leader of a movement known as Hizmet (Turkish for "service"). According to the Rubin Center for Research in International Affairs, he was estimated to have "between 200,000 supporters and 4 million people influenced by his ideas" in the late 1990s. Erdogan regularly accuses him of being the mastermind behind last year's attempted coup. "Only exiled people are going to be willing to go on record" about Kanter, a source familiar with the situation on the ground in Turkey tells Reason. "The whole set of accusations and demands has become toxic. It's partly because it's a no-go topic in Turkey but also because the [Gulen movement] is flawed and disliked by a lot of ordinary people in Turkey." After the failed coup, Erdogan initiated a massive purge of academics, bureaucrats, members of the judiciary, and members of the media, claiming with little to no evidence that thousands of people were colluding with what the Turkish government now calls the "Gulen Terrorist Organization." Kanter's family in Turkey has publicly disowned him, with his father apologizing to Erdogan "and the Turkish people" for "having such a son." That didn't keep Kanter's dad from losing his job at a university in Istanbul.* Turkey's slide into authoritarianism accelerated after a constitutional referendum earlier this year that vastly expanded Erdogan's powers. Since then, and particularly because Germany and the Netherlands prohibited pro-Erdogan election rallies in their countries, "Erdogan has shown little concern with how the West (particularly the U.S. and the EU) view his actions, and arguably has been behaving in such a manner as to create a wedge between the Turkish people and the West," says Michael Wuthrich, a specialist on the region who directs the Global & International Studies program at Kansas University. "What is particularly surprising about Kanter's case," Wuthrich adds, "is that they are targeting a well-known international figure who hasn't lived in Turkey for any length of time for years"—and "whose connection with the foiled coup plot would be extremely dubious to all but the most ardent Erdogan supporter." For Wuthrich, that means Erdogan "no longer feels shame from a harsh reaction from the West; in fact, he is stoking it to present to his political base a Western bloc that is part of a grand conspiracy to thwart Turkey's rise to greatness." Gulen, meanwhile, serves as "an Orwellian foil of sorts," though "there is very little substance that would link him to the attempted coup," Wuthrich says. Gulen has structured his supporters' network "in such a way that he almost never conveys direct orders. Even if he wished that Erdogan was removed from power, it is unlikely that he expressed this in any sort of explicitly incriminating ways or would have sullied himself with planning and preparation for such a thing." It's not even clear that the Turkish government sincerely wants extradite Gulen. Because he has been "conveniently operating as a scapegoat for every problem that Erdogan finds himself in for the last several years," Wuthrich explains, Gulen may be more valuable abroad. Turkey's chances of securing an extradition of Kanter are low, according to Wuthrich: "There is almost no way that the Justice Department could link Kanter to anything beyond verbal support for a religious leader, who the Turkish government [...]

Brickbat: Called for Traveling

Fri, 02 Jun 2017 04:00:00 -0400

(image) The Turkish government has canceled the passport of NBA player Enes Kanter and issued a warrant for his arrest for his support of Islamic preacher Fethullah Gulen. The government says Gulen played a role in a failed coup against President Tayyip Erdogan last year.

