Questioning the conventional wisdom put forth by the Church of Neil DeMause, author of “Field of Schemes”, can seem daunting. Having established himself as the leading voice regarding public spending and sports, his work is ubiquitous. Any time a stadium or arena is built or upgraded, his work is mentioned. Without fail, someone who doesn’t like sports will smugly provide a link to DeMause’s smug website, chiding the foolish supporters who dare suggest that a sports-related development could possibly benefit the host city.

“Actually, the research is well-established that there is no measurable economic benefit from professional sports.”

THE DEMAUSEIAN MEDIA “EMPIRE”

DeMause’s website, smug as it may be, is impressive. Having written a book that became a touchstone of sorts, he has not rested on his laurels. He posts almost daily about various stadium and arena “debacles”, “fiascos” and other synonyms for “train wreck”. There is a fairly extensive list of studies and research on which his basic thesis is built upon.

The bulk of the content is the aforementioned semi-daily news items, which tend to be brief, light and snarky in tone. There is a slight sense that DeMause is reaching for content, as some of his potshots are at privately-funded arenas, or adopt a reflexively cynical tone regardless of the merits or risk of the particular project. There is no professional sports expenditure  DeMause can’t find fault in, and apparently no expenditure too small to warrant scrutiny. I get it. Content producers gotta produce content. I’m guilty myself.

If you live in a major media market such as New York, Boston, or L.A., DeMause’s work is probably irrelevant to you. There is no amount of ink that could be spilled, no public policy change dramatic enough, to prevent the construction of stadiums in those markets. The existing economic activity and population density makes professional sports and the attendant venue construction an inevitability.

In all fairness, he’s not all wrong. His arguments, while haphazardly applied, are substantial. He does his homework, or at least he did at one point. There are many markets where the ownership of a sports team has convinced municipalities to enter into arrangements which don’t pay off. I’ll focus on hockey since it’s my area of expertise, but as the most niche of the major leagues, a sport still growing outside of its traditional hotbeds, it demonstrates the limitations of pro sports as an economic driver well. There is little argument that money invested by Raleigh, NC and Glendale, AZ has failed to yield a return which justifies the expense. There are a variety of reasons, but largely a combination of unfavorable leases which require a very high bar of success (as measured through gate attendance combined with television revenue) and the inability of professional hockey to draw interest away from other sports and forms of entertainment have conspired to make these ventures perennial money losers.

Even in these cases, where I agree fully that these ventures were better off never being entered into in the first place, there’s a flaw in DeMause’s theory of the crime. While the owners certainly do whatever they can to shift the burden of financial loss to their host city, no one makes money in these situations. Glendale, the Coyotes, and the NHL alike have all lost many millions of dollars trying to make major league hockey happen in the desert. It doesn’t exactly fit the narrative of greedy corporate robber barons bleeding cities dry and getting rich while incurring no financial risk. Everybody is losing.

SMALL PEG IN AN AGGREGRATE HOLE

Ultimately, my focus comes back to Hartford, as it always does. Our city, in particular the baseball stadium, is a favorite and a frequent subject of DeMause. He has this to say about the situation:

“Connecticut is like a lot of other states in that it has a lot of cities that are struggling economically, and I think when you have that, you get a lot of people throwing out, ‘OK, what’s the big idea, what can we do to try and turn the city around in a hurry?’” deMause says. “The idea is this will put our city on the map. This will turn us around. Unfortunately, the evidence is overwhelming that it doesn’t work.”

That sounds reasonable, and in a very general sense it isn’t factually incorrect. The studies which DeMause relies upon do suggest his conclusion. However, they do so by aggregating three very different types of markets, which I will refer to from here on out as Coyote, Ranger, and Whaler Markets.

The Coyote Market is an unmitigated disaster that was doomed to fail. The Ranger market is unprofitable by design. It’s an amenity, a loss leader of sorts. DeMause occasionally grouses about the lucrative leases granted to teams in these markets, but seems to acknowledge the inevitability of professional sports as a permanent feature of the landscape in major media markets. The Whaler market is a different beast, neither inevitable or doomed, and DeMause’s boilterplate blurb betrays his failure to understand it.

The elephant in the room, as my nickname may have suggested, is Hartford’s historical relationship with professional hockey. Nothing in his narrative jibes with our experience.

