The A’s Skip “The Town”: What Cities Can Learn from Oakland and LA
The Athletics’ time in Oakland has come to a close. After several attempts to relocate the A’s since 2006, the team will finally depart from the city they called home for 57 years.
The conflict between cities and teams is not new. Still, fans may be able to find a modicum of solace in Los Angeles’s history of refusing public funds for professional sports—and policymakers should take note.
For a time, the A’s were one of baseball’s premier brands. The franchise was arguably the second most successful American League team behind the Yankees. The A’s won the second-most pennants in the AL, tied for the third-most World Series Wins in the MLB, with multiple MVPs and Cy Youngs. “The Swingin’ A’s” of the 1970s, which won three straight World Series titles, is on the list of the best baseball dynasties in history.
Despite its storied history in the East Bay, the franchise set sights on a new stadium. The “brutalist gem” that is the Oakland Coliseum was not going to cut it after years of neglect. So the A’s explored moving to nearby Fremont. After that venture fell through, the City of San Jose tried courting the team. However, the potential move to the South Bay was denied because the San Francisco Giants claimed that San Jose was their exclusive territory. (MLB rules “generally prohibit” teams from operating in another team’s exclusive territory.)
Ironically, the only reason the Giants had any claim on San Jose was that legendary A’s owner and ex-Levi Strauss CEO Walter Haas Jr. graciously agreed to grant the Giants the territorial rights so that the Giants could build a stadium in Santa Clara County instead of relocating to Florida. The City of San Jose sued the MLB. Six years later, the issue was dropped after the US Supreme Court declined to hear the case. Ultimately, the A’s and Oakland could not come to an agreement, despite the city and Alameda County securing more public funding than the A’s $495 million ask.
On the other side of the spectrum is Los Angeles, which has been noteworthy for its refusal to use public funds for professional sports stadiums for years. Despite being one of the largest media markets in the country, Los Angeles went without a professional football team for over two decades after the Raiders and Rams left in 1995. This absence was not due to a lack of interest or potential suitors but rather a principled stance against subsidizing team owners.
Former California Governor Gray Davis said, “After they’ve ransomed money from every other city, they might come back to L.A. If we won’t pay a ransom to get an NFL team, they can’t go to the next city to demand a ransom so we have to be the last city on their list.”
Research has consistently shown that subsidizing stadiums is outside the economic interest of cities. Instead of accommodating the demands of professional sports franchises, Los Angeles made clear that if teams wanted to be part of the city’s lucrative market, they would have to foot the bill themselves. This stance was tested when the Raiders, Rams, and Chargers expressed interest in relocating to Los Angeles. Ultimately, the Chargers and Rams made the move and returned to their original home in LA (the Chargers only played their inaugural season in LA before moving to San Diego in 1961). The two teams now share the state-of-the-art SoFi Stadium in Inglewood, which was privately financed.
The Raiders would preempt the A’s move to Las Vegas from Oakland after the Nevada legislature passed a hotel room tax that gave the Raiders $750 million.
What is to be done? Scott Semet made an interesting point to me in a recent email exchange. He mentioned that, in game theory terms, cities are in a giant prisoner’s dilemma scenario. Collectively, it would be optimal for all cities to agree not to pay for stadiums. However, individual cities will try to better their position by defecting from such an agreement and they will try to court a professional team from another city. In theory, cities would have a better chance of colluding and forming something of a “buyer cartel” than the prisoners in the classic game, who cannot communicate with each other. In practice, such a collective action problem wouldn’t work and may be of questionable legality.
A better reform would come with curtailing municipal bonds. In the 1980s, Congress issued a series of bond reforms. First, they changed the tax-exempt debt rules to increase federal tax revenue. It was also supposed to curb the issuance of industrial development bonds used for stadiums, though it also had the consequence of encouraging states and cities to use eminent domain. Then, an unintended result of the Tax Reform Act of 1986 led to an increase in tax-exempt bond issuance for sports stadiums. Not much has been done to fix this issue since, although ending the federal tax subsidy of tax-exempt bonds for sports stadiums or applying a cap on stadium bonds would be a good start.
The Athletics departure stings, but it could serve as a wake-up call for cities nationwide that costly bidding wars and empty promises of economic prosperity is not a great long-term strategy. Los Angeles’s valuable lesson is that cities have the power to say no. It’s time for other cities to follow suit and end the era of taxpayer-funded stadiums once and for all so residents are not caught holding the bag.
