MLB in Oakland Dies as Billionaire Owner Cashes in on Vegas Taxpayers

Thursday, September 26, 2024, marked the end of a 56-year-long era for fans of the Oakland A’s. The Major League Baseball team played their last game at the Oakland Coliseum.

It’s a bitter and sad time for the team’s fans, who have been subjected to manipulation and abuse by the team’s billionaire owner, John Fisher. Since buying the team in 2005 and especially since becoming its sole owner in 2016, Fisher has practiced what many would characterize as a form of rent-seeking. As sportswriter Jeff Passan said, “The Oakland A’s were killed by greed.“

The final pages of the story of major league baseball in Oakland, California, were written by Fisher’s attempts to have taxpayers finance a new stadium for the team. ESPN’s Tim Keown gives an excellent overview of it:

To hear Oakland officials tell it, this is the tale of a risk-averse billionaire owner who chose the riskiest project possible, one that required nearly $1 billion in public funding for on-and off-site infrastructure, and then walked away when the finish line was in sight. The A’s contend that progress was too slow, that environmental and local groups put up roadblock after roadblock, and that Oakland city officials simply couldn’t guarantee a stadium deal before the team’s January 2024 deadline to continue to receive the franchise’s lifeblood: revenue sharing from Major League Baseball. Losing revenue sharing, Fisher said, “would be hugely detrimental to the organization.”

The deal Fisher chose in Las Vegas, should it be approved, consists of $380 million in public funding for the infrastructure surrounding the ballpark, nine acres of land and access to a growing media market—though far smaller than Oakland’s— that has long been viewed as ripe for an MLB expansion team. The projects in both cities called for Fisher, through a combination of his and his family’s vast wealth, and financing through Goldman Sachs, to privately pay for a ballpark predicted to cost in the neighborhood of $1.2 billion.

For a moment that typifies the disconnect between the Fisher and Oakland, look no further than Kaval’s initial call to Mayor Thao on the evening of April 19. “I can’t really understand how they can say they were blindsided,” Fisher says. “At the end of four years of negotiations, we were nowhere.” This contention mystifies those who worked to put together the financing on a project that was a source of both torment and delight; torment because the project was vast and unwieldy and expensive, delight because it was universally seen as having the potential to transform the city. The public infrastructure money Oakland was asked to raise dwarfed the $380 million in Las Vegas, and city officials say everyone understood it would take time. “To say we were nowhere is BS,” Mayor Thao says. “To say there was no proposal is total BS. Let’s be very clear: we did have a proposal. But maybe it wasn’t a proposal John Fisher could afford.”

Owning a major league baseball team is an expensive proposition. The multi-millionaires and billionaires who own them almost invariably seek to have the public foot a large part of the expenses that come from owning and operating their franchises, especially the most expensive part: the stadiums in which their teams play.

Hitting up taxpayers to pay for stadiums

That’s why they seek to exploit taxpayers by having city and state governments use tax-exempt municipal bonds to pay for their stadiums. Writing at Governing, finance columnist Girard Miller describes why using tax-exempt municipal bonds to fund sports stadiums for professional sports teams is a very bad deal for taxpayers at all levels: local, state, and also federal:

For local officials, there are multiple ways to support construction of a new sports stadium. They can void land-use restrictions, and they can build roadways to connect the facility to the area’s transportation grid and even link mass transit to the stadium. All those efforts have a local cost. The one expense that they often export to Capitol Hill is the use of tax-exempt municipal bonds to finance the facility itself. For that, the bill gets sent to Uncle Sam, which in turn helps fuel the federal deficits that everybody complains about.

Last year, municipalities issued more tax-exempt debt for sports venues than in any year since 2006, according to Bloomberg data. Some three-quarters of the 57 stadiums built from 2000 to 2019 were funded with tax-exempt bonds, at a net cost to federal taxpayers of $4.3 billion. With more massive, shiny new stadiums opening since, that number has only gone higher.

To add insult to injury, the quantified cost savings to stakeholders and users of these facilities were less than the cost to federal taxpayers. It makes absolutely no sense for Congress to engage in deficit finance to subsidize facilities that return only 84 cents on the dollar to local communities, the teams and their fans. Uncle Sam is borrowing money to lose money across the board.

Politicians and bureaucrats have many ways to waste millions and billions of dollars. Funding stadiums for professional sports teams rank among the dumbest uses of taxpayer dollars. If there’s a silver lining for Oakland A’s fans, it is that they will not have to pay to fund a baseball stadium whose primary purpose was to make John Fisher’s baseball ownership more profitable.

Not that Fisher isn’t bitter about that, as well. The A’s next few seasons will be played at a much smaller minor league ballpark in Sacramento, California, which will mainly benefit another billionaire professional sports team owner.

Assuming that goes as planned is an open question.

At the same time, the city of Las Vegas is set to demolish the historic Tropicana Casino and Resort on October 9, clearing the space where the A’s new stadium will be built. That stadium is planned to be open in time for the 2028 baseball season. Maybe. That stadium’s design is about 50 percent complete, which leaves many details about where extra costs will go and where corners will be cut to fit within Fisher’s taxpayer-funded budget.

How to make a lousy deal go away

If that sounds like a lousy deal, that’s because it is. For his part, Governing‘s Girard Miller offers a solution to make the problem of subsidizing sports stadiums for billionaire team owners go away for all taxpayers:

On a broader level, my suggestion is that Congress should begin an orderly multiyear phase-out of the entire private-activity bond subsidy. A reasonable transition might require that in each year another 10 percent of new-issue principal must carry taxable interest until the federal subsidy is eliminated entirely for bonds sold after 2035.

There’s no better place to start than with stadium bonds. This would provide an equitable, incremental and manageable transition that fiscal realists at all levels of government could not dispute. Profit-sharing deals with a realistic expectation of IRS revenue neutrality could still use tax-exempt bonds if the private beneficiaries secure a qualifying faithful-performance surety to backstop their financial projections.

Countering those who would argue that private-activity bonds have shades of gray with varying levels of private enrichment, the case against stadium bond tax giveaways is black and white. Arguably they don’t even deserve a phase-out, and belong at the top of any sensible list of tax preferences to jettison one way or another, the sooner the better.

Even if Congress enacted these proposals now, it wouldn’t be enough to stop Fisher from using taxpayer dollars for whatever the A’s will be doing for the next several years. But it would go a long way toward protecting taxpayers from the many abuses that professional sports team owners like Fisher put upon them.