Public funding for pro sports easy to sell, hard to justify

Lesson from the Seattle Supersonics should be heeded in Canada

Arevival of NBA basketball in Vancouver and Major League Baseball in Montreal, up to three new NHL teams in Ontario and Quebec, three more Major League Soccer teams across the country, and up to seven extra CFL teams — the time is ripe, says the Conference Board of Canada.

Which is, perhaps, not surprising given the business model preferred and perfected by pro sports.

True, their payrolls are big — though, with luck, rich and well- established teams help out new or weak ones by agreeing to salary caps and/ or revenue sharing.

But consider a couple of the other big- ticket items. While bakers, bankers, bike shops and virtually every other enterprise must struggle with rent and property taxes, pro sports teams get their pricey premises subsidized by taxpayers. And the media line up to provide them with millions in free advertising — in the case of TV, even paying out big money for the privilege of giving them more.

Add Canada’s strong dollar, steady growth of population and wealth in key urban centres, and the propensity for Canadians — especially men — to watch rather than play most sports, and I agree it’s a good time to invest.

But on the question of whether this is good news, I’m less confident than the study’s authors. The trouble is, all the public dollars going into sports facilities are real, while the vaunted benefits are … well, nebulous is the kindest word that comes to mind.

Bent Flyvbjerg, a Danish academic who specializes in poking pins into big projects, notes how all over the world, “planners and promoters deliberately misrepresent costs, benefits and risks in order to increase the likelihood that it is their projects, and not the competitions, that gain approval and funding. This results in the ‘ survival of the unfittest.’”

I’ll leave readers to decide if or to what extent a recent B. C. experience, the replacing of the roof on BC Place, fits this template. But let me recap what happened.

While Regina agonizes about whether its proposed new football stadium is worth the $ 278 million its proponents say it will cost, B. C. spent roughly twice that just to put a new roof on ours.

Yet, as my colleague Vaughn Palmer noted last spring, as recently as 2008 — after the old roof failed two decades ahead of schedule — the repairing and reroofing cost was said to be just $ 100 million to $ 150 million.

And promised benefits diminished as quickly as costs rose. A money- generating casino that was supposed to spring up next door was kiboshed by public sentiment, and the province scotched a deal to defer a bit of the cost by selling naming rights to Telus.

But even if these “benefits” had come to pass, how much would they be worth?

The authors don’t do a detailed analysis, but they dust off the old arguments about multiplier effects and suggest a net economic benefit to Canada of at least $ 1.5 billion.

But here’s what the Seattle SuperSonics, a professional basketball team that used the multiplier argument many times in its pitch for public dollars, had to say in court when it was trying to duck out of a contract and move to Oklahoma City:

“The financial issue is simple … there will be no net economic loss if the Sonics leave Seattle. Entertainment dollars not spent on the Sonics will be spent on Seattle’s many other sports and entertainment options. Seattleites will not reduce their entertainment budget simply because the Sonics leave.”

The Conference Board promises further studies to address questions like who should pay for facilities and the role of the public sector. To paraphrase the Sonics, the answers look simple to me.