National Football Cartel

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

Even if Ferris' projections are correct, the convention-related revenue will fall far short of covering the stadium's operating expenses projected to be $11 million in its first year of operation.

Critics say linking the football stadium with a convention center will simply increase the likelihood that the facility will lose money.

"Publicly subsidized convention centers, like stadiums and arenas, are plagued by operating deficits and minimal economic impacts," said Joseph L. Bast in a 1998 Heartland Institute policy report on the impact of stadiums and the economy.

NFL players receive about two-thirds of the league's revenue, which topped $3 billion last year.
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Source: National Football League Players' Associat
NFL players receive about two-thirds of the league's revenue, which topped $3 billion last year.

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Tourism and Sports Authority chief executive officer Ted Ferris is issuing no-bid contracts to companies with ties to the Cardinals.
Tourism and Sports Authority chief executive officer Ted Ferris is issuing no-bid contracts to companies with ties to the Cardinals.

The Phoenix Civic Plaza is one example. The publicly funded plaza lost $21.3 million on operations in 1999 and $25 million in 2000. The facility generated only $12 million in fees from conventions in 1999 and $8 million in 2000.

If the Cardinals stadium is built next to the convention center in downtown Phoenix, the city will have four huge facilities within a few blocks competing with each other for major events -- the 20,000-seat America West Arena, the 50,000-seat Bank One Ballpark, a huge convention center and the proposed 67,000-seat Cardinals stadium.

Adding the Cardinals stadium to the mix will do little to attract more convention business.

"You already have facilities for conventions," says Stanford economist Roger Noll. "There is no convention on Earth that requires two domed stadiums, plus a basketball arena."

Phoenix Mayor Rimsza dismisses the threat of the Cardinals stadium stealing convention business away from the financially ailing Civic Plaza, saying few conventions would want to be in a stadium setting anyway.

"We don't really think there is any significant convention booking," he says while feigning a yawn to emphasize the city's lack of concern over the stadium. "That's why we have never been overly focused that they are going to build convention facilities."

Rimsza isn't the only one yawning over TSA's projections that the new stadium will be an economic engine that will create thousands of jobs and generate more than $300 million a year in economic activity.

Sports economists with no financial ties to the Cardinals project say stadium proponents use simplistic analysis to overstate the economic impact of a new stadium.

According to economist Noll, more than a dozen independent economic analyses of new stadiums from across the country come to the same conclusions:

"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."

The Arizona Cardinals don't want to discuss how much money the team is putting into the stadium project.

There's a good reason for their reticence.

On the surface, it appears the Cardinals are contributing $85 million toward construction of the stadium -- or about 25 percent of the projected $334 million project.

But on closer examination, it appears the Cardinals will put none of their money into the project.

The agreement between TSA and the team allows the Cardinals to retain 100 percent of the naming rights for the stadium that is built primarily with public funds. Naming rights sell from anywhere from $50 million to several hundred million dollars.

But it's not just the naming rights deal that will cover most -- if not all -- of the Cardinals' "contribution" to the project.

The NFL operates a $1 billion-plus fund to help franchises build new stadiums. Each team contributes to the fund by paying a portion of revenue generated by premium-priced club seats.

Known as the "G3" program, the NFL stadium fund provides between 34 percent and 50 percent of a team's contribution toward building a new stadium. The larger the market, the greater the NFL's contribution toward stadium construction.

NFL spokesman Greg Aiello says the league approved a G3 distribution to the Cardinals at the NFL's annual meeting last fall. Aiello declined to state the amount, recommending that New Times call the Cardinals. The team declined to comment.

However, TSA boss Ferris says that the NFL's contribution is about 34 percent of the team's $85 million pledge, or roughly $28 million. Sports consultant Gannis also says the Cardinals received about this amount.

At the same time the Cardinals have managed to reduce the amount of money they are investing into the project, the team has negotiated a stadium-use agreement with TSA that allows the team to collect all ticket revenue from home games, all concession, parking and luxury suite revenue and all advertising except for temporary advertising related to the Fiesta Bowl.

While the Cardinals' contribution to the stadium is minimal, the public's exposure to cost overruns remains.

Proposition 302 stated that the stadium would not exceed a cost of $334 million. However, delays and statements made by TSA board members make it clear there will be cost overruns.

How far remains to be seen.

TSA board chairman Jim Grogan says he doesn't know yet what the cost will be, but doesn't expect it to rise much higher.

"Until we get a site and figure out where it's going to be and figure how it is going to fit in that site . . . we don't know," he says.

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