USA Today had an article last week (More Bowls, More Problems, Sept. 7, 2000) discussing how sports subsidies have gotten so out of control that cities and states are even beginning to subsidize bowl games — the irony being, of course, that the bowl games are supposed to be the big ticket source of money that makes college football profitable and justifies all the subsidies already thrown at that sport.
In fact, most college football teams — even when they’re nationally ranked — tend to lose money or just break even. The costs of running a big time Division I football program are enormous. The university I work at, Western Michigan University, has a small time Division I program that occasionally beats a lower-level big team (the football team here beat Iowa over the weekend, for example) but is just as often over-matched by the Mid-American Conference opponents it faces. And the available data indicates the team is a net liability on the balance sheet.
Anyway, what really surprises me is how far down the subsidy mania has passed. In Kalamazoo, where I live, the city commission several years ago decided to underwrite the construction of a small stadium in an effort to lure an independent league baseball team and soccer team to the city. I remember distinctly talking to a friend who is now a city commissioner who thought that lots of people would turn out to watch and this would really help revitalize the city. I, on the other hand, maintained there was a limited market for athletes whose abilities were less than a good college team, and that the project was destined for failure.
A couple years ago, the city announced it was going to have to spend $2 million bailing out the stadium project after the baseball team pulled out due to low ticket sales, and the soccer team had similar problems.
But does that dampen people’s enthusiasm for government-sponsored entertainment? Of course not. Many years ago as a teenager I happened to be one of the few Americans unlucky enough to visit another state-backed entertainment scheme — Autoworld. If you haven’t seen Michael Moore ridicule Autoworld in his film, “Roger and Me,” here’s the deal: the failing city of Flint decided it could revitalize itself if it spent many millions of dollars of taxpayer funds creating a museum/theme park centered on the history of the automobile. Flint projected millions of visitors, but in fact after it opened it quickly tanked with very few visitors compared to the projections and the money that had been spent. The only thing I remember about it that was semi-interesting was the video arcade which had a sit-down version of a popular Star Trek arcade game at the time (whereas the arcade near my house only had the lame-o stand-up version).
So you’d think, based on the history of Autoworld, that people would be skeptical of such projects. Not here in Michigan. There’s a halfway decent flight museum on the edge of town. The current proposed boondoggle is to spend upward of $80 million of taxpayer funds to turn it into an enormous museum/theme park of air and space flight. It’s Autoworld all over again. The backers have projections showing that literally more than a million people would probably visit the center on an annual basis, which would completely revitalize and transform the city.
Build it and they will come is apparently the only economic theory that government officials understand is build it and they will come.
Which is kind of surprising since there is already a very nice flight and space center about 40 minutes from Kalamazoo which not only has some cool planes like our little flight museum does, but also has a space capsule from one of the Apollo missions as well as moon rocks, etc. It’s a fun place to go but it hardly attracts millions of people each year.
The bottom line is the same for these large theme park projects as it is for sports teams: if it really will generate millions and millions of dollars in revenue then it doesn’t need public support. Such a project should easily generate more than enough private financing. If, however, supporters have to resort to public financing because private funding is unavailable, this is the best indication that the project is not worth doing.