One of our biggest challenges as human beings is adjusting our expectations when a trend reverses. We think housing prices are going to keep going up, gasoline prices are going to keep going up and free agent sports contracts keep going up.
But the need not keep going in the same direction. So when things change, it is sometimes hard to adjust one's expectations. A lot of baseball players (HT: Jeff Bliss) seem to be struggling with this. They don't seem to have fully appreciated that the market for their talent is very different from what it was just a few months ago.
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A lot of people still think ten bucks is a lot of money.
I have no compassion for a class of people (pro athletes) that possess a silly set of skills whose obscene salaries (largely subsidized by public monies) stagnate. I have even less for the owners of these teams.
So do the math Plac Ebo. How much of their salaries are being subsidized by public money? I agree that there shouldn't be public financing of baseball stadiums, but you have to amortize that spending over the lifespan of a stadium and then compare a yearly portion to TV contracts, product licensing, and ticket sales. You'll find that public money is a very minor subsidy. Still inexcusable, but minor.
If those basball players were on better terms with politicians in Washington, then they could have their own bailout, or be part of the "stimulus" package.
This just reminded me of when my father-in-law, who is a real estate agent, advised me and my wife to buy a house about 3 years ago. "Why do you waste your money on rent?", he said. "You could be using that money to pay off a mortgage. Buying a house is the best investment anyone can make. Prices will just keep going up." Luckily, we're still waiting to buy a house. I guess it helps to be psycho risk-averse sometimes.
Boscoh,
I have done the math and I agree with Plac-Ebo, players salaries are subsidized by public money.
Rather than go to actual spending of an actual team, let's just do some scenario building.
Let's say that Curvbol McDade buys an expansion baseball sports franchise in the major leagues. The franchise is for the city of San Antonio, Texas. San Antonio has no facilities adequate for a major league ballteam. So, we can be certain that before McDade even bid on the team he has cut a deal with the city fathers that if he gets the franchise they will help him build a stadium with all the expense that entails. He also knows he will get tax breaks if not outright tax forgiveness for many years. At today's prices, a new stadium will cost $500 million to build, McDade only has cash on hand (after purchasing the franchise) of $500 million. McDade will be able to participate in an expansion draft and also to go after college ball players who are eleigible for the draft. He is going to need virtually every dollar of his $500 million to sign enough good players to make the basis of a decent team.
McDade is faced with the problem of how much of his $500 million does he spend on the stadium, and how much does he try and reserve to sign players?
The city fathers agree to fund virtually all of the stadium and sell it to the public as being useful for many and varied events, so it's not an exclusive to the ballteam of McDade; but, they give the keys to McDade and give him the rights to say how and when the stadium is used when it is not being used for the ballteam. He gets the parking, he gets cuts on the vendors, and he has tax forgiveness if not forever, then for a very long long time.
The money he saves thanks to the city fathers he can now use to pay ballplayers. You can tell us that the ballplayer's salaries come out of the gate receipts; but, we both know that without the city fathers what McDade paid his ballplayers would be much less.
So yes, IMHO opinion, virtually every sports franchise has public subsidy that extends to the player's salaries.
Until I see hard evidence that this is not so and my scenario is bullshit, I will stick with it.
Now if we compare ballplayers and owners to politicians, I submit that we subsidize our politicians in much the same way.
We send them to D.C. on our dime knowing full well that they are going to take graft from the lobbiests, and conduct in other personal wealth building activities while there. Kinda of like buying the thug a gun and seeing him off to his chosen alley.
However, in summation, anyone who complains about players, entertainers, and polticians salaries and wealth, need to remember the prime priciple:
If you don't give it to them, then they don't have it. They have to shovel shit just like you.
And let's say your stadium has an expected life of just 25 years. Ignoring interest since we're talking an unrealistically short life span, that's $20 million per year. If you're in the top half of the MLB, your payroll is over $80M/year:
http://en.wikipedia.org/wiki/List_of_Major_League_Baseball_teams_by_payroll
Plac Ebo said the salaries were "largely subsidized by". I called BS. Conservatively, at most 25% and I'd bet closer to 10% on net. That's not "largely".
