With the announcement that the current naming rights to the Chesapeake Energy Arena have been terminated, there’s been significant interest in and speculation about its new name. Setting aside the speculations about who may be likely candidates to purchase the naming rights, perhaps we should recognize the Oklahoma City residents who have and continue to pay for the building. Perhaps naming it “Atlas’ Arena” may be appropriate.
It’s a bit tacky and overly sentimental, I know. But the allusion adequately captures the relationship of city taxpayers to the city’s numerous programs, including the arena. Allow me to explain. In Greek mythology, Zeus punished Atlas by literally placing upon him the weight of the heavens. The famous Farnese Atlas depicts Atlas, driven to his knee by the weight of the celestial globe bearing down on him. Similar to the mythological titan, taxpayers shoulder the burden of the arena.
In 1993, voters approved a temporary sales tax increase to support a revitalization project known as the Metropolitan Area Projects, or MAPS. Through MAPS, Oklahoma City administrators sought to use $350 million in additional tax revenue to revitalize its urban core. The original plan included constructing a new sports arena and event facility – the Chesapeake Energy Arena.
With additional tax revenue, a budget of $76 million, and a lowball bid of $66 million, construction began in 1999. A few years and $89.2 million later, the project was complete, and the doors opened. Under its fourth iteration, the taxpayers will continue to heft the financial burden of the arena with an additional $115 million for fan amenities, additional building investments, and arena maintenance.
This continued burden that MAPS 4 places on taxpayers begs several questions. Why does the city need to own an event venue, or four, or more? Why should the ordinary taxpayer bear the burden of subsidizing entertainment and recreation? Could these functions be better served by private ownership?
I am not questioning the value of recreation and entertainment. However, I am questioning the government’s role in owning and providing both. As I am sure is the case with many readers, I have taken advantage of MAPS projects. My kids and I have taken numerous strolls through Bricktown and played at Scissortail Park. Additionally, as a child, I vividly remember hiding under my covers at night, quietly listening listen to the NBA finals on the radio after my parents refused to let me stay up to watch the game. Thus, I can certainly appreciate the appeal of professional sports. However, what should be the government’s role and how should they spend taxpayer money?
In Rising Above Mere Politics, the 1889 Institute proposed five questions the need to be answered correctly before a governmental entity spends taxpayers’ money.
- Is a program consistent with the mission of Oklahoma’s state government?
- Is the program fulfilling a need only government can effectively fill?
- Are the benefits from a program unambiguous, obvious, and universal?
- Do the benefits of a program or agency indisputably outweigh the costs?
- Does the existing program or agency show evidence of past success?
In the case of the arena, all of these questions can be answered in the negative. It is clear that there is no legitimate justification for a publicly-owned arena and, therefore, no reason for taxpayers’ hard-earned money to be used to pay the price for one.
Providing entertainment is not, and shouldn’t be, part of the mission of any government. The people have entrusted federal and state governments with limited power. This power exists to preserve the freedom and establish the legal infrastructure within which people can “create their own happiness.” This does not include facilitating and subsidizing private entertainment and especially not ensuring that an NBA franchise has access to a tax-funded, publicly-owned, state-of-the-art venue.
Given that entertainment falls wholly outside the mission of government, it should be readily apparent that entertainment isn’t a need that only government can effectively fulfill. Assuming there is a demand for the arena, the construction and maintenance of a sports venue could have been efficiently undertaken by private industry. According to one source, OKC Thunder is valued at $1.575 billion with $236 million in net revenue. Current rent sits at $1.64 million per year. Add in revenue from other events, this may or may not be enough to entice private investment in a sports venue. If private industry is not interested or does not perceive a market for such a venue, perhaps it should not exist.
While there are attempts to justify public ownership by estimating the arena’s economic impact, these benefits are unclear, uncertain, and do not outweigh the costs. Other than forgone rent, whatever economic benefit the city claims would have been realized were the arena privately owned. Not only would the city likely reap the benefits of a privately owned venue, but neither the city nor the taxpayers would bear the bulk of the costs. Additionally, bad deals made in the “best interest” of the public can exacerbate these costs. In a troubling quote about conceding the naming rights to the arena, one city official said, “In order for [the Thunder] to be financially sustainable over the long term, which we all want, we have to give up a lot of the revenue streams that the arena had.” Propping up a business that isn’t sustainable without public money and significant concessions sounds an awful lot like corporate welfare. Is that really what we all want?
Whatever the perceived benefits, they are certainly not universal. Entertainment is subjective. Not everyone in the community likes basketball. Not everyone cares if the Thunder is immensely successful or an abysmal failure. Others who may care deeply about the Thunder may not be able to fork out the average ticket price of $72. Obviously, not everyone, or even most everyone, benefits from the arena. Aggregating all the individual and business benefits, they are far from universal.
Finally, there isn’t a history of success. Given that entertainment falls wholly outside the scope of governments’ mission, clearly defining and measuring success is rather difficult. However, recent developments with the Cox Center seem to indicate a poor track record providing and maintaining event venues.
Bottom line: To create and seek out entertainment is wholly the responsibility of individuals and private industry. An arena is not a necessary public function. The government is usurping the private sector and acting entirely outside its legitimate scope of power and authority, wasting taxpayer money. Yet here we are, the people, like Atlas, buckling under the punishing weight of taxpayer-subsidized entertainment for the few. Thus, “Atlas’ Arena.”
The opinions expressed in this blog are those of the author, and do not necessarily reflect the official position of 1889 Institute.