Cleveland Will Be Paying for Renovations to King James' Castle Until 2034

Sun, 28 May 2017 12:10:00 -0400

Led by one of the game's all-time greatest players and just four wins away from back-to-back league championships, there's no doubt that the Cleveland Cavaliers are basketball royalty. Taxpayers in northern Ohio—thrilled though they might be about the team's on-court exploits—might find themselves feeling more like peasants, the kind who get yoked into service for a $140 million renovation of "King" (Lebron) James' castle. After the Cavs broke a 52-year championship drought by rallying to defeat the Golden State Warriors in last year's National Basketball Association championship series (a rematch of which begins this week), team owner Dan Gilbert wasted little time in turning that goodwill into political capital, locking taxpayers into a stadium deal that they will be paying off long after James' career and the 2016 championship team are a hazy memory. Last month, Cleveland Mayor Frank Jackson signed off on the city's deal to renovate Quicken Loans Arena, where the Cavaliers play. Though the project carries a $140 million price tag that supposedly is split evenly between the team and the taxpayers, the final cost will end up being almost twice that total. As explains, Cuyahoga County will borrow the $140 million upfront by issuing bonds, but paying off those loans will take until 2034 and will end up costing an estimated $244 million. The city is piggybacking an extra $38.5 million into the bonds to pay for future sports stadium projects, bringing the final total to more than $282 million, paid over 17 years. While the Cavs will pay $122 million of the total, Cleveland will pay $132 million through a combination of higher taxes on tickets to events at the arena and hotel tax revenue. Another $16 million will come from the county, and the final $12 million comes from higher taxes on tickets to "future Cavs playoff games" and an increased sales tax on merchandise, food, and alcohol sold at the arena. As stadium financing deals go, this is far from the worst one out there. Most of the new taxes will apply only to people who go to games and other events at Quicken Loans Arena, which is better than asking the general public to foot the bill. Sure, your ticket will cost most and your beer and popcorn will be marked up to an even more unbelievable level, but you will have opted in to paying those higher fees by going to the arena. Still, it's hard to understand why the city feels the need to lavish corporate welfare on a team that's currently in the midst of an unparalleled run of success both on the court and in the board room. After winning the first championship in team history last year, the Cavs' are estimated to be worth $1.3 billion, according to Forbes' Magazine. That makes them the 11th most valuable team in the NBA, which is no small feat, considering the top 10 teams hail from much larger markets, like Los Angeles, New York, Chicago, and Houston. Surely the Cavs—and Gilbert, the owner, who bought the team in 2005 for $375 million, about a quarter of what it's worth today—could have afforded to pay a larger share of the renovations, had city and county officials pushed for that. Celebrate now, Cleveland. Back-to-back-to-back trips to the NBA Finals don't happen too often. Bask in the glory of James' transcendent abilities as the game's top superstar while you've got him. The bill will be coming due for years to come.[...]

How Madison Square Garden's $42 Million Tax Break Will Upend New York's NHL Geography

Sat, 13 May 2017 10:16:00 -0400

Every January, the National Hockey League rings in the New Year with one of the more unique traditions on the American sports landscape: The Winter Classic, an outdoor hockey game played in a football or baseball stadium. Next year, the NHL announced this week, that game will be an intra-state battle between the New York Rangers and the Buffalo Sabres, and the contest will be played at Citi Field, home of baseball's New York Mets. The stadium is located in Queens, less than 10 miles from Madison Square Garden, where the Rangers' normally play, but the Sabres will be the "home" team for the game, despite the fact that they hail from a city more than 350 miles away. The reason, as the Rochester Democrat and Chronicle uncovered this week: tax breaks. Specifically, one very peculiar tax break that applies only to Madison Square Garden. Thanks to state lawmakers in New York, the "most famous arena in the world" is also one of the least taxed. Madison Square Garden has a full exemption from property taxes, but the exemption is contingent on having both the National Basketball Association's New York Knicks and the NHL's Rangers remain full-time residents of the building. Playing even one home game somewhere else could cost the arena's owners—who also happen to own both teams—as much as $42 million annually. The special exemption was written into state law in 1982 in an effort to keep the Knicks and Rangers from following through on threats to leave Manhattan for a new stadium. It certainly accomplished that, but it's hard to justify such a narrowly tailored giveaway that benefits just a single business at the expense of all other New Yorkers. The Madison Square Garden Company, which owns the arena and the two teams, certainly doesn't need the corporate welfare. According to the D&C, the publicly traded company has a market value of more than $4.8 billion. New York City's Independent Budget Office—basically the city's number-crunching equivalent to the Congressional Budget Office—says the Madison Square Garden tax exemption is worth an estimated $42 million for the city's upcoming fiscal year (up from just $17 million in 2013, before a $1 billion renovation of the arena). There have been efforts to kill the tax exemption, most recently in 2016 when a proposal to eliminate the special giveaway was voted down in committee. For what it's worth, the NHL says the decision to make Buffalo the nominal home team in next year's Winter Classic was influenced by "a variety of factors." But when the Rangers played an outdoor game at Yankee Stadium—also as the road team, against the New Jersey Devils—in 2014, The New York Times noted that the Madison Square Garden tax break was likely the reason. Aside from highlighting one of the best examples of crony capitalism in New York's tax code, the whole situation says something about the unintended consequences of government policy. The state lawmakers who crafted this special property tax exemption for Madison Square Garden probably never intended to create a situation where the Buffalo Sabres would be playing a home game in Queens—for that matter, they probably never even considered the possibility of outdoor NHL games, something the league didn't start doing until the early 2000s. Policymakers can never foresee all the consequences of their actions. As unintended consequences of narrowly-tailored tax rules that benefit one special interest go, this is probably one of the least consequential. The fact that the Rangers will be the road team despite being closer to home won't affect the outcome of the game, and the loss of one true home game probably won't change the trajectory of Buffalo's season. Still, people and businesses respond to economic incentives. Apparently, $42 million of eco[...]

