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Largest Prize Pool in Esports History Tops $20 Million

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Prize pool for esports tournament the International Dota 2 Championships nears $21 million

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The XFL is making a comeback in 2020.

WWE CEO Vince McMahon announced his intentions on Thursday to revive the league that lasted only one year in 2001.

McMahon said the league will have eight teams--the same number that competed during its one and only season--and a 10-game regular season beginning in late January or early February.

Memphis Maniax were one of the eight original teams, along with Orlando Rage, Chicago Enforcers, New York/New Jersey Hitmen, Birmingham Thunderbolts, Los Angles Extreme, San Francisco Demons, and Las Vegas Outlaws.

McMahon said they are nowhere near ready to choose which cities will have teams during the league's second attempt.

Steve Ehrhart, the former vice president and general manager of Memphis Maniax, said Memphis has a great pool of talent to choose from in the event the Bluff City gets a team again.

"There's an awful lot of players that want to play pro-football in the nation today. Plenty of great coaches around to have jobs, too. Memphis always had some of the best teams in the spring leagues," Ehrhart said. Ehrhart is currently the executive director of the AutoZone Liberty Bowl.

McMahon stressed that the new XFL will "give the game of football back to the fans."

"The new XFL will be fan-centric with all the things you like to see and less of the things you don't," he said.
Copyright 2018 WMC Action News 5. All rights reserved.

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17 years after Maniax played in Memphis, XFL announces return

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The XFL is making a comeback in 2020. WWE CEO Vince McMahon announced his intentions on Thursday to revive the league that lasted only one year in 2001. McMahon said the league will have eight teams--the same number that competed during its one and only season--and a 10-game regular season beginning in late January or early February.

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Memphis' professional soccer team is only just getting established. But there's already a fervent group of supporters in place.

During Monday's press conference at AutoZone Park that officially announced the team, members of the American Outlaws entered with scarves aloft while chanting to the tune of "Let It Be" by The Beatles.

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"Nine-oh-one, 9-0-1, 9-0-1, 9-0-1. We're better than the 6-1-5, 9-0-1, 9-0-1."

The reference, of course, is to Nashville, which was awarded a Major League Soccer franchise last month. And although Memphis' team will compete in the second-tier United Soccer League, the enthusiasm is already at top division levels.

"We hate Nashville," said supporter Matt Healy, whose blue-and-grey club scarf was nicely accented by a Lucha Libre wrestling mask.

"Soccer is taking over. The Memphis Rogues were a big thing here back in the 1970s, but it's night and day from what it was. More and more of the middle, upper class people, their kids ain't playing football anymore. They're afraid of head injuries.

"And what are they doing? They're playing soccer instead."

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Tim Howard, a Major League Soccer star, U.S. National Team goalkeeper and Memphian, reveals that Memphis has the newest professional sports team, a yet-to-be-named United Soccer League team that will play its inaugural season in 2019 at AutoZone Park. (Photo: Yalonda M. James/The Commercial Appeal)

Officials of the team - which doesn't yet have a nickname - will be looking to tap into that market when play begins in March 2019. Games will be played at AutoZone Park, which will be re-configured for soccer.

"When I first visited AutoZone Park before purchasing the Redbirds, I immediately recognized the potential for it to be home to more than one professional sports team," club owner Peter Freund said. "We will build an entirely separate organization focused on providing an authentic soccer experience, similar to what Yankee Stadium, home to the New York City Football Club, has been able to achieve at the MLS level."

Memphis Redbirds team president Craig Unger added, "AutoZone Park is a big part of the fabric of the city and is the setting for so many memories for people each year. And now we are going to be able to invite even more people to experience the excitement.

"The stadium will now be buzzing every weekend from March through (October)."

The USL will have 34 teams for the 2018 season, with each team playing 34 matches over the course of a 31-week regular season. The league is divided into Eastern and Western conferences with scheduling focused on regional proximity.

The team will play its games at AutoZone Park. (Photo: Rendering provided by Memphis Redbirds)

Memphis will join with Austin and Birmingham and will compete with teams within a 500-mile radius of one another including St. Louis FC and Louisville City FC, which won the USL Cup in 2017.

The hope is that new rivalries will be formed, which will help attract fans to the games. Former U.S. national team goalkeeper Tim Howard - who was on hand for the press conference - knows all about rivalries and thinks Memphis and Memphis soccer fans will adapt well to the new league.

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"Soccer is special and unique to sports because it encapsulates passion, fans, team, community ... no other sport does that," Howard said. "With all due respect. I'm an American sports fan ... but in no other sport does the fan base and the community take ownership the way it does in soccer."
Reach John Varlas at john.varlas@commercialappeal.com or on Twitter @johnvarlas

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Memphis welcomes United Soccer League franchise

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Memphis' professional soccer team is only just getting established. But there's already a fervent group of supporters in place. During Monday's press conference at AutoZone Park that officially announced the team, members of the American Outlaws entered with scarves aloft while chanting to the tune of "Let It Be" by The Beatles.

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Photo of the rendering for the proposed football stadium on the St. Louis riverfront. - Jason Rosenbaum

It's a familiar tale: a National Football League owner gets mad about the condition of the local football stadium, and threatens to pull up stakes and move elsewhere. Now, it's happening in St. Louis.

St. Louis Rams owner Stan Kroenke announced about a year ago plans to build a shiny new stadium in Inglewood, Calif., which prompted many to assume that the NFL's days in the Gateway City are numbered. But relocation decisions fall to NFL owners, a group that may be squeamish about approving a move if a city possesses a viable stadium proposal.

That's where former Anheuser-Busch President Dave Peacock comes in. He's helped develop a plan to build a roughly $1 billion stadium on a drab section of St. Louis' riverfront, which would be funded with a combination of state, local and private dollars, as well as a portion of "game day" related taxes from stadium parking, concession stands and ticket sales.

While Peacock and others have touted the economic benefits to building the facility, there's also regional pride at stake - especially since St. Louis has already lost a professional football team when the Cardinals left St. Louis for Phoenix back in the 1980s.

