Commentary

Corporate Welfare for New Red Wings Arena Won't Spur Economic Development

(Editor’s note: The following commentary originally appeared on MLive.com on March 27.)

The idea that the proposed new Red Wings arena will revitalize midtown Detroit is the reason given for the $260 million in corporate welfare that will help finance the project. The idea that a new sports arena will spur economic development, however, lacks credibility.

An NHL season only has 41 home games, meaning the arena is closed for the most of the other 324 days of the year with the exception of some concerts or other special events. Not much development can take place around a facility that is closed nearly 90 percent of the year.

Take the Palace of Auburn Hills, where the Detroit Pistons play, as an example. An NBA season also consists of 41 home games. If sports arenas really spurred additional economic development, there would be bars and restaurants surrounding the Palace. Yet, there are not.

Backers claim the new arena will create 440 new jobs in addition to those that already exist at Joe Louis Arena. This means that taxpayers are providing a subsidy of approximately $600,000 per new job created. Given how sports arenas are only open a handful of days of the year, jobs created at them tend to be temporary, low-paying food service jobs.

Sports teams are simply too small a component of the local economy to serve as an engine of economic development.

According to Forbes, the Red Wings earned $96 million in total revenue in 2013. According to the U.S. Bureau of Economic Analysis, total income in the metro Detroit area was $208 billion in the same time period. This means that the Red Wings comprise 0.05 percent of the metro Detroit economy.

The Red Wings could move to a new state tomorrow and it would not cause a blip on Michigan's economic radar, especially since studies find that consumers would shift their entertainment spending to other local options. Surveying the literature on sports stadia and economic development, economists Dennis Coates and Brad Humphreys find that "the overwhelming preponderance of evidence [is] that no tangible economic benefits are generated by these heavily subsidized professional sports facilities."

Under the guise of economic development, state taxpayers simply trade one set of empty lots for another.

The building of Comerica Park resulted in a vacant lot on the corner of Michigan and Trumbull where Tiger Stadium once stood. The Silverdome sits empty with a destroyed roof in Pontiac now that the Lions play at Ford Field. A combined $335 million in taxpayer dollars was used to finance the two new facilities.

If a new Red Wings arena is built, Joe Louis will be demolished. It is unclear how taxpayers benefit from having vacant lots in one part of Detroit (and Pontiac) over others at a cost of over a half a billion dollars.

Instead of subsidizing the construction of the Red Wings arena, $260 million could finance the repair of all of Detroit's streetlights with money to spare. It would be enough to resurface I-75 from Saginaw to Mackinaw City. It could be used to hire 100 police offers in the city of Detroit for more than 25 years.

Though less flashy, those projects would result in more bang for the taxpayer buck than extending yet more corporate welfare to another billionaire.

#####

Christopher Douglas is an associate professor of economics at the University of Michigan-Flint and a member of the Board of Scholars at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.

News Story

School Union Contracts Across The State Retain Clauses Calling For Hiring Based On Race

Ann Arbor, Oak Park, Kalamazoo and others have provisions

At least five public school districts have language in their union contracts that could be in violation of the Michigan Civil Rights Initiative, which was passed in 2006 and bans discrimination in hiring based on race at public institutions.

Some school districts, such as Ann Arbor, have tweaked the language in prior contracts and now claim the revised language is legal. Others such as Kalamazoo say the contract language is constitutional because it must be read in conjunction with a federal court desegregation order.

And then there's Oak Park, which states the district wants to increase the number of racial minority teachers and "reaffirm" the district's commitment to affirmative action goals.

"To be that blatant is stunning," said Jen Gratz about the Oak Park contract. "It tells you who they are looking out for. It's not the kids. It's not the constitution."

Gratz, who led the way for the Michigan Civil Rights Initiative to be passed and founded the XIV Foundation, which advocates for equal treatment, said voters should be outraged such language exists.

"Talk about putting school districts, administrators and teachers between a rock and a hard place," Gratz said. "Union officials have negotiated race preferences in teaching contracts, but the state constitution says no race preferences in public employment, education or contracting. So if you are in one of these districts do you adhere to your contract or to your constitution?"

Ann Arbor
In its 2009-2011 teachers contract, the Ann Arbor Public School board agreed to this language:

The Board and the Association agree that affirmative action must be taken to recruit, employ, and retain ethnic minority group persons. Both parties agree that a highly significant part of the experience of children in today's society involves cross racial experiences. Part of that experience must be with ethnic minority group members who are educators. To the achievement of these ends, both parties agree that affirmative practices in hiring, initial assignment, voluntary re-assignment and the maintenance of minority staff in buildings shall not constitute discrimination within the meaning of Section 4.411. The parties also agree that it shall be their mutual goal to assign at least two African-American classroom teachers to each building.

