Monday, July 12, 2010

Bad Math.

The TeeWee news informed me this morning that the Indiana Pacers, the city's roundball team, has been bribed to remain in Indianapolis for the next three seasons to the tune of better than $10,000,000/annum.

The rationale handed out by the .gov is that area businesses would lose $50M/annum if we didn't have NBA basketball here. This would make fiscal sense if the sales tax rate was, oh, twenty frickin' percent. Otherwise, that's a serious revenue gap you're going to have to make up from somewhere, and I get the feeling it ain't going to be parking tickets.

Go Pacers! Perhaps to Nashville or Louisville. They haven't been kissed by the NBA yet.


alath said...

I will never understand how the same "conservatives" who decry other forms of welfare and bailouts suddenly become slavering Socialists far to the Left of Trotsky when it comes to their sports team.

Welfare for Whiny Billionaires.

alath said...

I also wonder at the methodology of the economic impact study. These things generally rely on the assumption that if the Pacers leave, people will just sit at home and bury their money in jars in the backyard. Far more likely, they'd find some other way to spend that money in the area.

Someone's going to come back and argue that the Pacers draw money in from outside the Indy area. Come now, the Pacers? Oh, yeah. We get scads of basketball fans from Kentucky, Chicago, Ohio, and Michigan driving hundreds of miles to come to Indy, watch the Pacers lose, and spend their money here.

Alternatively, someone might argue that the Pacers create "media exposure" for the city. Yes, please brand us as the City of Fail. That's worth millions, right there. You can't buy that kind of publicity.

When I used to live in Nashville, and they were thinking of bringing the Titans to town, an independent accounting firm did an economic impact study and found that an NFL team contributes to the economy about the same as a Super Wal-Mart. Except the Super Wal-Mart runs all year round.

Anonymous said...

Did the city council appaoint hte CIB members? Time they all go no incumbent should hold office again. Scallywags all. CIB should be expeled from the city never to return. These venues should be sold to investors who want the risks and benefits of a free market. If you want atendence provide good entertainment can't support your buisness go out of buisness. Mayor ballard on down OUT OUT OUT.

og said...

"This would make fiscal sense if the sales tax rate was, oh, twenty frickin' percent"

Shut. Up.

Damn, woman, don't give them any new ideas.

Anonymous said...

Seriously, those numbers stinketh like a septic tank cleaning truck.

And yeah, I fail to see why my tax dollars should go to supporting a for-pay professional team.

I'd contribute to make them LEAVE.

GreatBlueWhale said...

Actually, Louisville spit in NBA's eye when the Hornets were last in play. Many balked at building an arena w/public funds. Well, until the UofL Cardinals decided they needed a new home, they balked. I'm sure you've seen the new sports edifice to the right of the bridge on one of your trips thru our fair burg.

Anonymous said...

Given that the overwhelming majority of sports fans witness their team's efforts via The Tube, I've long thought that it would make sense to have an "Olympic Village" arrangement out in the wilderness somewhere where pro sports teams could all live, practice and play. You might need several stadiums to accommodate the turf wear from 31 NFL teams, but a couple of indoor basketball venues, operated 24X7 and broadcast on appropriate schedules, could handle all the roundballers.

The necessary ambience could be provided by a small cadre of professional fans who live in The Village, with a select number of Visiting Idiots flown in from the "home city" to provide raucous and outrageous amusement for the home viewers. With good camera management and some CGI no one would be able to tell the difference between 5K fans in the stands and 80K.

Periodically some of the home team stars could breeze in for personal appearances and autograph sessions, so everything would look pretty much as it does today, but without all the traffic.

Sort of a "Capricorn One" for pro sports, but with lower carbon footprint and no reduction in home team memorabilia sales.

DaddyBear said...

"Go Pacers! Perhaps to Nashville or Louisville. They haven't been kissed by the NBA yet."

Gee, Thanks Tam!

What did we ever do to you? If you take it back, I promise a bottle of Kentucky's finest is yours for the taking. Please don't induce the NBA to crap all over Louisville the way they do to Indianapolis.

Unknown said...

I don't pretend to fully understand what's called the "multiplier effect", beyond having read that a dollar gets spent eight times before it winds up back in the bank. (Might do an in-and-out with a paycheck, of course.)

Anyhow, the rationale is that the sales tax is collected some eight times on some percentage of all dollars spent.

Economics geeks know all about such stuff...


Fuzzy Curmudgeon said...

As I am fond of pointing out, Columbus Ohio seems to do just fine without NBA, MLB, or NFL franchises. I guess I can add Louisville and Nashville to that list :)

Bubblehead Les. said...