"We can't keep losing things. We can't keep being a city going backwards," Peacock said. "And I believe building is better than letting dilapidated areas stay the way they are."

Former Anheuser Busch President Dave Peacock speaks at a press conference unveiling the naming rights for St. Louis' proposed football stadium. Peacock is part of a task force trying to build support for the $1 billion project. - Jason Rosenbaum

One hurdle in getting the proposed stadium off the ground is for the St. Louis Board of Aldermen to approve a stadium financing package. St. Louis Alderman Tammika Hubbard sees the measure a chance to create construction jobs, revitalize a part of the riverfront and keep a wildly successful professional sport anchored in the city.

"We're a sports town and people are just excited to continue to have a team in St. Louis," she said.

But not everybody likes the idea of forking over public money for the stadium.

Some aldermen are upset that the proposal isn't being put up for a public vote, especially since the stadium would require bond payments for more than 30 years. And St. Louis Comptroller Darlene Green said the plan doesn't allow the city to keep enough stadium revenues to pay off the project's costs.

"This is not a fiscally responsible plan as it has been presented to the Board at this time," Green said. "It does not have enough revenues. As a matter of fact, the revenues are very short. And there's a material gap that's created between revenue and expenditures that go out each and every year as you can see."

Jeanette Mott Oxford, the executive director of the social welfare organization Empower Missouri, speaks at a St. Louis Board of Aldermen meeting. Oxford is a longtime critics of publicly-financing stadiums. - Jason Rosenbaum

St. Louis Mayor Francis Slay's staffer, Nahuel Fefer, pointed out that the budgetary gap shrinks when accounting for sales taxes that go to schools, public transit and parks. But former state Rep. Jeanette Mott Oxford, who now runs a social welfare group, wonders if the project is an example of skewed priorities - especially with major crime and poverty problems afflicting the city.

"I think that sports makes a lot of money and that they should have to pay to carry out their own projects, like a coffee shop would if they wanted to add an extra room or put new carpeting or curtains in," said Oxford, executive director of Empower Missouri.

Ultimately, any relocation requires a sign off from the NFL's owners. And their decision could come down to whether city leaders believe the benefits of the NFL outweigh the public cost.

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St. Louis weighs pros and cons of NFL stadium funding

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It's a familiar tale: a National Football League owner gets mad about the condition of the local football stadium, and threatens to pull up stakes and move elsewhere. Now, it's happening in St. Louis. St.

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Moderated by Tom Sabulis
Public subsidy of sports stadiums is a passionate topic in metro Atlanta these days, as the Braves and Falcons move forward with plans to construct new stadiums partially financed by taxpayer dollars. Recently, two economists steeped in the topic argued the pros and cons of decisions to underwrite splashy, state-of-the-art homes for local sports teams. The debate, held at the Georgia-Pacific building downtown, was sponsored by the conservative America's Future Foundation.

Commenting is open.

By Tom Sabulis

Do public subsidies for sports stadiums generate net regional economic benefit?

On the "yes" or "pro" side, Bruce Seaman, an associate professor of economics at Georgia State University, has pointed to the broader positives of public investment in sports and cultural institutions, beyond the numbers. On the "no" or "con" side, Victor Matheson, an economics professor at the College of the Holy Cross in Worcester, Mass., has studied the impacts of mega-events such as the World Cup and Olympics and found them lacking, economically speaking.

In a gentlemanly, sometimes funny exchange, the two agreed to play their parts as adversaries, but they tended to agree on one thing: If sports stadiums do benefit the public pocketbook, it is to a very small degree. Here are highlights of the debate (some remarks have been edited for clarity and space).

Tax financing as seed money

Seaman: Often public money is seed money that generates other private money, and time is of the essence. You often don't have the luxury of saying, we're going to put it in a five-year plan and figure out (how to rank) these projects. I am sensitive to that, but in reality it ... is a (recipe) for paralysis. No doubt, the burden of proof has to be on anyone claiming that public tax financing should be involved at all. But I don't believe that studies uniformly show that there is zero (impact).

Remember, many of these facilities actually end up being owned by the public sector. At least when you own the facility, you get some rent money back. As in the case of Turner Field, the city is able to sell that. There will be some benefit back to the city. You have to be reasonable about this. If you are opposed to private/public involvement, you'd have to be opposed to the Beltline, the Aquarium. Just think of the implications of that.

Hotel/Motel taxes

Matheson: One place I clearly disagree with Bruce is this concept of hotel/motel taxes. It's very common for politicians to say, hey, let's finance our stadium through rental-car taxes, because other people are paying that. Let's finance this on hotel taxes - that's a professor coming in from Boston to be in a debate. Let's figure out things that other people are paying for to pay for a stadium, and then it's like we get a stadium for free. The real problem with that is, you could always use hotel taxes to pay your teachers, your firefighters and police officers. You could build your local roads with hotel taxes. This idea that you must put hotel taxes towards a stadium I think is a wrong one. I'm comfortable taking a no-sports-subsidy stand because the number of examples of bad things happening so widely exceeds the number of things where we have some good outcomes.

Remember, sports teams are not in the business of local economic development. They're in the business of generating as much revenue as possible. The way you generate revenue is not by creating a neighborhood of bars and restaurants where people can go before and after the game. The way you make money is to make sure that anyone who (comes to your) stadium is spending all their money inside.

Positive byproducts of sports

Seaman: Almost everybody understands what it's like to be in a city that's somewhat unified amid all the discord by their teams doing better. In general, there are these benefits that to an economist are somewhat legitimate and, in fact, can sometimes be measured. Should we factor in something unique about what sports creates in consumption value? Sports does have some unique features. I think the arts, as well, have an element about this that should not be ignored. Frequently, the effects that are really dramatic and very beneficial are within a region. We are finding an actual bump, but we're also finding a bump that is a fraction of what's often claimed.

