National Football Cartel

How the Arizona Cardinals and their NFL brethren exert monopoly power to extract billions of dollars from American taxpayers

Again, since the NFL strictly controls expansion, Arizona could be in for a long wait. And, if the time does come, the expansion fee will likely be huge, considering the $700 million paid by Houston.

Faced with the prospect of losing the Cardinals, community leaders led by Bank One's former chairman Mike Welborn and more than 30 other business leaders joined the Arizona Cardinals and Governor Jane Hull's former deputy chief of staff Ted Ferris to develop a plan to keep the Cardinals in Arizona after Mesa voters turned down a stadium financing proposal in 1999.

In early 2000, the "Plan B" task force successfully lobbied the Legislature to place an initiative on the November 2000 ballot that was written by the Cardinals' attorney Steve Betts. Known as Proposition 302, the initiative rallied from far down in the polls under the direction of campaign consultant Jay Smith to win a razor-thin victory of less than 1 percent. Smith focused the advertising campaign on Proposition 302's benefits for youth sports, which receives the least amount of money, rather than the Cardinals, which receives the most.

Lake Forest College economist Robert Baade says the NFL is an "unregulated monopoly."
Lake Forest College economist Robert Baade says the NFL is an "unregulated monopoly."
Two-thirds of the Arizona Cardinals' revenue comes from the team's share of NFL television and radio contracts and the sale of NFL licensed merchandise.  The Cardinals' share of NFL revenues is about equal to players salaries.

Enlarge image
National Football League
Two-thirds of the Arizona Cardinals' revenue comes from the team's share of NFL television and radio contracts and the sale of NFL licensed merchandise. The Cardinals' share of NFL revenues is about equal to players salaries.

Enlarge image

The initiative triggered an increase in hotel and rental car taxes along with a host of other diversions of sales and income taxes that will total $1.8 billion over the next 30 years to primarily build and operate a new "multipurpose facility" for the Cardinals.

Most of the tax money -- $1 billion -- is earmarked to build and operate the stadium. The balance will go to fund tourism promotion ($265 million), pay for construction of new Cactus League spring training facilities for Major League Baseball ($205 million), and pay for youth sports recreation areas ($73.5 million).

Duplicating the NFL's strategy of having cities compete nationally for teams to bid up incentives, the Cardinals have Valley cities and Indian tribes competing for the second time in a year to spend anywhere from $60 million to well over $100 million for roads, parking lots, plazas and sewers to support construction of the stadium.

No one -- except for the state Tourism and Sports Authority, which will build, own and operate the facility -- expects the investments the "winning" city or tribe makes into the stadium to ever come close to generating a reasonable return.

"This particular stadium will not be a profit center," Phoenix Mayor Skip Rimsza tells New Times. "They just do not generate enough revenues and enough events to be a profit center, no matter where it is located."

Nevertheless, intraregional competition is so intense that last year it spurred Tempe officials to lie about receiving preliminary approval from the Federal Aviation Administration for a site near the airport that TSA selected as its first choice. The FAA later declared the site an aviation hazard, forcing TSA to look for another site and delaying construction on the project by a year.

Cities are fighting to have the stadium in their backyard because the stadium will from time to time pour money into the neighborhood where it is located.

"For any politician in one of these cities, this is gold," says economist Fort.

The cost of building the infrastructure for the stadium can be easily obscured in a city's ongoing expenses. What's visible to the public will be hordes of crowds spending money a dozen times a year or so for football games and other events.

Politicians' constituents, Fort explains, "will get the redistribution of all the money that gets spent at the stadium. Where it gets spent matters to the individuals who collect it."

Which explains why, despite Rimsza's negative financial assessment of the stadium, Phoenix is still making a strong push to have the stadium built in one of two locations: Seventh Street and Fillmore in downtown and at 40th Street and Loop 202.

"The question before us, in my mind, should not be which location can it make a profit. The question will be which location in the entire Valley will it have maximum community benefit," Rimsza says.

Downtown, Rimsza says, may be the best site because of existing parking, freeways, future light-rail stops and hotels.

If TSA selects downtown or the 40th Street site as one of its two finalists for the stadium, the city will have to hold a special election in May to get voter approval to spend more than $3 million on a stadium.

After all the problems the Cardinals have faced trying to site the stadium, exposing the project to another vote is risky, says NFL sports consultant Mark Gannis.

"I would be very concerned about going through another referendum," says Gannis, president of Chicago-based SportsCorp Limited. "If I were the Cardinals, I would be focused on just getting it done."


The Cardinals stadium was presented to voters as a multipurpose facility that will be able to host scores of major trade shows and conventions. This will be a difficult goal for TSA to accomplish given that Bank One Ballpark is attracting only a half-dozen or so non-baseball events a year. Bank One earned $390,000 in 1999 from non-baseball events, up from $269,000 in 1998.

Ted Ferris, TSA's chief executive officer, says the Cardinals facility will be able to attract about $5 million a year worth of non-football events because of the stadium's unique design that will allow the field to roll out and expose a floor wired for convention events.

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