The Cost of Doing Business

Last night, as I was watching ESPN's coverage of the Australian Open, I saw a brief headline across the ticker that indicated that the NFL's San Francisco 49ers and Oakland Raiders might consider building a new stadium that would house both franchises. The reason? It's a tough economy, and this might be an avenue toward fiscal restraint. A good idea, right?

Well, the story has been reported by the San Jose Mercury News. Mike Swift leads his article:

"The NFL is urging the 49ers to explore sharing a new stadium with their cross-bay neighbors, the Raiders, hoping the Bay Area could follow the lead of the New York Giants and the New York Jets, who have joined forces to privately finance the most expensive stadium in U.S. sports history."

Just how expensive is the New York venture? $1.6 billion. One. Point. Six. Billion.

Swift reports that a proposed 49ers-only stadium project in Santa Clara would run around $916 million, and that the new Dallas Cowboys stadium that opens next season will come in at $1.3 billion. This is evidence, he and league officials suggest, that a shared stadium makes good "economic sense."

Of course, what really makes good economic sense is to not build a new facility. Yet within the world of commercial sport, such a suggestion would be mocked and dismissed. What this discussion reveals is how deeply entrenched the logic of "It's the cost of doing business" has become. It's the reason why Nick Saban makes $4 million each year to coach college football at the University of Alabama. It's the reason why the New York Yankees will pay Mark Teixeira $180 million over eight years. And, it's the reason why nearly every professional franchise--big market or small, successful or not--is convinced that the only way to remain competitve is to join the great stadium arms race.

Evidently, the New York Giants-Jets agreement is supported with private money (plus $300 million from the NFL). To a degree, this is a good thing since it means the teams' owners aren't asking taxpayers to foot the bill. But make no mistake, fans will pay for the stadium: through higher prices for tickets, parking, concessions, souvenirs, and so on. Meanwhile, the "cost of doing business" justifies more and more expenses. At the end of the article, Swift quotes Carl Goldberg, chairman of the New Jersey Sports & Exposition Authority, which owns the land for the new New York stadium. He says:

"The whole thing seems to be a horrible waste. Let's not forget that they only play 10 games per year per franchise. Doesn't it make more sense to build a better facility, with better fan appeal and a better fan experience, for both teams?"

A horrible waste, yes. What makes more sense is not to build a facility at all.