The entertainment bubble

Back in February, a few days after U.S. Steel broke ground on its $3 billion facility in Osceola, the Virginia General Assembly passed legislation that moved a $3 billion NFL stadium closer to fruition.

The similar dollar amount serves to showcase the vast difference between the two projects, and their cultural and economic implications.

It’s hard to overstate the importance of steel as a foundational component to, well, almost everything.

Try to imagine a world without it, and vast aspects of life as we know it would vanish. Cars and trucks are mostly steel; so are trains. Modern buildings, including schools, hospitals and manufacturing facilities, require steel. Computers, phones and the entire telecommunications network apparatus is steel-dependent, as are most utilities. Agriculture is a steel-saturated industry, the armed services even more so. Steel is integral to clocks, appliances, utensils, keys, cans, plumbing fixtures, even bedsprings.

A day without steel would be a day without function. Literally and absolutely, for nearly every one of our 330 million citizens.

U.S. Steel’s Osceola mill annual production of three million tons of steel, when fully operational, will contribute to the national volume that supports the economic infrastructure of the U.S. All the companies that make all the things involving steel. All the people who work for those companies. All the consumers who benefit from the products they make. All the associated tax revenue.

All the social, financial and civic advancements derived from all those combined and intertwined activities are incalculable.

The $3 billion invested in Osceola will create transformational and generational returns in real, durable and measurable goods. It will create greater competition and cleaner steel production.

Now let’s look at the same $3 billion invested in an NFL stadium.

Try to imagine a world without professional football, and, actually, it’s remarkably easy. Most Americans don’t watch the NFL, even when the Super Bowl rolls around. Total attendance at regular-season NFL games was just over 18 million in 2021, and another 17 million tuned in weekly to watch games on TV.

A large part of the cost of an NFL franchise is its roster, and despite the “gridiron” moniker, the players don’t build or produce anything material. They play a game, with hopes that fans will watch them play either through physical attendance or on a screen somewhere.

But fans watching games don’t produce anything either, and furthermore, don’t improve themselves in any way during that time that has residual benefits. Indeed, routine overconsumption of snack foods and beer in a recliner or a stadium seat can have detrimental effects. And no matter how many hours are spent rooting for a team, talking about statistics, or reading game write-ups, it won’t make anyone a “better” fan than the person watching their very first game.

Furthermore, the NFL players club is a wildly overpaid group carried along by franchise valuations on a ridiculously steep trajectory. Basically, billion-dollar stadiums are built only to pay the tiny cadre of players, staff and owners better. Top quarterbacks today make $50 million, compared to $6 million 20 years ago. The average franchise value in 2000 was $423 million; in 2020 it was more than $3 billion — which is 500% more than the inflation-adjusted value.

It’s true that modern stadiums, like the one contemplated in Virginia, are more like malls and are designed for year-round usage. But besides hosting other sports events, they typically incorporate other entertainment elements, like music and theater venues and restaurants and bars.

The two $3 billion tales paint very different pictures of not only investment and return, but also of values and sustainability associated with the entertainment industry in America.

The NFL is just one slice of an enormous “show business” pie that includes everything from sports to movies to all manner of mass media programming. The entire industry is built around giving consumers something interesting to watch or do.

Not something productive. Not something educational. Certainly not something profitable. Only something entertaining.

But while durable-goods sectors are trying to streamline efficiencies and processes — the U.S. Steel mill in Osceola plans to apply for LEED certification and is designed to deliver a zero-carbon footprint by 2050 — the entertainment segment only seeks escalation of costs and price.

Entertainment inherently draws from disposable income, and its accelerating costs — the total media entertainment industry market has nearly doubled in a decade — are far outpacing that of people’s pocket change.

When pro athletes make more, game-day prices and TV rights rise. When film stars make more, movie and subscription prices increase. When singers and bands make more, concert prices soar.

In essence, entertainers are rewarded by the public’s attention on leisure, rather than on any form of work or work-enhancement such as education, innovation or inventiveness.

Economic expansion in a free enterprise economy may not be limited or capitated, but hours in a day are. Time spent on entertainment in every case reduces time spent on something else more instructive, productive or remunerative.

As a citizenry, some soul-searching on entertainment as a time-eater is in order. Because as its unsustainable bubble expands, the worse the fallout when the inevitable occurs.