Kathy Hochul gives multi-billionaire $850 million in state money because reasons

LGM commenter Victor Matheson wrote this terrific piece last April about the ongoing scandal of billionaire NFL owners extorting massive taxpayer subsidies to help build their newest sybaritic playpens. Victor points out this particularly distasteful form of legal theft (my characterization not his) had been somewhat on the decline since the Great Recession, but Kathy Hochul, huge Buffalo Bills fan from childhood and freak accident governor of the Empire State, has brought it back in a big way:

Study after study has shown that stadiums are terrible public investments. The taxpayers financing them rarely want to pay for them. So why are governments willing to subsidize them? . . .

Stadium subsidies in general are terrible public policy, and this arrangement is no exception.

The Bills and their owners, Terry and Kim Pegula, don’t need a handout. With a net worth of $5.8 billion, Terry Pegula ranks as the ninth-richest owner in the NFL. The generous revenue-sharing structure of the NFL means that even playing in one of the league’s smallest markets, the Bills have earned over $300 million in operating income since the Pegulas purchased the team for $1.4 billion just seven years ago. And since then, the value of the Bills has risen by another $900 million. The Pegulas have earned enough on their investment in just seven years to pay for the entirety of a new stadium on their own.

But the only thing better for a team owner than a new stadium is a new stadium that someone else pays for. Indeed, the new stadium is likely to further drive up the value of the Bills far more than the $350 million the Pegulas are contributing to the stadium’s construction costs.

Victor wrote this piece all of eight months ago, so we need to update his figures a bit. Per the same sources he cites, the value of the Buffalo franchise has skyrocketed from $2.3 billion to $3.4 billion — in no small part no doubt because of the very taxpayer ripoff he’s analyzing in the piece — while Terry Pegula’s net worth has risen accordingly, from $5.8 billion to $6.7 billion.

The standard justification for using taxpayer money to buy billionaires new stadia is that it’s good for the local economy, but economic research on this topic has concluded that this claim is, to use the technical term, a whole bunch of bullshit:

These taxpayer-funded deals are often pitched as an investment in the local economy, but two decades of academic research on the topic have conclusively shown that stadiums and franchises have little or no impact on local economies. The Bills are not likely to be an exception.

For one, most of the customers at a sports venue are residents of the metro area who would simply spend money elsewhere in the local economy in the absence of the team. Second, stadiums often make poor neighbors. NFL venues, like the Bills’ current home, Highmark Stadium, are huge facilities that are rarely used: The Bills play eight home games each year in the regular season. This creates little incentive for investing in the surrounding neighborhoods.

And don’t think that NFL stadiums typically host a multitude of other events. Over its 50 years of existence, aside from a pair of annual high school football games and a few miscellaneous competitions, Highmark Stadium has hosted a grand total of 30 major concerts, three college football games and two large hockey games. And Buffalo’s venue is not out of the ordinary for any large, outdoor stadium.

Rather than creating a dense area of housing, retail establishments and restaurants, Highmark Stadium instead sits alone as an island of concrete in a sea of parking lots.

These sweetheart deals for billionaires are, not surprisingly, quite unpopular with taxpayers on the whole, so what often happens is exactly what happened here, which is that the subsidy is smuggled into an omnibus state budget deal at the last minute, before public opinion can be rallied in opposition. It’s also of course a classic public choice problem, in that the people who care about whether the billionaire owner takes his franchise to greener pastures — there are a half dozen US metro areas with more than double the Buffalo metro area population and no NFL franchise at the moment, not to mention London calling — really care about this very intensely, while the vast majority of the state’s residents don’t care about the issue at all.

Anyway go read Victor’s article, then open your window and yell I’m mad as hell and I’m not going to take it any more (The cinematic political satires of the previous generation are now simply documentaries.)