The Wall Street Journal has a cautionary tale today of public financing for pro sports stadiums — highlighting big trouble in Cincinnati.
The timing of the story isn’t good for Vikings stadium supporters, who are still working behind the scenes to get a public subsidy bill passed when (if?) the Legislature meets in special session to resolve the budget crisis that has led to the state shutdown.
Says the story:
Here in Hamilton County, where one in seven people lives beneath the poverty line and budget cuts have left gaps in the schools and sheriffs department, residents are bracing for more belt-tightening: rollback of a property-tax break promised as part of a 1996 plan to entice voters to pay for two new stadiums.
The tax hit is just the latest in a string of unforeseen consequences from what has turned into one of the worst professional sports deals ever struck by a local government — soaking up unprecedented tax dollars and county resources while returning little economic benefit.
The story says the deal for the Bengals’ football stadium “was unusually lopsided in favor of the team and risky for taxpayers —the result of strained negotiations between a local government and the professional sports team it was anxious to keep.”
The deal still brewing in Minnesota has the state kicking in $300 million and Ramsey County contributing $350 million from a county-only sales tax increase, and the Vikings contributing about $400 million.
In Cincinnati, the story said, Hamilton County assumed more than $1 billion in debt for two stadiums, the Bengals and baseball’s Reds, “by issuing its own bonds without any help from the surrounding counties or the state. As debt service ratchets up, officials expect debt payments to create a $30 million budget deficit by 2012.”
“The Cincinnati deal combined taking on a gargantuan responsibility with setting new records for optimistic forecasting,” says Roger Noll, a professor of economics at Stanford University who has written about the deal told the paper. “It takes both to put you in a deep hole, and that’s a pretty deep hole.”
But that could never let that happen here, right?