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Keep Those Subsidies Flowing

The stadium game refers to the prisoners' dilemma-type game played by cities in their quest to attract/keep sports teams, a subject frequently touched on here at TSE.  In a comment to this TSE post on planned vs. spontaneous order and a subsidy given to keep the Power and Light district in Kansas City up and running, Don Coffin alerts us to another in an infinite series of gifts given to sports teams.  This one involves the NBA's Indiana Pacers who were in negotiations with the city of Indianapolis on  a new lease for Conseco Fieldhouse.  According to the article, Pacers officials had hoped to get a 20-30 year agreement with the city, but were unable to come to terms on such a lengthy agreement.  The negotiations ended with a short-term agreement in which the Pacers will receive a $10 million arena operating subsidy per year for the next three years as well as money for capital improvements to the arena.

Given the weakness of the national economy, this deal is atrocious.  The state of Indiana ranked 39th out of the 50th states in June 2010 unemployment rate and this helps in what way?  If the Pacers are such a great boon to the Indianapolis economy, why do the Pacers need a public subsidy (I ask that rhetorically)?  Next they'll be selling this as part of the national economic recovery package complete with orange road signs proclaiming as such.

You can argue that the Pacers generate an intangible benefit to the city of Indianapolis - civic pride or a source of commonality, for instance. - that justifies some subsidy of some size.  I don't deny the intangibles as a possible reason for a subsidy.  But I am not convinced that the value of the intangibles isn't somehow captured by the Pacers.  For example, the Pacers may capture some of the intangible benefits when they sell Pacers gear that fans can proudly wear wherever they may roam.  The same goes for every sports team, pro and supposedly amateur.  If so, then the argument for public subsidies loses much of its steam.

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