Now, that doesn't mean the subsidies are wrong. But if one is going to hate rich people because their salaries are largely subsidized by tax payers, well, one should have his facts in line. The same bad logic could be used to demean my earnings, because I some of it comes from a project that sells to public schools. I'd just suggest hating the game, not the player
. And deriving the hate proportionally from the right things.
My comment should read "That doesn't mean the subsidies AREN'T wrong.". I am in no way defending public financing of sports teams. I am saying it's not that significant in the lifetime cashflow of teams. And that's what makes there subsidies even less justifiable in my mind.
One of my first papers done as a freshman for my Intro.to English class at Rutgers Newark was to research the salaries of pro athletes and to determine if they are overpaid. I must admit I was biased towards the side that thought the athletes were overpaid. Once I looked into it, all studies that I could find stated that athletes were paid what they're worth and the mega salary players earn their pay by bringing in the fans, selling merchandise, and enhancing the worth of media rights etc. Public subsidies are not my favorite thing but the state benefits by tax revenue increases. The current trend in sports venue building is getting the localities to give tax free status to bonds for financing. As a Libertarian anything tax free is fine by me!
Bob,
Wow. Efficient pricing of athletes! Those team owners aren't so dumb.
However, stadiums rarely recoup the cost of building and that's why team owners routinely have government subsidize the venues for them. The tax revenue is not enough to offset the cost of building the venue.
Boscoh,
Splitting hairs, the words "largely subsidized" seem to leave us at a point where we make a subjective decision about the word largely? Yes?
You made a good reply to me, thanks. My personal feelings are that if the team is able to use public money for any of its operations, including construction and maintenance, then it and the city has gone too far.
As for your first paragraph above, the franchise owner does not own the stadium, he merely leases it. The depreciation is borne by the owners which is the public. The franchise owner is in the enviable position of obtaining all profit while suffering no expense. At least this is the situation as close as I can determine.
If my understanding is correct, then depreciation of the facilities will not effect the franchise owners ability to pay his players, true?
BTW, I personally hate neither the game nor the players; however, I discovered so long long ago that I derived great pleasure from playing and virtually none from watching. This was true of all sports, even Women's Jello Wrestling down at my favorite redneck bar.
My whole point about professional (and I include college sports in this) sports is simply that they do not get any of my money except that slight bit that the city may take out of sales taxes to subsidize the stadium and team. If there people who are stupid enough to plunk down $1,000 (nonrefundable if you lose, I was told) just for the privilege of drawing in a lotto to see who gets to buy season tickets, then God bless 'em, go for it. you won't see me doing it, nor even buying a ticket at the gate.
My son-in-law, part owner with his Dad in a very profitable oil field supply business, complained once three years ago that, "The Texan's tickets were too high." I knew that he had bought the tickets, so I told him that his complaint was wrong, they weren't too high. He came back with, "Yeah they are, $XXX is just too damn high." He doesn't discuss things like that with me anymore because I asked him, "You bought them didn't you? If they were too high why, or how, would you have bought them."
The clincher was telling him that he was bitching with his left hand while his right hand was giving him reason to bitch.
I moved out of Houston/Harris Co. precisely for those reasons. In the span of just a few years the city/co. subsidized the building of a fancy baseball park downtown, that was followed by an extravagant football field on the grounds of the old Astrodome, that was followed by 17 miles of light rail that connects the two sites, and finally a fancy new basketball arena downtown. Enormous sums of money were spent on facilities that the public still could not go into without paying admission fees.
My wife and I departed Harris Co. in the middle of all that and I pay none of it except as I say some small part of any sales tax on purchases I may make in that county, which are really very infrequent. My actions were not untypical, many people abandoned Harris county to become commuters in from suburbs in different counties. Oh, maybe it would help if I explained that Harris Co. has very little area that is not filled by the city of Houston, so being in a surrounding county is not difficult nor necessarily distant.