The recent increase in the rate of condemnation of private property under the guise of public utility has been an issue of concern across the various states in America. In the past, the Supreme Court has elaborated on the use of eminent domain and given the states the power to condemn both tangible and intangible property, thus courts have further broadened the definition of “public use.” This proven practice is making billionaires out of the already millionaire owners.
What is eminent domain?
Eminent domain is a governmental power which may be used to acquire property for public use from a non-consenting owner provided the owner receives just compensation. The owners do benefit but they are not entirely to blame. With loopholes in the eminent domain clauses, and with the fact that stadiums are considered public utilities, the abuse of eminent domain has and will continue to rise in the sports industry. Despite the prospect of retaining local teams being the reason for condemnation, various homes and businesses are being demolished to satisfy the interests of few individuals. However, if the local government fails to initiate condemnation of the identified business or property, the team leaders then threaten with relocation. There are various cities in the U.S. that have established themselves as centers of sports entertainment, and any prospect that a home-revered team could be leaving, those centers would do everything possible to prevent such movements, even if it includes condemning private property. However, the proceeds from such ventures ultimately only benefit team owners.
For instance, in Miami, the local government was entangled in a court battle with the locals about the construction of $650 million sports stadiums for the Miami Marlins. In the 2008 case, the government was faced with a major dilemma whether it should fund the construction of the new stadium or use the funds to improve the Dade County Convention Center. The latter had better economic prospects since it would bring millions of visitors in the state and increase visitor spending unlike the latter which had dim economic benefits. Predictably, the Miami Marlins threatened with relocation if their interests were not met.
What is the alternative?
With the increasing cases of abuse of eminent domain, various alternatives can be used to prevent losses by local governments. For instance, one of the plausible remedies can be insisting on no relocation contracts with sports team owners. As an example, by July 2018, the MLS will be playing in a new stadium, the Audi Field. The construction of the new stadium was a joint venture between the team ($150 million USD) and the local government ($85 million) (Turner, 2018). The local government provided most of the land for the construction; however, some of the land was obtained through eminent domain. With the pending eminent domain, the costs incurred by the local government could be more than $100 million. The local government signed a 12-page contract that bars the team from any contract with the net result of relocation. But the most effective way to make eminent domain pay would be to have the cities, municipalities or states, participate in the upside created by the public policy of eminent domain. This article would be far less meaningful if for every billionaire created by this policy, millions were shared with their unwitting partners, YOU!
Stadiums Financed in Whole or in Part by Eminent Domain Policies
Cowboys Stadium ($1.33 billion)
100,000-seat stadium with the world’s largest HD TV screen
Yankee Stadium ($1.5 billion)
The Yankees were bought for $8.7 million back in 1973
MetLife Stadium ($1.6 billion)
This is the most expensive stadium in the world—the cost was shared by the taxpayers of New Jersey.
Citi Field ($922 million)
Why does a 41,000-seat stadium (opened in 2009) cost a billion dollars? That’s $24,487/seat.
Madison Square Garden ($1.1 billion)
Recently underwent another 3-year $800 million renovation in 2014
Wealth Creation through Eminent Domain
Team owners combined average net worth = 2.825 Billion
Team owners average combined franchise holding period 15.75 years