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Real Salt Lake Subsidy

2007 February 18
by Skip Sauer

The following account is from an editorial in the Daily Herald Newspaper, (from the Provo area south of Salt Lake City). It sketches the timeline of negotiations between the MLS soccer club and various government entities in Utah. The subsidy is rather small at $35m, but the sequence of events is fairly typical in the subsidy negotiation game:

Dave Checketts, owner of Real Salt Lake, threatened to move the professional soccer franchise to St. Louis if he didn’t receive public funding to build a 20,000-seat stadium in Sandy.

Real Salt Lake is playing at the University of Utah until it can get a permanent venue, a dream that was momentarily placed in doubt when Salt Lake County Mayor Peter Corroon withdrew the county’s promise of $30 million to help Real relocate to Sandy. Corroon had been warned by financial advisers that it was a risky investment.

An alternative proposal from Utah County was snubbed. Anderson Development offered to buy the team and base it at the former Geneva Steel site in Vineyard. Checketts insinuated that we’re second-class citizens down here and rejected the deal.

In the eleventh hour, the Utah Legislature, goosed by Gov. Jon Huntsman Jr., came through, pledging $35 million in public money. The cash is supposed to come from taxes on hotel rooms and rental cars.

House Minority Whip Brad King, D-Price, called it a chance to promote Utah to the world. “This is worth millions and millions of dollars we will never commit from state coffers to promote us,” King said.

Checketts is not the first sports team owner to get help from state government. Utah Jazz owner Larry H. Miller leases the land under the former Delta Center for $1 a year until 2040. Salt Lake City is also using taxes to pay off the center’s $25 million bond.

There may be times when it’s proper for government to help a business get started, but we are not convinced this is it. A soccer stadium hardly qualifies as an economic kick-start.

This is a subsidy for a special interest, in our view.

We console ourselves with the fact that $35 million is a small amount compared to other stadium deals. But that doesn’t change the principle.

Salt Lake County’s financial advisers said that revenue projections by Checketts were “too optimistic.” Likewise, economists Roger Noll of Stanford University and Andrew Zimbalist of Smith College — co-editors of the book “Sports, Jobs and Taxes” — say that stadiums are more of a consumption expense than an economic booster.

Yes indeed. One might argue that the consumption expense is worth it to Utah’s public. But equally valid is the claim that this expense is inflated by league restrictions on the number of franchises, and imperfections in the political process.

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