Sports fans and non sports fan alike, the court case that opened Monday regarding the fate of the Seattle Supersonics is worth following. Though not being framed in this light, it carries significant meaning in regards to the relationship between business and government.
For those unfamiliar with the background details of the case, the Seattle Supersonics came under new ownership a few years ago, a man named Clay Bennett. Since taking over the franchise, Bennett has been hellbent on moving the team to his home state of Oklahoma and disenfranchising the Seattle population of their sports team. This move has gotten approval from the league and the board of governors, and looked to be all but official. However, the city sued the team for violating their lease and is seeking a court order to keep the team in Seattle.
Here's the basic facts of the case. In 1994, the city and team signed a contract that was designed to keep the team in Seattle until 2010 in exchange for arena renovations. The city invested $84 million of tax payer dollars into renovating the Seattle Coliseum, the arena where the Sonics played, in exchange for the team signing a lease that would tie them to the arena until 2010 and obligate them to play games there.
Bennett is attempting to buy out the lease for $10 million and is effectively trying to get the court to declare the contract null and void upon this payment. His argument is that the other half of the lease agreement stated "that the city would provide an 'economically feasible' venue", which he argues the Seattle Coliseum does not fulfill despite the $84 million of investment the city pumped into it over the last decade. He demanded the city build him a new $500 million arena in order to stay, paid for by taxpayer dollars of course.
Here's the basic concern here. Right now, this case seems to be an inherently sports related matter. But it really encapsulates a delicate and complicated relationship between business and government, and the highly public ruling of this case can create significant precedent for how this relationship continues in the future.
Right now in society, businesses, especially large corporations, are very reliant on government subsidies and handouts. The recent string of government bailouts for such disparate entities as Bear Sterns, subprime lenders, and the airline industry proves what many businesses already believe: if you're large and important enough, you can afford to take risks in investment, because in the case of catastrophic failure, there will be millions of taxpayer provided dollars waiting to bail you out. The precedent was set with Lockheed and Chrysler back in the late 70s and early 80s; it's practice continues to this day.
Sports franchises have traditionally pushed this symbiotic relationship with government even further and harder. Most stadiums that franchises play in are at least partially subsidized by local governments and citygoers' tax money...whether they support or care about the team or not. In recent years, there has been a larger and larger push by teams to get the local governments to provide them with bigger, better, more expensive, and more frequent facilities upgrades. Larger and fancier arenas allow the team to make considerably more money, from ticket, vending, and parking sales. And by having the local tax base foot the bill, they can increase their profit margins with little to no investment.
Why do governments agree to this? Because of situations like Seattle, or even Baltimore, Houston, Hartford, Winnipeg, or Quebec: any situation where a city lost their beloved franchise. If at any point, a franchise can get up and move, canceling out of a lease with a paltry buyout, the franchises can hold this threat over the cities' head: give us our $500 million facility, or we'll move to a city who will.
In the realm of sports, this seems sinister enough, but the real blood chilling possibility is that this practice moves from the realm of entertainment and sport into more serious and widespread business/government relationships.
What, for example, if General Motors, in their never ending quest to find a sustainable business model, latches onto this idea of forcing the government to finance their business model? If General Motors came to the Michigan legislature with the demand that if the legislature offer them $5 billion for a new manufacturing plant, would Michigan's government be ballsy enough to turn them down, even if it meant GM leaving the state altogether?
The answer is probably a resounding no. Given governments' historic reluctance to let large corporations fail, when the resulting financial chaos would be so widespread and hurt so many people, the ultimate result of such a power play would most likely be a $5 billion investment into a new GM plant.
If this technique catches on and becomes legally and economically accepted practice, then the insidious ties between government and business that have worsened so rapidly under the Bush administration would grow stronger still.
Indeed, when Bush was nominally in charge of the Texas Rangers, the team used a similar power play to the one currently in operation by Bennett to entice the city of Arlington to foot $135 million of the team's new $190 million stadium. The team covered their $55 million obligation by raising ticket prices.
The scam didn't stop there, of course. As another part of the deal, the Texas government created the Arlington Sports Facilities Development Authority (ASFDA), a government branch designed essentially to provide the Rangers with condemned land. The way this system worked was the Rangers identified a piece of land they wanted, offered a price far below market value, and if the owner did not accept that price, the ASFDA stepped in to condemn the land, bought it via eminent domain at the condemned price, and then sold it to Bush and the Rangers at the price he originally asked. When the Rangers built the new facility in the middle of the land they bought up via this method, the land value of these parcels skyrocketed, and they made enormous sums of money on the resale.
The end result of this cozying up between government and business that has become so predominant in recent years is that we're moving closer and closer towards a central planned economy, circa the old school USSR, where the poor are taxed to finance the projects' of the rich.
So just a sports case? Hardly. The ongoing saga of the Supersonics touches into so much more, lapping up against the fundamental economic structure of our nation. If Bennett and his goons manage to break the lease and leave the city high and dry, we'll know that we're one step closer to being unable to tell our corporations and our lawmakers apart.
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