Matheson: My research into the direct economic impact of franchises, stadiums and mega-events suggests that the economic impacts of these sports tend to be small, a fraction of what is typically claimed. That being said, we do have some evidence that sports makes us happy. With the World Cup in Germany in 2006, we had evidence of a small positive economic impact in terms of visitor days and tourist spending, but really very small. What we did see very significantly is that the self-reported happiness of Germans was much higher after the event than before the event. And I think we have some good history to suggest that the world's a better place with a lot of happy Germans than a lot of angry ones. So we do have some evidence that sports makes us happy, but we don't have much evidence that it makes us rich.

The final word

Seaman: My position is that there has been no argument made by economists that somehow proves that public/private partnerships to create cultural infrastructure and stadiums have to be a loser. Have there been horrible deals cut? Absolutely. I think it's a matter of looking at it case by case. When you look at this as an investment,the arguments being made are really part of a broader issue: whether or not there's a role for public-sector financing for projects that can range from aquariums to the Beltline, park projects and streetcar projects. I think we all agree that the potential for abuse is very serious. But you don't want to take a kind of principled ideological position that says this is somehow a totally inappropriate role for the public sector to play, if the public sector money can be used as seed money for further private-sector investment, especially when you talk about some of the inner-city things. Both the Braves and the Falcons are making serious efforts to have (positive) neighborhood effects.

Matheson: What's happened over the last 25 years is that economists not associated with the leagues or local chambers of commerce - and I'm one of these - will look at any economic variable we can get our hands on. We try to look at things like GDP, personal income, taxable sales, employment or unemployment, hotel occupancy. We try to see if the presence of mega-events, and whether the presence of new stadiums, of new franchises, actually causes a discernible bump in the amount of economic activity. By and large, these studies find that the economic impact associated with sporting events is either zero or very small, or not discernibly different from zero.

As a rule of thumb, an economist like me would say this: Take whatever (economic impact figures) the supporters are telling you, move the decimal point one place to the left, and that's a pretty good estimate. The economic impact is a fraction of what's claimed, and if the economic impact is a fraction of what is claimed, then the amount of public subsidy that's justified putting into facilities like this is probably a fraction of what's being asked for.

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Pro/Con: Public funds for sports stadiums?

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Moderated by Tom Sabulis Public subsidy of sports stadiums is a passionate topic in metro Atlanta these days, as the Braves and Falcons move forward with plans to construct new stadiums partially financed by taxpayer dollars.

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To find out more, see Roger Noll and Andrew Zimbalist's edited book, Sports, Jobs, and Taxes: The Economic Impact of Sports Teams and Stadiums.

America is in the midst of a sports construction boom. New sports facilities costing at least $200 million each have been completed or are under way in Baltimore, Charlotte, Chicago, Cincinnati, Cleveland, Milwaukee, Nashville, San Francisco, St. Louis, Seattle, Tampa, and Washington, D.C., and are in the planning stages in Boston, Dallas, Minneapolis, New York, and Pittsburgh. Major stadium renovations have been undertaken in Jacksonville and Oakland. Industry experts estimate that more than $7 billion will be spent on new facilities for professional sports teams before 2006.

Most of this $7 billion will come from public sources. The subsidy starts with the federal government, which allows state and local governments to issue tax-exempt bonds to help finance sports facilities. Tax exemption lowers interest on debt and so reduces the amount that cities and teams must pay for a stadium. Since 1975, the interest rate reduction has varied between 2.4 and 4.5 percentage points. Assuming a differential of 3 percentage points, the discounted present value loss in federal taxes for a $225 million stadium is about $70 million, or more than $2 million a year over a useful life of 30 years. Ten facilities built in the 1970s and 1980s, including the Superdome in New Orleans, the Silverdome in Pontiac, the now-obsolete Kingdome in Seattle, and Giants Stadium in the New Jersey Meadowlands, each cause an annual federal tax loss exceeding $1 million.

State and local governments pay even larger subsidies than Washington. Sports facilities now typically cost the host city more than $10 million a year. Perhaps the most successful new baseball stadium, Oriole Park at Camden Yards, costs Maryland residents $14 million a year. Renovations aren't cheap either: the net cost to local government for refurbishing the Oakland Coliseum for the Raiders was about $70 million.

Most large cities are willing to spend big to attract or keep a major league franchise. But a city need not be among the nation's biggest to win a national competition for a team, as shown by the NBA's Utah Jazz's Delta Center in Salt Lake City and the NFL's Houston Oilers' new football stadium in Nashville.

Why Cities Subsidize Sports

The economic rationale for cities' willingness to subsidize sports facilities is revealed in the campaign slogan for a new stadium for the San Francisco 49ers: "Build the Stadium-Create the Jobs!" Proponents claim that sports facilities improve the local economy in four ways. First, building the facility creates construction jobs. Second, people who attend games or work for the team generate new spending in the community, expanding local employment. Third, a team attracts tourists and companies to the host city, further increasing local spending and jobs. Finally, all this new spending has a "multiplier effect" as increased local income causes still more new spending and job creation. Advocates argue that new stadiums spur so much economic growth that they are self-financing: subsidies are offset by revenues from ticket taxes, sales taxes on concessions and other spending outside the stadium, and property tax increases arising from the stadium's economic impact.

Unfortunately, these arguments contain bad economic reasoning that leads to overstatement of the benefits of stadiums. Economic growth takes place when a community's resources-people, capital investments, and natural resources like land-become more productive. Increased productivity can arise in two ways: from economically beneficial specialization by the community for the purpose of trading with other regions or from local value added that is higher than other uses of local workers, land, and investments. Building a stadium is good for the local economy only if a stadium is the most productive way to make capital investments and use its workers.

In our forthcoming Brookings book, Sports, Jobs, and Taxes, we and 15 collaborators examine the local economic development argument from all angles: case studies of the effect of specific facilities, as well as comparisons among cities and even neighborhoods that have and have not sunk hundreds of millions of dollars into sports development. In every case, the conclusions are the same. A new sports facility has an extremely small (perhaps even negative) effect on overall economic activity and employment. No recent facility appears to have earned anything approaching a reasonable return on investment. No recent facility has been self-financing in terms of its impact on net tax revenues. Regardless of whether the unit of analysis is a local neighborhood, a city, or an entire metropolitan area, the economic benefits of sports facilities are de minimus.

