The Outstater: What if the Colts Aren’t Worth It?

July 4, 2016

“The Indianapolis Colts signed franchise quarterback Andrew Luck on Wednesday to the richest deal in the history of the the NFL. Luck was due to earn $16.1 million this season and the five-year extension through 2021 brings the total value of the contract to $140 million, according to Colts owner Jim Irsay.” — June 29 Forbes magazine

by Craig Ladwig

So many experts have been warning about commingling public monies with professional sports for so many years with only the most contemptuous response that it justifies a civil arrest warrant. 

Named on this capias mittimus (a bit of legal jargon there) would be the Indianapolis Capital Improvement Board (CIB), the top six floors of the City-County Building, the Democrat and Republican state committees and the editorial boards of both the Indianapolis Star and the Indianapolis Business Journal.

Dr. Cecil Bohanon and Noah Peconga, economists writing for the quarterly Indiana Policy Review, issued a warning in 2003 that the cost of using public funds to keep the Colts in Indianapolis must be balanced with any alternative use of those funds (streets, sidewalks, safe water supply, etc.). The authors granted that the “non-captured psychological consumption benefits” (painting your face blue) may be worth a cost then estimated at $22 million a year — but then again it may not, a possibility that boosters in the media and city hall never empirically addressed.

“To our mind, and to the minds of other economists who have examined the issue, the economic-development benefits of professional sports are illusory,” Bohanon and Peconga concluded.

A few years later, Fred McCarthy, a veteran of 40 years in Statehouse politics, reminded us that the Indianapolis media, if not numbingly incurious, was complicit in the illusion. It began with an April 1,1994 headline in the Star: “City to Make $1.39 Million Annually from Colts’ Move,” which was not an April’s Fools joke but rather a prediction that turned out to be so far off the mark as to be absurd. 

“The editors and news directors, accepting press releases as fact, did not investigated even the most suspicious CIB operations or even ask serious questions about the expensive and frequently secretive operations of the board,” McCarthy wrote.  “Indeed, Mayor (Bart) Peterson was able to deny for years that there were even any plans for a new stadium.”

And Tyler Watts, another economist, asked provocatively what would happen to Indianapolis if the Colts just left town:

“Would all that sports spending really vanish from the Indianapolis economy? No. Although fans would be disappointed, they would still have many outlets (substitutions) for their entertainment dollars. Attendance and spending at college and high-school football games would rise, along with bowling alleys, bingo parlors and other recreation venues. Downtown pubs might suffer but suburban restaurants would likely see a bump in revenue. Consumers of the NFL are us, after all. It’s not as if the NFL draws its customers from Mars. If there were no Colts, we would spend our fun money on something else.”

Last week, a USA Today columnist named Jim Irsay the National Football League leader in gouging taxpayers, the $619.6 million of Indianapolis taxpayer monies used to build the Colts’ $719.6-million football stadium easily beating out the $289 million that Denver handed to the Broncos.

“Indianapolis,” wrote Brent Gardner, “heads a long list cities and counties that have raised sales or property taxes to cover their debts, harming their own citizens to fund a handout to wealthy owners (and players) who often live out of state.” 

Cited was a study in The Journal of Sports Economics that adding a sports team to a city neither raises regional incomes nor improves a local economy. And last year Roger Noll, a Stanford scholar and former chief economist for the President’s Council on Economic Advisers, reached a similar conclusion: “Stadiums do not generate significant local economic growth, and the incremental tax revenue is not sufficient to cover any significant financial contribution by the city.”

What is left to say to a city that has been so wooden-headed for so long? Let the capias mittimuses fly.

Craig Ladwig is editor of the quarterly Indiana Policy Review.
Resources

1. Cecil Bohanon and Noah Peconga. “The Colts and Opportunity Cost.” The Indiana Policy Review, spring 2003.
2. Fred McCarthy. “Boosterish Indy Media Let Readers Down on Sports Financing.” The Indiana Policy Review, April 6, 2009.
3. Tyler Watts. “The Colts Won’t Make Us Rich.” The Indiana Policy Review, Sept. 17, 2011.
4. Brent Gardner. “The NFL Should Pay for Stadiums.” USA Today, June 29, 2016.



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