Excepting a few bitter malcontents and nay-sayers, there is a nearly universal consensus that the Whalers had an overwhelmingly positive on Connecticut, the greater Hartford area in particular. At least today. In 1996, state and city officials (who we now know were secretly negotiating the exit of the Whalers in order to pursue the Patriots of the NFL) were flirting with rhetoric that could be described as proto-DeMauseian. This article by Mike Swift of the Courant from that year cites a sweeping study of relocated franchises from 1958 to 1987 and suggests that the loss of the Whalers would hardly be noticeable. A year later, Swift wrote this Pollyanna-esque piece suggesting that Hartford had made the painful but correct choice in refusing to give the Whalers a new arena. Things would not just be okay, they’d be better.

I’m not sure whether to laugh or cry as a laundry list of business owners, every single one of them gone just a few years later, are quoted saying things like “I think it will make more of a difference to me than the Hartford Whalers” and “I’m really ecstatic”.

The mall was demolished. Retail is non-existent, restaurants are smaller and less numerous and the city has become known once again, as it was before the Whalers came, for being dead after 5:00pm. Only in recent years, as makeshift arena upgrades have made it temporarily feasible for UConn athletics to come Downtown, has the arena been able to turn a profit. Downtown residence is increasing, restaurants are staying open later, retail is beginning to exist. The area around the ballpark, be it a fiasco or not, has attracted ancillary development in the immediate area. The Yard Goats brand itself, something DeMause and his ilk never talk about, has done something twenty years of slogans and Metro-Hartford Alliances and millions of dollars in attendant funding have failed to do: get people talking about Hartford for something other than insurance or its high murder rate.

The Goats, seizing on the intangible sense of identity that the Whalers gave Hartford and once drew the entire metro region into the Downtown area in droves, have quietly built a Hartford marketing empire while DeMause has gloated about the chaos around the stadium. They have successfully quantified the benefit that Swift failed to put a number on back in 1996: in merchandise sales. Number one in minor league baseball sales, merchandise sold in all fifty states and several foreign countries. Last week a Yard Goats-focused blog I write for part-time, Bleating Hartford, was ranked #14 out of all baseball blogs on the host site. Out of hundreds, at all levels of the game.

EVERYONE’S A CRITIC, BUT NO ONE HAS A SOLUTION

I raised this point earlier today in a discussion which set the ball rolling for this piece, and the response I received to this description of how professional sports did indeed benefit Hartford was that Hartford subsequent economic decline was not a great argument for bringing the NHL back. I don’t totally disagree with that point, nor do I totally agree with it, but on its face it strikes me as evasive. The original argument I was responding to was the DeMauseian assertion that there is no benefit to cities in investing in professional sports. I made the above point about Coyote, Ranger and Whaler markets (thought with much more brevity though, as we were on Twitter) to illustrate exceptions to that assumption. Shifting the concern from the economic benefit of cities to “what’s in it for the league and team ownership?” feel like moving the goal posts.

That said, it’s not a totally unfair point. As I illustrated earlier with the lose-lose-lose situation of the Arizona Coyotes, it is in everyone’s best interest for any given team to be financially viable for all parties. A professional sports franchise that benefits the host city while the owner loses money is a ripe for relocation as the inverse.

In this case, professional hockey remains an outlier. As salaries sky-rocketed in the nineties, the NHL tried to respond as other leagues had, by expanding their footprint into the south and the west, and pulling out of smaller markets. Hockey, even after having grown in popularity, remains a niche sport compared to the other major leagues. Unable to convert larger markets in the warmer climates into the basis for a national television deal, the NHL has shown an openness to the stability of smaller traditional markets. Winnipeg, back in the league, and Quebec City, currently being considered for expansion, would never be considered for a second in any other league. In the NHL they offer a much-needed stability that only a passionate one-horse town can. Hartford, not being saddled with the Canadian dollar or French-language media, has no rational basis other than the lack of arena to consider ourselves less viable than these two cities.

Perhaps the biggest red flag for me in Hartford’s growing affection for the ideas of DeMause is in who is embracing them. Carrie Saxon-Perry, the now-infamous Hartford mayor who was ousted after suggesting it would be better if the Whalers left because “only white people like hockey” and alienating the CEO of Aetna to the point where he bluntly informed the city that “either she goes or we go”, was a big proponent of redistributing public funds away from pro sports and into addressing the plight of poverty. Years later, local nutjob Ken Krayeske, famous for being publicly dressed down by Jim Calhoun at a press conference and assaulting Governor Jodi Rell on a bicycle, had this to say in response to DeMause’s words regarding the Hartford stadium:

“People in one of the poorest cities in the country should not be bonding money or paying for a stadium so that billionaire owners of baseball teams can field development teams,” says Krayeske, who launched several lawsuits against the city in an attempt to block the stadium’s development.