That was changed in the current contract to this:

Staffing practices will reflect the Ann Arbor Public Schools and community's desire for diversity. The Board and the Association agree that action as allowed by law must be taken to recruit, employ, and retain ethnic minority group persons. Both parties agree that a highly significant part of the experience of children in today's society involves cross racial experiences. Part of that experience must be with ethnic minority group members who are educators. To the achievement of these ends, both parties agree that personnel practices in hiring, initial assignment, voluntary re-assignment and the maintenance of minority staff in buildings shall not constitute discrimination within the meaning of Section 4.411. The parties also agree that it shall be their mutual goal to assign at least two African-American classroom teachers to each building.

Liz Margolis, spokeswoman for the Ann Arbor Public Schools, said the language meets all legal requirements.

Gratz questioned the legality of mandating that two African-American teachers be in each building.

"That would be something that I would say is outright unconstitutional," she said. "I don't know why our government officials can't just understand that. The people have said that we want to be treated equally. Yet, these bureaucrats continue to do it and thumb their nose at voters. What is wrong with judging people on their character and their merit and letting the chips fall where they may?"

Oak Park

Oak Park's teachers contract states: "The parties to this Agreement are mutually committed to increasing the number of racial minority teachers recruited by and hired into teaching positions within the Oak Park Schools. The parties reaffirm their commitment to affirmative action goals and human relations."

Superintendent Daveda Colbert said the district sought legal counsel to make sure the contract provision is not illegal. She said she was told that affirmative action goals are still recognized as valid.

Colbert went on to say the clause in the contract "does not constitute a commitment for preferential hiring or the hiring of less qualified candidates," adding that the district intends "to strive toward our goal without discriminating against any groups."  

Oak Park School Board President Marie Reynolds and Vice President Maxine Gutfreund did not respond to requests for comment.

Kalamazoo

The Kalamazoo teachers contract states: "It is mutually agreed that the District shall exercise the right and responsibility to hire minorities whenever possible to enhance the ethnic ratio of our staff."

Kalamazoo Public Schools Spokesman Alex Lee said the contract also states that minority hiring clause "cannot conflict with any court orders, and should these court orders be changed or modified in any way, this article will be open for renegotiation."

He said there also is a letter of agreement that does not establish any racial preference for hiring decisions, which are based on candidates' qualifications. As a precaution, Lee said the contract also stipulated: "The above is applicable to the extent permitted by law."

Gratz said instead of saying they will follow the law, districts should just remove the language that is no longer allowed by law.

"They start by saying, 'We are going to do everything in our power to hire racial minorities, but we are going to follow the law,' " Gratz said. "Why after it passed didn't they change their contracts? They say, 'We'll do it only to the extent the law will allow it.' The law doesn't allow you to do that anymore."

A recent study from the Mackinac Center for Public Policy found that up to 60 percent of the union contracts in Michigan's largest school districts could have illegal provisions in them.

Ferndale Public Schools and Mount Clemens Community Schools also refer to racial preferences when hiring.

Ferndale's current school board members include: Amy Butters, Kevin Deegan-Krause, Nancy Kerr-Mueller, Raylon Leaks-May, Jim O’Donnell, Karen Twomey and Jennifer LaTosch. The superintendent is Gary Meier, who, after 14 years in the district, announced he is retiring. His announcement came just days after Michigan Capitol Confidential broke a story about the school district having a clause in the union contract that gives preference to "non-Christian" teachers.

Mount Clemens school board members include Earl C. Rickman, III, Steven Gravlin, Michael Schichtel, David McFadden, Edward Bruley, Patrick Maceroni and Jeanine Walker. The superintendent is Deborah Wahlstrom.

Ann Arbor’s school board members include: Susan Baskett, Andy Thomas, Simone Lightfoot, Christine Stead, Deb Mexicotte, Glenn Nelson and Irene Patalan. The superintendent is Jeanice Kerr Swift.

Kalamazoo's school board members include Patti Sholler-Barber, Jennie Hill, Carol McGlinn, Martha Warfield, Craig Herschleb, and Mollie Peterson. The superintendent is Michael F. Rice.

Oak Park's school board members include: Terrence R. West, Sr., Marie Reynolds, Misty Patterson, Maxine Gutfreund, Menachem Hojda, Claudette Lunkins and Mildred Warren. The superintendent is Daveda Colbert.

(Editor's note: This story has been updated. The story originally said Oak Park Superintendent Daveda Colbert did not respond to a request for comment. However, she had sent an email before publication that inadvertently was left out of the original story. It has been added.)

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.