`Public Investment Insuring Private Profits' A Conversation about Baseball with Bob Costas
Bishop, Ed, St. Louis Journalism Review
Major League Baseball--the national pastime and St. Louis' secular religion--is in trouble. A combination of sky-high free-agency salaries for ballplayers and vastly unequal incomes for owners is threatening to tear the business of baseball apart.
In fact, the very concept of one city's team competing against another city's team in the hope of eventually ending up in the World Series is all but myth under current conditions. Clubs in smaller markets can't afford the salaries of established superstars. In the last few years, only the teams on the list of top 10 revenues have played in the World Series.
One of the stopgap solutions proposed by owners across the country is the building of new, publicly financed stadiums. The owners argue that the public must put up millions of dollars if they want a competitive team. In other words, the owners want public investment to insure their private profits. Here's why.
Baseball franchises have three basic revenue streams: ticket sales, the sale of broadcast rights and miscellaneous income from such things as parking, concessions and the sale of T-shirts and caps. The big variable here is the sale of broadcast rights. In huge markets, like New York City, the revenue from broadcast rights is huge. In small markets, like Kansas City, the revenue from broadcast rights is small. So far, the big-market franchises have refused to share broadcast revenues with the small-market franchises. So owners in small and medium-sized markets have asked local governments to pay for new stadiums with luxury boxes that increase revenue from ticket sales dramatically. The owners say that without this new income they can't compete in the free-agency market.
Eight or nine of these new, publicly financed stadiums have been built. And, now, the owners of the St. Louis Cardinals want one too. Their proposal has caused a fierce debate throughout Missouri.
This debate is bigger than a normal sports story. It has ramifications throughout American society. It smacks of socialism for rich people. One example is what happened in Texas. President George W. Bush invested $600,000 in the Texas Rangers. Then he helped talk public officials into building a publicly financed stadium for the team. The new stadium so enhanced the value of the team that when it was sold Bush's share of the profit was $15 million.
One of the leading voices nationally for economic reform in baseball and for revenue sharing is Bob Costas, who lives here in St. Louis. In his book, "Fair Ball--A Fan's Case for Baseball," Costas explains the recent economic history of baseball and argues for massive reform in the structure of professional baseball. He also discusses the Cardinals' situation in the book.
Costas recently sat down with SJR to discuss the local situation.
SJR: Someone estimated that if the Yankees drew the same percentage of the New York metropolitan area as the Cardinals draw in this region, Yankee attendance would be 27 million per season. I guess my question is: What's wrong with the Cardinals' current stadium? The fans seem to like it.
Costas: As I've said many times, if baseball had a sane economic structure, there would be absolutely nothing wrong with the Cardinals' situation. If baseball fans and politicians around the country had been farsighted enough, if they'd had the guts to see beyond their local situation, if somehow there had been a national consensus on this, they would have seen that all of these new publicly financed stadiums are insanity. Then all these communities would have said we'd consider a reasonable public-private partnership only when baseball has reformed its internal economics. Until then, it's just throwing good money after bad.
SJR: So wouldn't public financing for this new stadium only exacerbate existing financial problems in baseball?
Costas: Well, the trend is already set. I understand the public reluctance and skepticism about a new stadium for all the reasons people point out. Not only are the Cardinals successful--they draw 3.4 million fans a year and it's as rabid a baseball city as there is--but you don't hear complaints about Busch Stadium. It's easy to get into and out of. It's spruced up pretty well. I'm sure a new ballpark would be nicer and maybe a better baseball atmosphere. But nobody sees a crying need for it. And, if baseball's economics made any sense at all, there wouldn't be any argument made for one until Busch Stadium began to deteriorate.
SJR: Should we put this current proposal on hold then?
Costas: What I think--and the Cardinals' owners will protest that they're being held to a different standard than other owners in other cities--but why not wait and see? Why not wait and see? We know that push is going to come to shove in 2002 when a new agreement between management and the players is hammered out. Why not wait and see if baseball reforms itself. And, if they do, then consider a new stadium outside the pressures of the present situation. Then you could arrive at a sane and logical deal. Look, a common sense recognition of the nature of baseball, where competitors are partners, is needed. In baseball, conditions are in place that would never be accepted in another business. Scheduling, roster limitations, trades, free agents--all those things are in place because baseball recognizes the nature of its business. It used to be that Kansas City, if they were shrewd and lucky, could still be competitive with the New York Yankees. But now the revenue gaps have grown so large that new mechanisms are needed in order to make the major leagues function as they should. And the first and most important of those mechanisms is comprehensive revenue sharing.
