Mesa, Arizona Voters Back Nearly $100 Million Subsidy for Chicago Cubs

Published November 15, 2010

For 50 years, the Chicago Cubs have conducted spring training in Mesa, Arizona.

A business consortium in Florida hoped to lure the Cubs there, but Mesa residents in November voted to let the city help the professional baseball franchise finance a new stadium and training facility, along with ancillary retail space and infrastructure upgrades. The vote will keep the Cubs in Mesa for spring training for decades to come.

The money will come from bonds paid back from the city’s enterprise fund. This fund comes from surplus utilities fees and other city fee-based services.

Specifics of the deal are not final, but the city and the Cubs have signed a memorandum of understanding outlining some basics. In exchange for the Cubs staying in Mesa for 30 years, the city will provide $84 million for baseball facilities. Another $15 million will be for city infrastructure improvements around the development.

Ban on Taxpayer Gifts
Mesa’s voters approved the measure with a 65 percent majority—despite a state constitution that bans publicly funded gifts to private entities. As with most stadium deals around the country, supporters argued the taxpayer subsidies would bring big economic benefits.

Most economists who have studied the issue, however, say the promised benefits of government funding of sports facilities are usually overblown, making sports facilities a bad deal for taxpayers.

Allen Sanderson, a sports economist at the University of Chicago, is one such economist. He said he doubts the economic benefits of deals like the one Mesa granted the Cubs.

’10 to 20 Percent of What’s Promised’
Most of the time, he said, the economic benefits of government-funded stadium projects are “10 to 20 percent of what’s promised.” In cases where one or more communities are bidding against each other for a sports franchise, the franchises act as monopoly sellers. In such cases, “they [the franchises] are going to come out quite well,” Sanderson said.

As the Cubs and Mesa officials finish the deal, negotiators must make sure the contract complies with Arizona’s constitution. The Goldwater Institute recently won a lawsuit against the city of Phoenix over a $100 million tax concession to a retail and residential development called City North. The state’s supreme court ruled the concession violated the state’s constitutional ban on publicly financed gifts to private entities.

Terms of Deal Still Vague
Carrie Ann Sitren, an attorney with the Goldwater Institute’s Sharf-Norton Center for Constitutional Litigation, said the taxpayer handout to the Chicago Cubs could violate Arizona’s constitution, but she says she’s not certain because the terms are currently too vague. Nevertheless, the majority vote in favor will not affect its legality.

“The fact that voters approved the measure has no effect on the potential gift clause issue,” said Sitren. “Voters in a city cannot vote to give officials permission to violate the state constitution.”

When a contract is signed, courts will be asked to determine whether Mesa’s deal with the Cubs violates the state’s gift ban. For now, however, Mesa’s taxpayers are on the hook to subsidize a sprawling new training facility and stadium for the Cubs.

Byron Schlomach ([email protected]) is director of the Center for Economic Prosperity at the Goldwater Institute in Phoenix, Arizona.