The irony of Krayeske, who has made a career out of frivolously litigating against the city and state, decrying wasteful public spending, is rich. As of this writing, we are still waiting for his endless series of lawsuits against the city and individual police who apprehended him for charging at the Governor to conclude so a final cost to the taxpayers and can be assessed.

There is a larger point illustrated here. DeMause adopts a practically libertarian tone when talking about “building stadiums on the taxpayer dime”, as do many of his supporters, but what I’ve never seen addressed in any substantial way, is how the money could be better spent. Make no mistake, psuedo-libertarian rhetoric aside, Krayeske and his ilk are not suggesting that anyone be allowed to keep their tax dollars. They represent a hard left which borders on openly socialist and has no reservations about public spending for their pet causes.

The interesting thing about having this discussion in Hartford is that it’s not speculative. Ultimately, the state resisted both the reasonable arena request of the Whalers (studies suggest that a modern arena would have indeed provided enough revenue to make the team viable), and the less reasonable requests of the Patriots. We’ve had moderate-to-liberal leadership at the state level, and it’s been decades since a Republican was politically viable in Hartford. No amount of wealth redistribution has put a dent in poverty, but the loss of regional pride and lack of attractions Downtown have compounded the economic decline in the city and region.

If the economic benefits of stadiums are negligible, and the public funds expended on them so harmful, Hartford should have been a model of success in the post-Whalers era. Money was invested in schools, social services, and “other ways of marketing the city” as is so often vaguely suggested.  Until very recently, Hartford has been religiously DeMauseian in its refusal to spend a dime maintaining or building arenas and stadiums. Having followed his playbook to a tee, the state today faces a deficit of over $900 million.

It strikes me as opportunistic and disingenuous to suddenly lay the blame for the city’s decline at the feet of a AA baseball stadium.

SNARKY ANSWERS TO COMPLICATED SYSTEMS

A final irregularity to consider, which speaks to the ideological underpinning of the movement DeMause has birthed, is that all of these figures regarding economic benefits not only exclude certain ancillary economic benefits in way which strikes me as somewhat arbitrary (I can find absolutely no accounting for the very real benefit of publicity, which is something Hartford currently and unsuccessfully spends millions of dollars on), but have been offset to account for tax breaks, gifted land etc.

This is not to say that there is no value to even a blighted lot, such as the one the Hartford stadium now occupies, but allowing a team to occupy an empty space that had no prospective tenants, even at no or reduced cost, is not the same as giving money outright to a team. It’s simply intellectually dishonest to suggest they are equivalent. And to conflate the situation of the Ranger Market and the value of the land where Madison Square Garden sits, with the Whaler Market and the useless vacant lot which became a ballpark, is another example of where the simplistic analysis of DeMause fails to truly explain a complex system.

Furthermore, the narrative of greedy owners swindling naive cities over and over may be true in some cases, but when stretched out to the point of becoming a sweeping generalization, it becomes mighty thin. Even Peter Karmanos, as arrogant and selfish as he might be, can not be honestly said to have entered the Raleigh market with any intention of failure. He simply miscalculated the market and his ability to succeed there. And while all owners are certainly profit-driven, the suggestion that owner greed is driving the ever-escalating race towards bigger and better arenas is simply flat-out wrong, the most simplistic analysis possible. Arenas are a response. The real driving factor is rising player salaries.

Prior to Bob Goodenow’s 15-year reign as head of the NHL Player’s Association, Hartford, despite having one of the smallest arenas and lower-than-average attendance, was one of the most profitable teams in the league. Creative merchandising and an affluent fanbase which was willing to pay premium prices for tickets made the market’s size a non-issue. This changed in the early nineties. Under Goodenow, player salaries started rising rapidly. Teams which could afford new arenas which provided additional revenue streams did so and survived until 2005, when the salary cap and revenue sharing were mercifully implemented. Teams that could not or would not moved.

The particulars of this are widely misunderstood (to the extent that they’re known at all) by fans, which is why Hartford’s loss of the Whalers seemed like a sudden, confusing and most of all undeserved betrayal by the league and our owner. The arena had been full every night for a year and we had successfully grown one of the largest season ticket bases in the league. The team still left.

It didn’t matter, and no one understand the real reason why: The arena and it’s attendant streams of revenue were the only thing which could have saved us.