As noted, a stadium can spur economic growth if sports is a significant export industry-that is, if it attracts outsiders to buy the local product and if it results in the sale of certain rights (broadcasting, product licensing) to national firms. But, in reality, sports has little effect on regional net exports.

Sports facilities attract neither tourists nor new industry. Probably the most successful export facility is Oriole Park, where about a third of the crowd at every game comes from outside the Baltimore area. (Baltimore's baseball exports are enhanced because it is 40 miles from the nation's capital, which has no major league baseball team.) Even so, the net gain to Baltimore's economy in terms of new jobs and incremental tax revenues is only about $3 million a year-not much of a return on a $200 million investment.

Sports teams do collect substantial revenues from national licensing and broadcasting, but these must be balanced against funds leaving the area. Most professional athletes do not live where they play, so their income is not spent locally. Moreover, players make inflated salaries for only a few years, so they have high savings, which they invest in national firms. Finally, though a new stadium increases attendance, ticket revenues are shared in both baseball and football, so that part of the revenue gain goes to other cities. On balance, these factors are largely offsetting, leaving little or no net local export gain to a community.

One promotional study estimated that the local annual economic impact of the Denver Broncos was nearly $120 million; another estimated that the combined annual economic benefit of Cincinnati's Bengals and Reds was $245 million. Such promotional studies overstate the economic impact of a facility because they confuse gross and net economic effects. Most spending inside a stadium is a substitute for other local recreational spending, such as movies and restaurants. Similarly, most tax collections inside a stadium are substitutes: as other entertainment businesses decline, tax collections from them fall.

Promotional studies also fail to take into account differences between sports and other industries in income distribution. Most sports revenue goes to a relatively few players, managers, coaches, and executives who earn extremely high salaries-all well above the earnings of people who work in the industries that are substitutes for sports. Most stadium employees work part time at very low wages and earn a small fraction of team revenues. Thus, substituting spending on sports for other recreational spending concentrates income, reduces the total number of jobs, and replaces full-time jobs with low-wage, part-time jobs.

A second rationale for subsidized stadiums is that stadiums generate more local consumer satisfaction than alternative investments. There is some truth to this argument. Professional sports teams are very small businesses, comparable to large department or grocery stores. They capture public attention far out of proportion to their economic significance. Broadcast and print media give so much attention to sports because so many people are fans, even if they do not actually attend games or buy sports-related products.

A professional sports team, therefore, creates a "public good" or "externality"-a benefit enjoyed by consumers who follow sports regardless of whether they help pay for it. The magnitude of this benefit is unknown, and is not shared by everyone; nevertheless, it exists. As a result, sports fans are likely to accept higher taxes or reduced public services to attract or keep a team, even if they do not attend games themselves. These fans, supplemented and mobilized by teams, local media, and local interests that benefit directly from a stadium, constitute the base of political support for subsidized sports facilities.

The Role of Monopoly Leagues

While sports subsidies might ow from externalities, their primary cause is the monopolistic structure of sports. Leagues maximize their members' profits by keeping the number of franchises below the number of cities that could support a team. To attract teams, cities must compete through a bidding war, whereby each bids its willingness to pay to have a team, not the amount necessary to make a team viable.

Monopoly leagues convert fans' (hence cities') willingness to pay for a team into an opportunity for teams to extract revenues. Teams are not required to take advantage of this opportunity, and in two cases-the Charlotte Panthers and, to a lesser extent, the San Francisco Giants-the financial exposure of the city has been the relatively modest costs of site acquisition and infrastructural investments. But in most cases, local and state governments have paid over $100 million in stadium subsidy, and in some cases have financed the entire enterprise.

The tendency of sports teams to seek new homes has been intensified by new stadium technology. The rather ordinary cookie-cutter, multipurpose facility of the 1960s and 1970s has given way to the elaborate, single-sport facility that features numerous new revenue opportunities: luxury suites, club boxes, elaborate concessions, catering, signage, advertising, theme activities, and even bars, restaurants, and apartments with a view of the field. A new facility now can add $30 million annually to a team's revenues for a few years after the stadium opens.

Because new stadiums produce substantially more revenues, more cities are now economically viable franchise sites-which explains why Charlotte, Jacksonville, and Nashville have become NFL cities. As more localities bid for teams, cities are forced to offer ever larger subsidies.

What Can Be Done?

Abuses from exorbitant stadium packages, sweetheart leases, and footloose franchises have left many citizens and politicians crying foul. What remedy, if any, is available to curb escalating subsidies and to protect the emotional and financial investments of fans and cities?

In principle, cities could bargain as a group with sports leagues, thereby counterbalancing the leagues' monopoly power. In practice, this strategy is unlikely to work. Efforts by cities to form a sports-host association have failed. The temptation to cheat by secretly negotiating with a mobile team is too strong to preserve concerted behavior.

Another strategy is to insert provisions in a facility lease that deter team relocation. Many cities have tried this approach, but most leases have escape clauses that allow the team to move if attendance falls too low or if the facility is not in state-of-the-art condition. Other teams have provisions requiring them to pay tens of millions of dollars if they vacate a facility prior to lease expiration, but these provisions also come with qualifying covenants. Of course, all clubs legally must carry out the terms of their lease, but with or without these safeguard provisions, teams generally have not viewed their lease terms as binding. Rather, teams claim that breach of contract by the city or stadium authority releases them from their obligations. Almost always these provisions do not prevent a team from moving.

Some leases grant the city a right of first refusal to buy the team or to designate who will buy it before the team is relocated. The big problem here is the price. Owners usually want to move a team because it is worth more elsewhere, either because another city is building a new facility with strong revenue potential or because another city is a better sports market. If the team is worth, say, $30 million more if it moves, what price must the team accept from local buyers? If it is the market price (its value in the best location), an investor in the home city would be foolish to pay $30 million more for the franchise than it is worth there. If the price is the value of the franchise in its present home, the old owner is deprived of his property rights if he cannot sell to the highest bidder. In practice, these provisions typically specify a right of first refusal at market price, which does not protect against losing a team.

