Friday, June 09, 2006
Icing the Taxpayers
Finally, someone has admitted it—team owners push for building sports arenas with taxpayer money to increase their own wealth at the expense of taxpayers. While we always knew it, supporters of such a strategy would dance around the issue or hide under the “quality of life” excuse. In the ongoing saga of the Pittsburgh Penguins, a source familiar with the selling of NHL teams has validated our view: “Buyers are looking for situations in which they could operate an arena without having to pay for it, while making money from other events, naming rights, concessions, parking and advertising.”
The Penguins have been pressing for a new arena since the team was bought from bankruptcy by its current ownership group. The mantra has always been competitiveness on the ice and how the team cannot keep up with big market teams like Detroit or New York. Before the NHL went on strike, Forbes magazine valued the team at $114 million. With the lockout over and a new owner-friendly collective bargaining agreement in place, that value is estimated to be the same. Considering that the team was purchased in 1999 for $85 million, that is not a bad return on investment (34 percent increase).
However, with a new arena, industry insiders estimate that the team could be worth nearly $150 million—a return on investment of $65 million (76 percent) for the current ownership group. A new arena makes perfect sense for owners—the old ones reap the benefits when it is sold and the new ones make money from its operations—without having to pay the approximately $300 million cost.
What a sweet deal. Even politicians benefit from being known as the ones who saved the franchise. Fans gain as they can continue to spend their entertainment dollars watching grown men play a child’s game. Taxpayers, however, are left on ice, as the money used to build this facility cannot be used to lower taxes, pay off government debt, or make the City’s pension system solvent. $300 million can go a long way to fixing the City’s or region’s problems, instead it will go toward lining the pockets of the owners.
http://www.pittsburghlive.com/x/pittsburghtrib/news/cityregion/s_457111.html
The Penguins have been pressing for a new arena since the team was bought from bankruptcy by its current ownership group. The mantra has always been competitiveness on the ice and how the team cannot keep up with big market teams like Detroit or New York. Before the NHL went on strike, Forbes magazine valued the team at $114 million. With the lockout over and a new owner-friendly collective bargaining agreement in place, that value is estimated to be the same. Considering that the team was purchased in 1999 for $85 million, that is not a bad return on investment (34 percent increase).
However, with a new arena, industry insiders estimate that the team could be worth nearly $150 million—a return on investment of $65 million (76 percent) for the current ownership group. A new arena makes perfect sense for owners—the old ones reap the benefits when it is sold and the new ones make money from its operations—without having to pay the approximately $300 million cost.
What a sweet deal. Even politicians benefit from being known as the ones who saved the franchise. Fans gain as they can continue to spend their entertainment dollars watching grown men play a child’s game. Taxpayers, however, are left on ice, as the money used to build this facility cannot be used to lower taxes, pay off government debt, or make the City’s pension system solvent. $300 million can go a long way to fixing the City’s or region’s problems, instead it will go toward lining the pockets of the owners.
http://www.pittsburghlive.com/x/pittsburghtrib/news/cityregion/s_457111.html