DeMause’s response to this phenomenon is glib, dismissive, and oft-repeated: “Of course they really need a new stadium, LOL”. In his world, sports is less a business than a hunting ground full of amoral wolves and misguided sheep. The fact that the escalation of expenses is driven in part by, of all things, a labor union, is not a point of view  many anti-stadium activists are willing or able to process. So greedy owners it is.

In the real world, where human behavior is notoriously responsive to both profit and multi-million dollar losses, things are more complicated. The swindle theory is debunked by a very obvious fact which (yet again) DeMause’s anaylsis fails to address with an substance: cities keep walking into these stadium deals, over and over again, with clear eyes.

Why would somebody do something, over and over again, if there was such overwhelming evidence that there is no benefit to doing so?

The simple explanation: They wouldn’t, and they don’t.

I recently invited to participate in panel on public spending and sports by Colin McEnroe of WNPR, serving in the role (of course) of a Whalers historian of sorts. The panel included the owner of the Yard Goats, a well-paid public official who heads up an agency that exists for the sole purpose of promoting the state nationally, and Victor Matheson, an economist from Holy Cross who DeMause cites in his work. We discussed many of the things I’ve written about here, and at a certain point Matheson was pressed to explain, as an economist, why cities kept building these stadiums if they were such bad deals.

He made the point as eloquently as I could have, albeit reluctantly and with several qualifications.

If you have a good lease, and have done due diligence on the market, and have a stable tenant, and the ancillary development happens as planned…yes, he admitted,  it can be a sound investment. The words seemed to be dragged from his mouth against their will, and you could hear audible groans from members of the crowd who were counting on Matheson to make DeMause’s case on their behalf, but there it was. At the end of the day, we weren’t disagreeing on the facts. It was more a matter of worldview.

The problem, he went on to explain, lies with the intangibles. A normal business model wouldn’t consider breaking even a success because other area business benefited from its presence. Sports, as a whole, exist not because they are profitable, but because they mean something to people. Even when they are economically beneficial, they are irrational in a way that makes people uncomfortable. People who don’t like sports or don’t care to see them as positive seem simply unable and unwilling to consider the more nebulous benefits of pride and positive regional identity.

For people who find the idea of corporate welfare odious (even when it comes in the form of not taxing revenue that wouldn’t exist in the first place) and the idea of professional sports brutish and trivial, it’s understandably difficult for them to wrap their heads around the fact that so many people are willing to expend so much time and money propping up this massive industry. They can’t understand why that money isn’t invested in education or the arts or theatre, anything loftier than this dumb, ugly American monolith of professional sports. But again, it’s intellectually dishonest to pretend this is some kind of swindle perpetrated on an unknowing public. Athletes and owners make as much money as they do because we want them to. We voted on it, with dollars. They won. Over and over again.

The trouble with democracy is that even dumb ugly Americans, yes, even those of us who are passionate about men in green whale uniforms punching each other on ice, are allowed to decide what benefits them most.

And that’s exactly what we’ve done.

 

THE NUMBERS

$100 Million: the economic activity generated annually by the Hartford Whalers (Per Mike Swift of the Courant this figure includes ticket sales, parking, concessions, restaurants, hotels and sales taxes and is in 1995 dollars)

$59 Million: The average NHL payroll circa 2012, a significant portion of which is spent and taxed locally

556,000 Viewers: An average audience for regular season Whalers games against out-of-market opponents on weeknights when broadcast on ESPN. There is considerable debate about how to best quantify the value of national exposure cities receive from professional sports branding, but it is not factored into any of DeMause’s studies.

$147.5 Million: the proposed cost of the NHL arena the state refused to build for the Whalers

$374 Million: the cost of the stadium that the state offered to the Patriots, which was refused

16%: The percentage of visitors to the city of Hartford who came exclusively because of NHL hockey (does not include employees of businesses who were incidentally profitable because of the presence of the Whalers)

$14.6 Million: The latest available figure for annual charitable contributions by Aetna, a Hartford-based corporation which built and and subsidized the Hartford Civic Center and mall. In 2012, Aetna approached the state with a Downtown revitalization plan which included a renovated and modern arena. Their plan was rejected by Governor Malloy. Aetna is currently considering a move out of state. General Electric recently departed for Boston, citing not taxes but a lack of amenities. Both companies employ thousands.

$700,000: The annual revenue loss suffered by Chuck’s Steakhouse, one of the restaurants in the Civic Center mall, as a result of the Whalers departure. Every game played Downtown brought approximately 600 additional diners to Chuck’s, which quickly became unprofitable and closed.

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