Cities trying to hold on to a franchise can also invoke eminent domain, as did Oakland when the Raiders moved to Los Angeles in 1982 and Baltimore when the Colts moved to Indianapolis in 1984. In the Oakland case, the California Court of Appeals ruled that condemning a football franchise violates the commerce clause of the U.S. Constitution. In the Colts case, the condemnation was upheld by the Maryland Circuit Court, but the U.S. District Court ruled that Maryland lacked jurisdiction because the team had left the state by the time the condemnation was declared. Eminent domain, even if constitutionally feasible, is not a promising vehicle for cities to retain sports teams.

Ending Federal Subsidies

Whatever the costs and benefits to a city of attracting a professional sports team, there is no rationale whatsoever for the federal government to subsidize the financial tug-of-war among the cities to host teams.

In 1986, Congress apparently became convinced of the irrationality of granting tax exemptions for interest on municipal bonds that financed projects primarily benefiting private interests. The 1986 Tax Reform Act denies federal subsidies for sports facilities if more than 10 percent of the debt service is covered by revenues from the stadium. If Congress intended that this would reduce sports subsidies, it was sadly mistaken. If anything, the 1986 law increased local subsidies by cutting rents below 10 percent of debt service.

Last year Senator Daniel Patrick Moynihan (D-NY), concerned about the prospect of a tax exemption for a debt of up to $1 billion for a new stadium in New York, introduced a bill to eliminate tax-exempt financing for professional sports facilities and thus eliminate federal subsidies of stadiums. The theory behind the bill is that raising a city's cost from a stadium giveaway would reduce the subsidy. Although cities might respond this way, they would still compete among each other for scarce franchises, so to some extent the likely effect of the bill is to pass higher interest charges on to cities, not teams.

Antitrust and Regulation

Congress has considered several proposals to regulate team movement and league expansion. The first came in the early 1970s, when the Washington Senators left for Texas. Unhappy baseball fans on Capitol Hill commissioned an inquiry into professional sports. The ensuing report recommended removing baseball's antitrust immunity, but no legislative action followed. Another round of ineffectual inquiry came in 1984-85, following the relocations of the Oakland Raiders and Baltimore Colts. Major league baseball's efforts in 1992 to thwart the San Francisco Giants' move to St. Petersburg again drew proposals to withdraw baseball's cherished antitrust exemption. As before, nothing came of the congressional interest. In 1995-96, inspired by the departure of the Cleveland Browns to Baltimore, Representative Louis Stokes from Cleveland and Senator John Glenn of Ohio introduced a bill to grant the NFL an antitrust exemption for franchise relocation. This bill, too, never came to a vote.

The relevance of antitrust to the problem of stadium subsidies is indirect but important. Private antitrust actions have significantly limited the ability of leagues to prevent teams from relocating. Teams relocate to improve their financial performance, which in turn improves their ability to compete with other teams for players and coaches. Hence, a team has an incentive to prevent competitors from relocating. Consequently, courts have ruled that leagues must have "reasonable" relocation rules that preclude anticompetitive denial of relocation. Baseball, because it enjoys an antitrust exemption, is freer to limit team movements than the other sports.

Relocation rules can affect competition for teams because, by making relocation more difficult, they can limit the number of teams (usually to one) that a city is allowed to bid for. In addition, competition among cities for teams is further intensified because leagues create scarcity in the number of teams. Legal and legislative actions that change relocation rules affect which cities get existing teams and how much they pay for them, but do not directly affect the disparity between the number of cities that are viable locations for a team and the number of teams. Thus, expansion policy raises a different but important antitrust issue.

As witnessed by the nearly simultaneous consideration of creating an antitrust exemption for football but denying one for baseball on precisely the same issue of franchise relocation, congressional initiatives have been plagued by geographical chauvinism and myopia. Except for representatives of the region affected, members of Congress have proven reluctant to risk the ire of sports leagues. Even legislation that is not hampered by blatant regional self-interest, such as the 1986 Tax Reform Act, typically is sufficiently riddled with loopholes to make effective implementation improbable. While arguably net global welfare is higher when a team relocates to a better market, public policy should focus on balancing the supply and demand for sports franchises so that all economically viable cities can have a team. Congress could mandate league expansion, but that is probably impossible politically. Even if such legislation were passed, deciding which city deserves a team is an administrative nightmare.

A better approach would be to use antitrust to break up existing leagues into competing business entities. The entities could collaborate on playing rules and interleague and postseason play, but they would not be able to divvy up metropolitan areas, establish common drafts or player market restrictions, or collude on broadcasting and licensing policy. Under these circumstances no league would be likely to vacate an economically viable city, and, if one did, a competing league would probably jump in. Other consumer-friendly consequences would ow from such an arrangement. Competition would force ineffective owners to sell or go belly up in their struggle with better managed teams. Taxpayers would pay lower local, state, and federal subsidies. Teams would have lower revenues, but because most of the costs of a team are driven by revenues, most teams would remain solvent. Player salaries and team profits would fall, but the number of teams and player jobs would rise.

Like Congress, the Justice Department's Antitrust Division is subject to political pressures not to upset sports. So sports leagues remain unregulated monopolies with de facto immunity from federal antitrust prosecution. Others launch and win antitrust complaints against sports leagues, but usually their aim is membership in the cartel, not divestiture, so the problem of too few teams remains unsolved.

Citizen Action

The final potential source of reform is grassroots disgruntlement that leads to a political reaction against sports subsidies. Stadium politics has proven to be quite controversial in some cities. Some citizens apparently know that teams do little for the local economy and are concerned about using regressive sales taxes and lottery revenues to subsidize wealthy players, owners, and executives. Voters rejected public support for stadiums on ballot initiatives in Milwaukee, San Francisco, San Jose, and Seattle, although no team has failed to obtain a new stadium. Still, more guarded, conditional support from constituents can cause political leaders to be more careful in negotiating a stadium deal. Initiatives that place more of the financial burden on facility users-via revenues from luxury or club boxes, personal seat licenses (PSLs), naming rights, and ticket taxes-are likely to be more popular.

