TCS: Applying Free Market Logic to an Unfree Market
My latest Tech Central Station piece, “Applying Free Market Logic to an Unfree Market,” tackles the D.C. baseball stadium fiasco.
While libertarians rightly bemoan the notion of forcing taxpayers to subsidize wealthy team owners, they should understand that the market works both ways. If sports leagues have the leverage to demand public financing of stadia as a precondition for moving a franchise to a city, they would be foolish not to use it.
Luring a professional sports team is difficult and generally not economically smart. It is rather galling that the vast majority of a town’s residents who will never attend a game are forced to pay for the privilege of added traffic congestion. Nonetheless, there are plenty of cities out there begging for a team. Public subsidies for arenas are the cost of playing.
Lots of linkage and analysis in the piece.
What the peice… and the libertarians, seem to miss is the huge amount of busiensses and the tax revenue they bring to an area when a Stadium goes up, by and large.
Witness, as an example the Southtowns of Buffalo, where the Bills’ stadium is.
OTOH, when the stadium is used to rebuild an area of town… say, as it was in the case of Baltimore, or here in Rochester, the results are not nearly as good, nor long lasting.
If sports leagues have the leverage to demand public financing of stadia as a precondition for moving a franchise to a city, they would be foolish not to use it.
You have it exactly backwards — it’s the very fact that the teams have no economic leverage whatsoever that compels them to rely instead on political leverage and campaigns of ignoring (or distorting) the economic realities of stadium finance, which are never on their side.
Well, no. Demand is a key variable to markets–and it’s an economic variable. It’s no different than Brioni being able to charge $4000 for a $500 suit because people are label snobs.