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Russell Wangersky: Subsidized sports getting a deal at taxpayers' expense

Sports subsidies
Sports subsidies

It’s messy, and it’s educational. Right now, the city of Calgary and the Calgary Flames hockey team are locked in a public battle over a new rink for the team, and just how much the city should be chipping in to keep the team from flitting off to some new venue.

Russell Wangersky

One benefit of the battle? That the sort of deal that’s on the table has become public fodder, so we can get an idea of just how much public involvement private business sports operations seem to feel they deserve.

And the offers are bizarre. Would you become a partner with a business that promised you no profit sharing, asked for up to two-thirds of the cash required to build a stadium and wanted a free pass on municipal taxes?

That’s not a business deal, that’s a ticket on the gravy train.

But, from the big guys in NHL, right down to the junior teams that set up — and often depart — from Atlantic cities, sponsorship of sports teams is a one-way street, a special kind of give and take relationship. Taxpayers give, and franchises take.

The expectations are big: control of ticketing, shares of concession income, discounted rents, municipal tax holidays, provincial and municipal investment in rinks, and the list goes on.

But questions have to be answered, including just who the subsidies actually benefit. Among the most common beneficiaries?

The teams and owners themselves, and those among us who are well enough off to buy the tickets and pay the inflated rates for rink concession treats. The lower end of the taxpaying spectrum can’t afford the tickets, but can afford, apparently, to pay their share of the subsidies.

Any municipality looking at getting into the sports racket should have a few basic ground rules – the first of which should clearly be that, if you’re expected to be partners with a sports franchise, you get to see the books. Not a shorthand, back-of-the-napkin view of projected finances — no, the full and complete audited financial statements. Not just at the outset, but throughout the entire duration of the municipal involvement.

Deals should involve clear rules for profit sharing for the whole term of the arrangement.

There also has to be a clear view of what the benefits are.

When team owners start talking about all the spinoff revenues they are “creating,” municipalities have to have a clear understanding of such things as the substitution effect; people who attend a game are simply choosing a particular place to spend entertainment dollars they’d spend somewhere else.

Bringing customers into a region only is a net economic driver if the people who are coming to watch are coming from so far away — Nova Scotians going to Montreal to watch the Habs, Newfoundlanders taking in a Leafs game — that their money is essentially dollars that wouldn’t be spent in the region otherwise.

The whole idea of municipalities giving tax breaks to big draws is a mug’s game anyway.

Should grocery stores pay less in taxes because they bring buyers into a town from nearby areas to spend money? Should a regional hospital get a subsidy for the number of families it brings into a central region while a family member is getting lengthy treatment?

I understand councillors love to be in stands, love to soak up free tickets and wave to the crowds. Pricy bread, expensive circuses.

But cities and towns across this country have to realize that we can no longer keep sports franchise in the standard to which they’ve become accustomed. Sports teams are businesses. Let them sink or swim on their own business merits.

Russell Wangersky’s column appears in 35 SaltWire newspapers and websites in Atlantic Canada. He can be reached at rwanger@thetelegram.com — Twitter: @wangersky.

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