Unfortunately, citizen resistance notwithstanding, most stadiums probably cannot be financed primarily from private sources. In the first place, the use of money from PSLs, naming rights, pouring rights, and other private sources is a matter to be negotiated among teams, cities, and leagues. The charges imposed by the NFL on the Raiders and Rams when they moved to Oakland and St. Louis, respectively, were an attempt by the league to capture some of this (unshared) revenue, rather than have it pay for the stadium.

Second, revenue from private sources is not likely to be enough to avoid large public subsidies. In the best circumstance, like the NFL's Charlotte Panthers, local governments still pay for investments in supporting infrastructure, and Washington still pays an interest subsidy for the local government share. And the Charlotte case is unique. No other stadium project has raised as much private revenue. At the other extreme is the disaster in Oakland, where a supposedly break-even financial plan left the community $70 million in the hole because of cost overruns and disappointing PSL sales.

Third, despite greater citizen awareness, voters still must cope with a scarcity of teams. Fans may realize that subsidized stadiums regressively redistribute income and do not promote growth, but they want local teams. Alas, it is usually better to pay a monopoly an exorbitant price than to give up its product.

Prospects for cutting sports subsidies are not good. While citizen opposition has had some success, without more effective intercity organizing or more active federal antitrust policy, cities will continue to compete against each other to attract or keep artificially scarce sports franchises. Given the profound penetration and popularity of sports in American culture, it is hard to see an end to rising public subsidies of sports facilities.

For more information on sports economics, see Andrew Zimbalist's 2015 book Circus Maximus: The Economic Gamble Behind Hosting the Olympics and the World Cup.

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Sports, Jobs, & Taxes: Are New Stadiums Worth the Cost?

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To find out more, see Roger Noll and Andrew Zimbalist's edited book, Sports, Jobs, and Taxes: The Economic Impact of Sports Teams and Stadiums. America is in the midst of a sports construction boom. New sports facilities costing at least $200 million each have been completed or are under way in Baltimore, Charlotte, Chicago, Cincinnati, Cleveland, Milwaukee, Nashville, San Francisco, St.

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Jens Hilgers is a geek, it's how he describes himself both in person and on the bio of his LinkedIn page -- "entrepreneur, geek, gamer, tree hugger."

He's always enjoyed gaming and as he watched soccer fans lining up to watch Bundesliga games in his native Germany, he believed that one day people would do the same to cheer on people playing video games.

Given that was around 15 years ago, it was some vision.

"In the late 1990s, it felt like Woodstock," Hilgers told CNN recently, referring to the music festival which defined the 1960s sex, drugs, rock 'n roll culture.

"Lots of people connecting their computers with copper cables to hold LAN parties."

Those local area network (LAN) parties were a labor of love, often taking as much time to set up as the games actually took to play.

"The players were striving to become the star of their game, the spectators were enjoying beautiful entertainment, cheering for their favorite players and teams."

It was far from perfect, but it was a start; for the next 15 years, these early pioneers had many experiments and "obstacles in every single aspect."

In time though, it would be worth it.

Financial losses; virtual gains

Meanwhile in the U.S., Marcus Graham was also doing things the hard way.

Technically he was a professional video games player -- known as djWHEAT -- at these LAN parties, but it was hard work, especially financially.

"We'd travel 1m200 miles to play in a tournament, it would cost us $1500 to get there; and we'd win $800. Even when we were winning, we were losing money."

As the turn of the century approached, Graham found a way to diversify his talents, experimenting with coaching other players and then primitive broadcasting as a "shoutcaster."

As he called his first game on a live stream, his audience numbered just eight people, but the experience was intoxicating. By 2002, when he traveled to Korea to cover the World Cyber Games, he was hooked for life.

The only constant is change

For Graham and Hilgers, things have changed considerably since then.

Graham is known globally as one of the voices of eSports, working for the billion-dollar Twitch organization, and Hilgers is one of industry's top business minds.

So, just how did we get to a point where entrepreneurs are tripping over themselves to invest hundreds of millions of dollars and players are becoming world-famous millionaires?

Y2K and the advent of high-speed internet technology was crucial, but Hilgers can identify three critical factors that changed the game forever.

Firstly, the gaming industry had to be turned upside down. The old-school business model was a simple one-off transaction between consumer and developer; for about $50 you'd purchase a new title, master it within a few months and move on to something else.

The game was there to be beaten and that was it -- no long-term investment for either party.

New generation

The new generation of games were more of a service than a product. Free-to-play at first, a longer shelf-life meant developers could profit in the long run through in-game micro transactions.

These were real-time strategy team-games and they could never be mastered; so a community grew around them with narratives formed and legends born.

The next big turning point came with the launch of Twitch in 2011, a live streaming service that enabled anyone to share their own gaming experience with the masses.

Tournaments now had a reliable, efficient and high definition distribution network, while teams and players had an opportunity to engage directly with their fans and build a brand.

With the young millennials eschewing traditional forms of media entertainment and therefore eluding the advertisers, Amazon saw the potential and snapped Twitch up for almost a billion dollars in 2014.

Almost everything was now in place, but Hilgers knew there was still one last tipping point.

"We needed an audience for which eSports was natural, not alien. An audience of millennials that would grow up with computer games and accept eSports as a part of our culture."

It would seem that we're at that point now. Anyone who might have sneered at gamers playing in their parents' basement with the curtains drawn are now being forced into a major rethink.

The numbers are incredible.

The eSports industry has been experiencing double digit growth for several years and according to the research group Newzoo, it boasts a global community of 148 million enthusiasts.

That number is projected to hit 215 million by 2019. Just one game -- "League of Legends" -- drew an audience of 36 million for its World Championship last year, that's more viewers than the NBA Finals.

According to Newzoo, global revenue in the eSports industry rose from $194 million to $463 million in the same period -- a 239 percent increase -- and is expected to smash $1 billion by 2019.

