At the Washington Examiner today, David Freddoso explains the faulty logic in the D.C. Council's justification for the heavily-subsidized Nationals Park:
In 2009, rents and sales taxes from the stadium itself came to less than $17 million. Debt service on the stadium cost $32 million. So the District lost $15 million on the stadium last year. In fact, the District has lost a cumulative $48 million on the stadium since 2005. It is expected to lose $18 million more in 2010.
So why did [DC Councilman Jack] Evans imply that the stadium is profitable? Not because the stadium is profitable (it isn't), but because the promise of baseball also prompted the D.C. Council in 2004 to raise taxes on businesses to pay for the money-losing stadium. Those taxes -- on utilities and on the gross receipts of businesses with more than $3 million in sales -- are bringing in more revenue than the stadium is losing.
There two ways of looking at this. One is the way the council looks at it. They speak as though the gross receipts tax -- which falls on "income derived from any activity whatsoever from sources within the District" -- is somehow part of the stadium's operation and should be counted as such. This position indicates a worldview in which government makes a "profit" by shaking down its residents and using their money to subsidize one of the worst and worst-attended (average so far this year: 20,760 per home game) baseball franchises in America.
If this were actually true, then the District could solve its budget problems by building several new stadiums every year.
Since baseball returned to D.C. in 2005, the Nationals have experienced some of the worst attendance levels in major league baseball. Major league baseball depends on a larger percentage of local revenue (money made from tickets, expensive hot dogs) than, say, the NFL with its massive television contracts. And fewer fans at the park means less demand for stores and restaurants in the area. So instead of the promised economic boost from the new team's new stadium, Washington residents have received "a losing baseball team and $202 million (so far) in tax increases on non-baseball-related D.C. businesses," as Freddoso puts it.
Perhaps the D.C. Council should have read up more on the history of major league baseball in the Baltimore-Washington market. Since the 1901 National League-American League settlement (considered the beginning of the modern MLB), teams in Washington have been the least successful when Baltimore also has a team.
In 1901 and 1902, both the Baltimore Orioles and the Washington Senators played in the majors. In 1903, the Orioles moved to New York and eventually became the Yankees while the Senators remained the sole team in the market until 1954. Never a consistently great club, Washington nevertheless played in three World Series during this period, winning in 1924, and boasted a respectable .474 winning percentage. The St. Louis Browns relocated to Baltimore as a new incarnation of the Orioles in 1954, and the Senators winning percentage dipped down to .399 from then until 1961, when the team relocated to Minnesota.
Washington immediately received a new franchise in 1961, also called the Senators, which spent most of its ten years in D.C. at the bottom of the ten-team American League before becoming the Texas Rangers. The Baltimore Orioles, by contrast, had a string of successful seasons from the late 1960s to the early 1980s, playing in six World Series and winning three of them.
The Nationals troubles since 2005 seem to be a continuation of that trend. Washington may be satisfied with the idea of having a baseball team again, but this historically bad baseball town is paying a high price for a bad team no one wants to see. The one question that should be on Nats fans' minds is: can Stephen Strasburg turn this century-old trend around?
Michael Warren, a Collegiate Network fellow, is an editorial assistant at THE WEEKLY STANDARD.