Re: Is the NBA fantastic?

[Michael Hoover <hooverm@xxxxxxxxxx>]

>>> ssandron@xxxxxxxxxxx 12/24/04 6:53 AM >>>
http://www.politicalaffairs.net/article/articleview/487/1/54/
Seth Sandronsky

seth's article mentions stern using team will leave for 'greener'
pastures threat if public doesn't finance new arena for kings...

see below excerpts...   michael hoover

This article first appeared in The American Prospect magazine, no. 40, September-October 1998, pgs. 38-43.
ROOTING THE HOME TEAM
Why the Packers Won't Leave -- and Why the Browns Did
David Morris
Daniel Kraker

How can a city keep its home team without emptying the municipal coffers into the hands of a private owner?

The best answer to this last question may be provided by 1998's Super Bowl losers, the Green Bay Packers, the only community-owned team in America. Rather than paying a continuous stream of subsidies to fickle owners, communities ought to be able to emulate Green Bay and buy their teams outright. Community ownership, combined with effective revenue sharing within professional sports leagues, would prevent teams from leaving home and would save taxpayers huge amounts of money by protecting fans and taxpayers from owners who bid their team out to the city offering the best stadium and the biggest subsidy.

FAITHFUL FANS
Professional sports is modernity's mass religion. The sight of Green Bay Packers fans baring their chests and wearing foam-rubber cheese on their heads leaves little doubt as to just how fanatic these modern zealots can be.

Yet support for a local professional team is more than frenzied enthusiasm. Stadiums bring together Americans from all walks of life -- black and white, old and young, assembly-line worker and CEO -- to share civic pride as they root for the home team. Detroit's population doesn't congregate in bars to watch Ford or Chrysler workers build cars; Seattle residents don't cluster around their televisions to watch Microsoft programmers design software. But the cities do root communally for the Tigers and the Seahawks. This intimate connection between fan and team is what makes it so unbearable for some people to see their favorite team shipped around the country like a packaged good.

The best way to reverse this trend and keep teams at home is to allow communities to own their teams. The Green Bay Packer organization is the poster child for community ownership of professional sports teams. Pre-NFL football champions in 1929, 1930, and 1931, and winners of Super Bowls I, II, and XXX, the Packers were incorporated in 1923 as a private, nonprofit, tax-exempt organization. Their bylaws state that the Packers are "a community project, intended to promote community welfare." The team can move only through dissolution, in which case the shareholders receive only the original value of their shares. A board of directors, elected by the stockholders, manages the team.

This nonprofit status has been threatened only once, in 1949. The Packers needed to raise more than $100,000 to avoid insolvency, but instead of becoming a profit-making venture the board chose to authorize 10,000 shares of common stock at $25 a piece -- 4,628 of which were issued -- and dissolve the stock that had been sold in 1923. To ensure that no one individual or company had too much control, each shareholder was limited to a maximum of 200 shares.

Green Bay's model works. While its surrounding metropolitan area is home to fewer than 200,000 people, the Packers rank in the top 20 percent of all professional teams in terms of franchise value. Extravagant player salaries have driven many cost-conscious franchises into competitive irrelevancy as they fail to bid for the best free agent players. Observing this trend, Packer team shareholders decided in late 1997 that more revenue needed to be raised for the team to remain competitive. The 10,000 shares issued in 1950 were split into 10 million shares -- 400,000 of which were made available to the public at $200 a piece. A disclaimer on the opening page of the stock offering reads: "It is virtually impossible for anyone to realize a profit on a purchase of common stock or even to recoup the amount initially paid to acquire such common stock." Even so, by March the team had raised $24 million dollars, far short of its $80 million goal but enough to double its available cash, and ample capital to invest for the future construction of a new stadium 20 or 30 years from now.

Wisconsin residents support the team even through dismal seasons. Games at Lambeau Field have been sold out for more than 30 consecutive seasons, even through years of mediocrity in the 1970s and 1980s. Streets are deserted for three hours on autumn Sunday afternoons. The waiting list for season tickets is 36,000 names long for seats in a stadium that holds 60,000. It is common for season tickets to be willed from one generation to the next and to be hotly contested in divorce proceedings. For better or for worse, the Packers are like a community religion (even for the truly religious: nuns in northern Wisconsin proudly sport Packer T-shirts when doing social work in the community). Literal and figurative community investment in the team fuels such loyalty.

LEAGUE RULES
If community ownership can make sports teams less transient, then why isn't it more widespread (though it should be noted that the Canadian Football League, the NFL's struggling junior sibling to the north, boasts four successful community-owned teams)? One simple reason, mainly: professional sports leagues have prohibited community ownership.

The NFL formally banned community ownership in 1961 at the same time that it adopted a radical revenue-sharing plan that distributes all revenue from merchandise, television, and gate receipts equally among all teams. It took NFL Commissioner Pete Rozelle two years to convince Congress to enact this essentially socialist redistributive mechanism. Revenue sharing made small-market teams viable. In fact, had the league not chosen to ban community ownership at the same time, we might now be rooting for NFL teams from Akron, Ohio, and Gary, Indiana. 

Though clearly successful where implemented, community ownership remains illegal in most professional leagues. A bill introduced in the House of Representatives by Earl Blumenauer, a Democratic congressman from Oregon, would change that. The Give Fans a Chance Act of 1997 would override all league rules against public ownership. Under the bill, if a league refused to allow a community to purchase its team, the league would lose its sports broadcast antitrust exemption. The bill also would require leagues to take into account fan loyalty and whether an investor is willing to keep the franchise in its home community when considering whether to allow teams to relocate. If enacted, Blumenauer's bill would give fans the opportunity to give the home team genuine roots.

REVENUE SHARING
Yet community ownership, while necessary, is by itself an insufficient remedy for the disease currently afflicting professional sports. The Green Bay Packers, though the paragon of community ownership, would have died long ago if not for the NFL's revenue-sharing policy -- which ensures that, for example, its recent $17.6 billion television contract will be divvied up among all the teams.

Baseball and -- increasingly -- basketball and hockey, on the other hand, are tied to the fortunes of their owners and the skybox-revenue generating capacity of their stadiums. The four most victorious baseball teams in 1997 also had the largest payrolls; six of the eight top-spending teams have had stadiums built since 1989. As the same well-positioned teams continue to win while the small-market clubs flounder in division cellars, fan enthusiasm will erode, taking with it the leagues' financial vitality. If baseball, basketball, and hockey are going to retain an interesting level of competitiveness, small-market vitality, and national fan support, these leagues must emulate the NFL's revenue-sharing system.

But revenue sharing alone will not make sports franchises less nomadic. In fact, the NFL's revenue-sharing policy has effectively encouraged team migration -- the NFL has experienced more relocations than any other league over the last decade -- because sharing revenue permits small cities to compete for teams. But since revenue from corporate suites, club seats, and other stadium sources are excluded from the revenue-sharing arrangement, owners feel compelled to demand new stadiums with more and bigger skyboxes. 

Professional teams have become an integral part of our community fabric and our emotional and civic lives. This may justify stadium subsidies in certain communities, but common sense dictates that when an owner demands a subsidy two to three times the value of the team itself, fans would be much better off purchasing the team themselves.

Professional sports may be in decline. As taxpayers spend more on new stadiums, team values, player salaries, and ticket prices all increase. Many fans can no longer afford to attend games and will grow increasingly uninterested in sports. For fans and communities to reclaim their teams, they need to rewrite the rules of ownership to give priority to the civic value of teams; for leagues, new rules of ownership may be the smartest option even if it's not yet in their playbook.

© 1999 Institute for Local Self-Reliance

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