Even first-person shooter games like "Counter-Strike : Global Offensive" have boomed, despite the visceral depiction of brutal violence.

Worldwide Scope

The excitement isn't just confined to Korea, where eSports is already ubiquitous. American broadcasters like ESPN and Turner are now presenting games to their television audiences.

Players are making seven figure salaries and are celebrated like rock stars.

Tournaments are played-out in arenas packed with tens of thousands of fans. You can even go to college on an eSports scholarship.

What began as a hobby for pioneers like Hilgers and Graham has now become a lucrative profession.

ESports is a revolution which has redefined gaming, helped shape what it means to be a millennial and quite possibly paved the way for the future of broadcast sports and entertainment.

And the most exciting thing is that nobody quite knows what the future holds, but the passion is real and the numbers are staggering; eSports is very much here to stay.

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ESports revolution is right here, right now

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Jens Hilgers is a geek, it's how he describes himself both in person and on the bio of his LinkedIn page -- entrepreneur, geek, gamer, tree hugger. He's always enjoyed gaming and as he watched soccer fans lining up to watch Bundesliga games in his native Germany, he believed that one day people would do the same to cheer on people playing video games.

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The 2017 NBA All-Star Game brought an estimated $44.9 million in spending to Louisiana in mid-February, according to a study by the LSU Economics & Policy Research Group.

The report said those attending the game in New Orleans generally had pre-paid packages that covered tickets, and in some cases hotels. However, visitors surveyed spent an average of $1,440 in addition to their packages. Those attending events other than the game spent an additional $798 during the weekend.

The study was commissioned by Louisiana Economic Development and conducted with support from the National Basketball Association and the Greater New Orleans Sports Foundation. A research team conducted on-site surveys at the event to estimate total visitor spending during the weekend.

The research showed visitors to the NBA All-Star Game had much higher income than the general population, which also contributed to higher spending by fans. In total, the researchers estimate that attendees spent $23.7 million.

The researchers compiled other spending totals that included $18.7 million by the NBA; $1.4 million by media outlets; and $3.9 million by event sponsors.

"A major event like this draws visitors from across the country as well as a significant number of international visitors, who stay in the area and spend money at local hotels, restaurants, bars and attractions in addition to the spending we see at the event," said Stephen Barnes, director of the center and one of the study's authors.

The study also evaluated the indirect economic impact of the spending related to the All-Star Weekend. The researchers estimate a total of $82.7 million of additional sales in the state. The researchers said the event generated a total of $24.7 million of additional earnings for Louisiana workers. The event also led directly and indirectly to $2.5 million in Louisiana sales and excise taxes.

"An event like this offers Louisiana an opportunity to showcase the state's tourism and hospitality assets, but also creates immediate economic benefits in terms of supporting jobs, creating wages and generating new tax revenues for the state," said Dek Terrell, the center's executive director and one of the study's authors.

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Study estimates NBA All-Star Game generated $44.9 million in spending to Louisiana

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The 2017 NBA All-Star Game brought an estimated $44.9 million in spending to Louisiana in mid-February, according to a study by the LSU Economics & Policy Research Group. The report said those attending the game in New Orleans generally had pre-paid packages that covered tickets, and in some cases hotels.

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"A'roundin' third and headed for home...

It's a brown-eyed handsome man..."

-"Centerfield" as recorded by John Fogerty

This week my beloved Cubbies begin their first World Series title defense in 109 years, if my math is correct.

My husband, a diehard New Orleans Saints fan, warns me that things will never be the same now that the Cubs have climbed the mountaintop. He says he suffered through decades of losing with the Saints; then, when they defeated the Colts in the 2010 Super Bowl, a brief period of joy was actually followed by a lingering sense of ennui. The Saints had finally won it all. What was left to hope for? What could possibly top being world champions?

As Peggy Lee (thank you Leiber and Stoller) sang in her 1969 hit, "Is That All There Is?"

Beyond the glorious feeling of being champions and discarding the longtime loser label, at least there are significant economic benefits associated with a winning sports team, right? At least that's what I always assumed. Turns out, though, the financial impact of professional sports franchises on local economies is actually fairly negligible, regardless of the quality of the team.

Why? Because residents enjoy a finite amount of discretionary income.

If they don't spend it at the ballpark, they'll spend it somewhere else instead, usually in restaurants, stores or at other special events. Or perhaps by investing the money in a business. So if a sports team moves away, there is no real loss to the area's economy. The dollars still get spent, usually locally, just on other things.

A California City Controller conducted a study that states that the economy around the Staples Center might actually improve if the Lakers moved away. Victor Matheson concurs. Matheson, a sports economist at College of the Holy Cross, notes that traffic congestion and activity associated with a sports team can repel folks from living, investing and shopping in a community.

Sports economist Michael Leeds says in a marketwatch.org article entitled "Are Pro Teams Economic Winners for Cities?", "If you ever had a consensus in economics, this would be it...There is no (economic) impact."

Local officials frequently and fervently disagree, though, and here's where things get complicated. Civic pride and identity are involved. What city or state wants to lose their team? Local business owners in downtown Cleveland assert that their operations have been revitalized since LeBron James returned to play there. The Governor of Missouri offered the Rams $400 million to stay in St. Louis rather than move to Los Angeles, but to no avail.

My hometown has a myriad of professional sports franchises. And I want them all to stay in Chicago, especially one of the baseball teams.

Go Cubs.

-Margaret R. McDowel is the founder of Arbor Wealth Management LLC, a fee-only, fiduciary Registered Investment Advisory Firm near Destin. This column should not be considered personalized investment advice and provides no assurance that any specific strategy or investment will be suitable or profitable for an investor.

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"A'roundin' third and headed for home...It's a brown-eyed handsome man..."-"Centerfield" as recorded by John Fogerty This week my beloved Cubbies begin their first World Series title defense in 109 years, if my math is correct.My husband, a diehard New Orleans Saints fan, warns me that things will never be the same now that the Cubs have climbed the mountaintop.