SJR: Collectively, the Cardinal owners are worth billions of dollars. What would be wrong with them spending their own money to buy a stadium? It would be a very small amount of their total worth.
Costas: I understand that view. And, the only argument against it is that's not what has happened elsewhere. The owners' view is like the pitcher who says, "Hey, I went eight and six with an ERA of 3.2 last year. I'd like $6 million. Here are 10 other pitchers with similar records last year that got $6 million. Therefore I should get $6 million."
SJR: mother words, it's the craziness of baseball right now.
SJR: After reading your book and some of your comments in the newspaper, I'm still unclear on whether you're against the owners' current proposal for public funding of a new stadium for the Cardinals.
Costas: It's hard to know what the current proposal is. But I certainly think there could be a larger private component to it. I think that if there is a deal, it will have to be more favorable to the public and less favorable to the owners than they originally proposed. My sense of it is that the new stadium is probably inevitable, that it's going to happen. So, if it's going to happen, public officials should drive the hardest bargain possible.
SJR: What's wrong with building the new stadium in West County or even the East Side?
Costas: Yeah, the New York Giants and the New York Jets play in New Jersey, but it just doesn't feel right. Although the Metro East is obviously part of the greater St. Louis area, somehow even St. Louis County has a different sound, a different feel to it. I think moving to Illinois would have a psychological impact--I mean the same state with the Cubs! There's something about that that isn't quite right.
SJR: If the owners do get some public funding, do you think it would be appropriate for the metropolitan region to receive some proportional ownership in the team?
Costas: I agree with that in theory. Or, if the team is sold, the taxpayers are entitled to some equity. George Bush put $600,000 into the Texas Rangers. When the team was sold he made something like $15 million because the equity in that team went up so dramatically when they got the public to build a new stadium. There's nothing wrong with that. There was a public referendum on it, the public voted for it. They got a better ballpark and they got a better team. But, clearly, it was a situation where you socialize the debt but you privatize the profit. So, if it's an investment, then it should be an investment on the part of the taxpayer.
SJR: What if we went even further? What do you think of the idea of metropolitan areas owning professional sports franchises?
Costas: I once said that to George Steinbenner about five years ago. They were talking about $1 billion for a new Yankee Stadium. I said that the Yankees might be the most profitable team in all of baseball but I've never heard their value estimated at a billion dollars. So wouldn't it make sense for the city, rather than spending $1 billion for a stadium, to buy the team for $800 million and spruce up Yankee Stadium and just run it as some sort of public enterprise?
Costas: He just smirked. (Laughter) That ain't how it's done. (More laughter.)
SJR: Has your opposition to the stadium caused you any personal problems with friends and colleagues who have publicly supported Cardinal ownership? Has there been any tension?
Costas: No. I'm on the road quite a bit anyway so I'm not right in the middle of it. Mark Lamping (Cardinals president) has explained their case to me. All the Cardinals' owners have always been very cordial and friendly. And I think they're good owners. They put a good product on the field. They try to be as fan-friendly as possible. I like them personally. I was the only person in the St. Louis media that I'm aware of--maybe there was somebody from the Riverfront Times- that was firmly against the Rams' deal too.
SJR: What do you think is going to happen next year? Will the owners and players sit down together and reform the game?
Costas: I think there'll be a lockout. Because the players' association is so ideological and so rigid that, even if the owners can get a supermajority among themselves on the subject of. revenue-sharing, the players are so set in stone I don't see them moving their position in any way that will get to the heart of the problem. And the only alternative the owners will have is to lock the players out.
SJR: Who will get the backlash this time?
Costas: If the owners do a good job of presenting the reasons for the lockout--what their reform means--I think fans would back them. What I think they should do is pay for a half hour on ESPN and have a credible spokesman lay out the reasons for reform. Talk about what's going on here, talk about how the players as a group aren't going to be hurt--a few superstars might have to take $10 million instead of $15 million. Talk about how they can make the game more stable. If they did that, then I think the players would take all the backlash. But if they do what they did last time, which was just try to shove a salarycap down the players' throat without. any real reform on their own part, then it'll be what it was last time--a pox on both their houses.…