Like Most Americans, NFL Players Think They Should Be Allowed to Use Medical Marijuana

Sat, 06 May 2017 10:26:00 -0400

Like the vast majority of Americans who watch them on television every Sunday during the last four months of the year, an overwhelming majority of professional football players believe medical marijuana should be legal. In a survey conducted by, an online medical marijuana marketplace, more than 150 current and former professional football players were asked for their experiences with various types of painkillers, including opioids and marijuana. Though marijuana is current banned by the National Football League, 68 percent of the current and former players polled said they had used marijuana (either for recreational or medical purposes) during their career, while 87 percent said they would use it if the league allowed it (and 89 percent said they believed it would be an effective treatment for pain and other ailments). Sure, a business like has an interest in seeing medical marijuana more widely accepted and legalized, which is why they do polls like this. But their polling of NFL players matches with national attitudes towards medical marijuana, which is now legal in 29 states. A Quinnipiac University Poll conducted in February found support for medical marijuana at 93 percent nationwide, with large majorities cutting across all demographics. According to Gallup's latest polling, support for legalizing recreational marijuana is at 60 percent, the highest percentage recorded in the polling firm's 47 years of tracking that question. The NFL's resistance to legal medical marijuana (like opposition in government from people like New Jersey Gov. Chris Christie and Attorney General Jeff Sessions) increasingly runs against not only public opinion but common sense. Roger Goodell, the NFL commissioner, told ESPN last month that he supports a continued ban on marijuana because he thinks the drug could be "negative to the health of our players." That's pretty laughable, as Reason's Mike Riggs pointed out last week, considering that NFL players are playing a sport that is demonstrably more dangerous to their health than marijuana is. Add to that the fact that many NFL players are being loaded up with other forms of painkilling drugs, often dispensed by the same team doctors that are supposed to care first and foremost about the players' health. In the survey, 91 percent of players said they had taken opiate-based painkillers like oxycodone, hydrocodone, and propoxyphene. Additionally, 45 percent of players said they had felt pressured into taking those drugs by team doctors, staff, and teammates in order to get back on the field (68 percent say they have been concerned about their usage of painkillers, and 74 percent say they've had negative side effects from using them). In fact, the NFL currently is fighting a lawsuit from several former players who allege that official team doctors literally handed out piles of opioids and other painkillers—ignoring federal laws for prescription drugs and disregarding medical guidance—before, during, and after games. Deadspin has all the details on the lawsuit, which includes several telling anecdotes about how team doctors allegedly hand out opioids like candy on NFL sidelines. As I've written before, the NFL's anti-pot policy might make a degree of sense if it was part of an overall effort to prevent teams from using painkillers of any kind, lest some players or teams gain a competitive advantage on the gridiron. That's hardly the case, as the lawsuit and poll demonstrate. A majority of states now allow medical marijuana as a treatment for at least some medical continues. It's time the NFL (and the federal government) get on board.[...]

Are High Taxes to Blame for Minnesota’s Championship Drought?

Sat, 29 Apr 2017 11:30:00 -0400

Of the 13 metropolitan areas in the United States currently hosting teams in each of the four major professional sports leagues, none have been waiting longer to celebrate a championship than the Twin Cities. One possible reason why? Minnesota's high personal income tax rate. "You get a lot of complaining about professional sports in Minnesota, because this problem is especially acute there," Dr. Erik Hembre, told The Washington Post this week. "People complain about, 'Oh, we can't get good free agents. It really hurts us.'" Hembre, an economist at the University of Illinois at Chicago, claims to have found a direct relationship between state tax rates and the success of professional teams based in those states. His research shows that, since the mid-1990s, a ten percentage point increase in income taxes correlates with a 2-3 percentage point decline in team's winning percentage. The effect is greatest in the National Basketball Association (where signing one major free agent arguably has a greater impact on a team's success than in any other major sport) and smallest in Major League Baseball, according to Hembre. Minnesota's high tax rate, Hembre says, costs the Minnesota Timberwolves a total of 4.5 victories per season when compared to pro basketball teams in low-tax states like Florida or Texas. Minnesota's state income tax is one of the highest in the country. The top marginal rate of 9.85 percent applies to anyone making more than $157,000 annually (or married couples making more than $262,000). That high rate might force teams in Minnesota to pay higher rate for the same talent, or might give highly-sought-after free agents a reason to play somewhere else. The Twin Cities last celebrated a major sports championship in 1991, when the Twins claimed the World Series with a dramatic extra inning victory in the seventh and final game. Since then, not a single Minnesota-based team has reached the final round of their respective league playoffs. Bad luck may be part of the answer. The Vikings of the National Football League reached the final round before the Super Bowl in 1998, 2000, and again in 2009, only to lose all three times (twice in overtime). The Minnesota Twins made regular playoff appearances during the 2000s, but only advanced past the first round on one occasion, which might say more about the comparatively random nature of Major League Baseball's playoff system than anything else. The Twin Cities' professional basketball and hockey teams have been occasionally competitive but never considered strong championship contenders since joining the National Basketball Association and the National Hockey League in 1989 and 2000, respectively. (It should be noted that the Minnesota Lynx are something of a dynasty in women's professional basketball, having won WNBA championships in 2011, 2013, and 2015.) Other metropolitan areas with all four major professional sports have higher taxes than Minnesota does—the Los Angeles area and the San Francisco Bay Area in California, for example—but professional athletes might be willing to pay a premium, in the form of higher taxes, to live in places like that. As great as the Twin Cities can be (full disclosure: I lived there for three years and loved it), they have a hard time competing with South Beach and Hollywood for celebrity culture. "Professional athletes are paid very well and therefore they have large incentives to consider the tax implications of the teams they choose to play for," Hembre told the Post. Well-paid professional athletes are a particularly mobile sector of the workforce, and can more easily make decisions about where to live and work than most of us who can't slam dunk a basketball or throw a baseball a[...]