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The City of Memphis wants to bring another multi-purpose sports, events, recreation and entertainment venue to the Mid-South Fairgrounds.

Plans call for building a multi-purpose center that could accommodate different floor configurations.

"The drivers of success for a facility like this are versatility and regularity of use," said Dev Pathik, founder and CEO of the Sports Facilities Advisory (SFA). "You could have a concert and an event happening while another basketball tournament is taking place."

SFA has been contracted to deliver a pro forma that will "right size" the project to the city's budget and bonding capacity by the end of the year.

"We'll build out a pro forma that is an extraordinarily detailed cash flow forecast, down to how many rolls of toilet paper and how many cups they will need," Pathik said.

Memphis is a good fit for youth sports because of its geographic location, which can draw from a large population within a five- to six-hour drive, and already has a strong tourist economy.

"When it comes to sports, you want to attract girls' sports. Girls bring more visitors; they spend more money. They just attract a better total overnight stay and that's what attracts the hoteliers to follow facilities like this," Pathik said.

Memphis also has an existing sports commission that is well known in the industry and recognized for attracting events to the city, Pathik said.

And, the new venue would not go against the Grizzlies noncompete clause because it would not host concerts that would require more than 5,000 seats.

SFA will also complete a local spending analysis, a competition analysis, and a survey of drive times, other events in the region and feedback from other events' rights holders to see if they would consider relocating.

"We'll produce the forecast that will let the city know how many overnight hotel stays the facility will produce, how much spending and where those athletes will come from," Pathik said. "If we're going to go to the city and say this makes good financial sense, we also have to be prepared to go to Wall Street and say here's what you should lend on."

The financial forecast will be based on the actual performance of similar sized facilities in other regional markets.

For example, the Myrtle Beach Sports Center in South Carolina, for which SFA completed a financial pro forma, was forecasted to see $7 million in new spend its first year but actually produced $31 million in the first year.

Another facility, Rocky Top Sports World in Gatlinburg, was forecasted to produce $4.5 million in its first year but actually brought in $17 million.

"We're known to be extraordinarily conservative in our forecasting because otherwise no one is going to lend money to the projects we are involved in," Pathik said.

Memphis Mayor Jim Strickland cautioned the proposal wasn't "the final step."

"It is the next step," he said. "We are reporting to you a draft of what we would like to see at the Fairgrounds. We will not have a final plan until we present it to the City Council - likely in January - and then to the state."

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The City of Memphis wants to bring a new sports, events, recreation and entertainment venue to the Mid-South Fairgrounds. - Memphis Business Journal

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The City of Memphis wants to bring another multi-purpose sports, events, recreation and entertainment venue to the Mid-South Fairgrounds. Plans call for building a multi-purpose center that could accommodate different floor configurations. "The drivers of success for a facility like this are versatility and regularity of use," said Dev Pathik, founder and CEO of the Sports Facilities Advisory (SFA).

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Home >

Football fans in Charlotte, N.C., have had a fun season watching the NFL's Carolina Panthers reel in 15 wins, a near perfect season, and secure the top playoff seed in their conference.

And it could turn out to be quite the edge for the Panthers in their quest to reach the Super Bowl.

But the economic impact season essentially rides on the first playoff game. If the Panthers win, they get another home game. And if that happens, area hotels win big.

"If we have two (playoff) games this year, oh my gosh, it is going to be great for business," Sid Smith, executive director of the Charlotte Area Hotel Association, told The Charlotte Observer.

In Memphis, of course, there are no NFL playoff games. But for five years running, there have been NBA playoff games. Even before then, in 2010, Younger Associates provided an economic impact study for the Greater Memphis Chamber on the effect the Grizzlies and FedExForum have on Memphis.

The conclusion was an annual economic impact of nearly $223.3 million and 1,534 jobs supported.

On Jan. 28 at the Memphis Brooks Museum of Art, The Daily News Publishing Co. will offer another installment of its seminar series - Memphis Newsmakers: Effect of Local Sports on the Memphis Economy. Memphis Grizzlies general manager Chris Wallace will deliver the keynote address. Joining him for a panel discussion will be: Tom Bowen, athletic director at the University of Memphis; Craig Unger, general manager of the Memphis Redbirds; and Fred Jones, founder of the Southern Heritage Classic.

The program begins at 3:30 p.m. with check-in opening at 3. A wine and cheese reception will follow the program. Seating is limited; visit bit.ly/MEMnewsmakers to register.

Jones recently told The Daily News that for the first Southern Heritage Classic Game more than 26 years ago, he had one corporate sponsor: Coca-Cola. For the game held last September, FedEx was the presenting sponsor and the sponsor list also included AutoZone, Allstate Insurance, Nike, Carrier Corp., the Governor's Highway Safety Office and Coors Light.

Asked if he had to bankroll the first game with mostly his own money, Jones laughed and said, "Not mostly, not mostly."

Much has changed in the last quarter-century. AutoZone Park opened in 2000 at Third Street and Union Avenue. Now, the Redbirds are owned by their parent St. Louis Cardinals and the ballpark underwent significant renovations before last season.

Wallace came to the Grizzlies in 2007, at a time when John Calipari had U of M basketball dominating the local sports landscape and people still wondered a little about the local NBA franchise.

"We had to re-win the fan base," Wallace said of his early days on the job.

Now, the Grizzlies are working on a sixth straight postseason appearance.

Meanwhile, U of M football just finished its second straight winning season and hired a new coach in 34-year-old Mike Norvell, formerly offensive coordinator at Arizona State.

"He's the right next step for this program," U of M president M. David Rudd said.

So there should be a lot to talk about at the Jan. 28 seminar, which includes a question-and-answer session.

Just one request, though: Don't ask anybody about officiating in a particular game. No one wants to get fined.

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Sports Execs Tackle Teams' Economic Impact

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Home > Football fans in Charlotte, N.C., have had a fun season watching the NFL's Carolina Panthers reel in 15 wins, a near perfect season, and secure the top playoff seed in their conference. And it could turn out to be quite the edge for the Panthers in their quest to reach the Super Bowl.