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January 14, 2005
Sports, Jealousy, and Economics
In his first post over at The Sports Economist, Prof. John Palmer catches me in a bit of a slipup within my last post. He asks: "Why does it matter how wealthy they are?" referencing my quote that "millionaire players and billionaire owners feel the need to take money from everyday people to fund their lines of work."
He makes a good point. For even if Alex Spanos (the owner of the Chargers) didn’t have a dime to his name, it still wouldn’t justify forcing taxpayers to fund his stadium against their will.
But this quote from the post troubles me slightly:
The question of whether taxpayers should support professional sports is a valid one. If it is efficient to support them, if there is a net social gain to supporting them, then it should not matter how well-off the owners and players are, unless we openly acknowledge that we would be happy to sacrifice some economic efficiency just to keep rich franchise owners and highly paid players from becoming richer.
Now, it’s clear that what Dr. Palmer is saying over the entire post is that I should not resort to relying on people’s jealously to make my point, for there are many reasons that stadiums should not be funded with taxpayers’ dollars on efficiency grounds alone. Yet jealousy aside, by pointing out the net worth of the players and owners, it’s clear they would have the collateral to get a loan to fund their stadium if it really was such a good deal.
But even more importantly, I am always bothered by arguments that we should or should not pursue a certain course of action justified solely on economic efficiency. That’s an arbitrary standard in my opinion. When dealing with economic models there are just too many unknown variables to predict the value to society of a given project. You could very well imagine a situation where Economist A says that her calculations predict a stadium would not be economically efficient, while Economist B’s calculations predict it would. Voters could then justify their support or opposition to such a plan by picking their preferred economist, while in truth it may have more to do with the teams winning or losing record.
What is needed instead is a standard of right and wrong that must be applied to all such situations. The standard I use, and that I try to convey to others when debating such a topic, is that individuals should not be coerced into paying for something that they do not support. The fact that a majority of people want a stadium doesn’t justify confiscating the minority’s hard earned cash. Now, that has far reaching implications, but I do think it’s a basic standard that many of us agree upon.
Most of the time we won't find out if a project such as a stadium is economically efficient until years after it is completed. The fans, players, and owners might be right that a new stadium will be a boon to the city of San Diego. What better way to get it build but to have them put their money where their mouths are and fund it themselves?
Update: My friend Dan emails to point out that I grouped players and owners together when there really should be a distinction. Why should players be asked to fund a new stadium he asks? He points out not only the fact that players are contract employees who could be traded to another teams and never get to play in the stadium, but also that if the players did help fund the stadium they should get a paid to do so just like any other investor. In short, even though players do have lots of money, in no way should they be obligated to pay for the stadium simply because they might be working there.
Point taken and I stand corrected.
Posted by Peter Mork at January 14, 2005 3:25 PM
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