ESPN Will Get Better, or Fail Trying

Wed, 26 Apr 2017 18:23:00 -0400

ESPN, which has lost millions of subscribers in recent years, announced it would be laying off 100 employees, mostly on-air talent, as The Hollywood Reporter reports—they are not the first big layoffs at the sports network, but represent ESPN's continuing efforts to respond to increased competitive pressure as fortress cable's hold on Americans' viewing habits continues to weaken. ESPN makes the majority of its money—two thirds of its revenue in 2013—on carriage fees. If you have a cable or satellite package with ESPN on it, the network gets a cut of your monthly bill whether you watch or not. The rest comes from advertising. In 2015, cable companies lost 1.1 million subscribers, four times the number they lost in 2014. Last year, 1.8 million people cut the cord. According to Disney, which owns ESPN, the network lost 3 million subscribers in 2015, and is down to 92 million from 99 million at the end of 2013. Competing cable networks don't always benefit—in February Fox Sports 1 lost even more subscribers than ESPN, and from a smaller base. Nevertheless, ESPN has the kind of long-term contracts for broadcasting rights other cable sports networks aren't saddled with. It spends more on content a year, $7.3 billion, than Netflix, which spends $5 billion. It's spending $166 million a year through 2036 on the ACC alone. According to Motley Fool, ESPN last year had $33.27 billion in long-term broadcast rights contract obligations for MLB, the NBA, the NFL, and the college football playoffs. ESPN has been successful for a long time, and according to Disney revenue and operating income for its cable networks still rose three percent in the first three quarters of 2016, as Motley Fool reported, a slowdown from previous years. ESPN enjoyed the benefits of being the first network to do what it did—dedicate its broadcasts entirely* to sports—and the benefits of the cable monopolies. Almost since its inception, the cable industry has been regulated at the local, state, and federal level. As a 1984 Cato report explained, federal regulations brought the cable industry to a near halt between 1966 and 1975. After courts and bureaucrats started rolling back these regulations, local governments stepped in with new regulations and controls. Clint Bolick noted in the 1984 report the danger posed by local regulation and franchising prompted by the fallacious idea that cable was a natural monopoly. Such predictions of natural monopoly formation, Bolick explained, tended to be self-fulfilling prophecies because of the government intervention they yield. By 2005, the Federal Communication Commission (FCC) was concerned in the other direction, spending several years trying to combat the rising cable prices enabled by local government franchise regulations and the expansive bundles that came with them—George W. Bush's FCC wanted to force cable companies to offer more a la carte choices, but in the end, as Peter Suderman noted in 2015, it was market forces, and the internet in particular, that yielded the "great cable unbundling." ESPN's broadcasting rights binge may have been a response to those trends. Actual games are the currency of sports broadcasting. But ratings are down in many sports too. NFL ratings fell 9 percent last year (ESPN is paying $1.9 billion a year for the broadcasting rights to Monday Night Football through 2021). Major league has seen some ratings improvements after years of decline. At the same time as going all-in on being the home of broadcast sports, ESPN has moved away from the idea of all-sports coverage. Its own public editor reported of regular complaints about the network's foray into politics (generally of a specific left-wing [...]