How California Can End Sports Extortion

The game is officially on. After weeks of playing playing footsie with Anaheim, the Maloof family, the owners of the Sacramento Kings, announced Monday that they’ll keep their woebegone basketball team in the capital city another year in hopes taxpayers will buy them an arena. The announcement is the opening whistle for the game of extortion that is at the heart of the National Basketball Association’s business model and that of other professional sports leagues.

The game works this way: The NBA creates an artificial scarcity by keeping the number of franchises low. That scarcity means there are always cities itching to have a team and foolish enough to be willing to lay out taxpayer money to subsidize an arena to attract one. Municipal foolishness sets up the opportunity for extortion. The NBA tells the city whose team has the least heavily subsidized or attractive arena that they must use tax dollars to build the team a new one, or risk losing the franchise to one of the eager wannabe towns. Build it, or we will go.

This extortion game is one driver of growing income inequality in America. It is a settled fact of economics that building a publicly financed sports facility creates no economic benefit to the community that pays for it. All of the tax dollars end up finally in the pockets of millionaire players and billionaire owners.

Unfortunately, sports subsidies are catnip to local politicians, who are boosters are heart and who love to live in the reflected glow of sports celebrity and enthusiasm. Local media rarely look critically at the flawed arguments offered for subsidizing sports franchises. From the sports page to the advertising and marketing departments, media have a big interest in keeping a sports team from moving. It provides prestige to those who report about it, what’s now called “content” to bring in readers and viewers, and more advertising dollars. When the extortion game begins, politicians and journalists alike find themselves powerless to resist playing.

What makes the game different this year is that it is being played mostly in California. Look around pro sports and you’ll notice that many of the big extortion plays are aimed at California taxpayers. There’s Anaheim vs Sacramento in basketball. Santa Clara is trying to move the football 49ers from San Francisco. The baseball A’s are looking to move out of Oakland toward Silicon Valley. Los Angeles is fighting over building an NFL football stadium, perhaps to lure the Chargers out of San Diego. And that concentration creates an opportunity to suspend the extortion game. If the Legislature were to step on the hose of dollars, the extortionists would be out of luck.

At a time when local governments are slashing budgets for police, fire protection, libraries, parks, recreation, and schools, it is insane for them to give tax dollars as subsidies to billionaire sports owners. As we point out in California Crackup, one of the defects of California’s current system of governance is the post-Prop 13 operating system that has centralized power in Sacramento. But here is a moment when the Great Centralization can be a benefit in providing one-stop stopping of the sports extortion game.

All that is required is for a majority of lawmakers to add control language to the budget denying any of the appropriated funds to communities that provide any taxpayer funds to subsidize stadiums or arenas. And how hard can it be to collect that majority? Republicans oppose tax increases. Democrats oppose cuts to public services. The goal of the extortion game is to benefit billionaires and millionaires by forcing what both Republicans and Democrats oppose. Surely both parties can agree that now is the moment to shut the game down.