I'd say something witty and cool, but since I have to live with the Indians, Browns and Cavs, and Queen LeBrat just blew out of here like a Snowbird in October....

Zendo Deb said...

Cities everywhere build stadiums, give sweetheart deals to hold or lure professional teams.

It is a national insanity, not limited to Indy.

If you do a better job at math than most Americans can handle you will find....

professional sports don't contribute very much money to a city. (Look what Cincinnati spent on stadia in the past 10 years. They gave up prime real-estate and for what? Newport built shops/theaters/an aquarium on similar land across the river and was doing much better financially.)

college sports - football in particular - cost more than they recoup in TV revenue and in alumni gifts. (Look up the 3 universities with the largest endowments, and the best giving by alumns, and you will find they aren't exactly known for their sports teams. My Alma Mater didn't sponsor a football team from the 1930s til the 1990s and it is one of those 3)

But why confuse the issue with facts. If sports fanatics (fan being short for fanatic) were rational, no one would go see a Chicago Cubs game.

Frank W. James said...

Re: The Pacers; have you actually gone to one of their games? I did...ONCE. Never again. Took the family some years ago because the wife and the boy are INTO basketball.

We paid a bunch of bucks to watch so called professional WALK from one end of the floor to the other.

I'll never go to another NBA game as long as I live. What a scam...

All The Best,
Frank W. James

Joe in PNG said...

File under things that will never happen:

Team: "Unless you give us a mountain of money and a new stadium, we're leaving."

City Gov: "Bye. Don't let the door hit you on the way out."

Fans: "Yeah, we're tired of supporting a bunch of overpaid, underperforming losers. Throw them out!"

City Gov: "Well said."

Fans: "Actually, we meant you as well. You're not exactly championship material either."

*AHEM* Got a little carried away there. I think I'd actually support a city official who had the guts to tell the local pro team to bugger off.

Old Grouch said...

Slammed from both left and right.

rickn8or said...

Sounds like the same smoke-and-mirrors mathematics that convinced the Memphis leadership that an NBA franchise would solve all the city's problems.

So, they gave away the store to get some third-rate team, which demanded a NEW place to play, because the (still not paid for) Pyramid wasn't good enough for them.

They okay'ed a quarter-billion edifice without a referendum because "this is a LIMIITED TIME OFFER!!" and the taxpayers are stuck with this white elephant.

Frank W. James, I don't like basketball as well as you do.

Anonymous said...

Anon 10:30 a.m.:

That you Tam?

'Cause that centralized coliseum idea is teh brilliant, and it reads like you.

If not Tam, who?


Unknown said...

Don't get too all-inclusive. Daytona and Talladega make out pretty well.

Longhorn football's profit pays for ALL other sports at UT and pumps a few million into academics. Might have something to do with competence of the managment.


staghounds said...

"Longhorn football's profit pays for ALL other sports at UT and pumps a few million into academics."

If it's like the other UT that makes a similar boast, it's because many of the expenses are on the University's balance sheet, not the football programs.

I've seen the Vols' books- the accounting tricks are spectacular.

Geodkyt said...

By and large ALL government attemps to "increase revenues" by bribing businesses to move there fail, when the bribe requires an upfront cash outlay and no guarantee of full repayment from the business if the revenue thing doesn't go as planned is part of the deal.

Bribes that do not require up front cash outlays (favorable zoning changes, spending the already planned cash in area X rather than area Y, offering a limited tax rate reduction, etc.) tend to work better, if still not the money printing machines the politicians ALWAYS think they will be.

Go figure. If there was a net benefit to the business for setting up there they wouldn't NEED a government bribe. If teh business can't make a go of it at that location, then the tax revenues won't be forthcoming. So, if Wal-Mart, Ford, or teh NBA team insist on millions of dollars in promised gifts to set up in your town, chances are, it's a losing proposition -- they'll milk the locality for the bribes and then either sit pretty (like a professional team) until they get a better offer, or just close the place when the Goodie Train ends (like Wal-Mart).

If it was a good enough oppourtunity to jump in without a government subsidy, most high level businessmen WILL. . . that way they get to keep all the profit and control in-house. If the city paid the bills and has offered huge breaks, then they will get to call more of the shots.

However, company neutral encouragement (such as an across the board reduction in tax rates below your regional competitor cities) tend to work VERY well. That just generally encourages business development in multiple directions, which tends to start a self-perpetuating cycle of economic growth.

Go figure. If your average locality politician was as smart at business as a trump or a Steinbrenner, he wouldn't be in local politics, would he? He'd be making bank off the inexperience of local politicians!