It's Nice to Have a Monopoly

Today's Post story confirms what we all knew about the incentives of the players in the whole stadium fiasco, which I touched on here. In sum, MLB has told the potential owner groups not to offer to pay for cost overruns of the stadium. As we suspected, MLB does not want the actual owners of the Nats to negotiate a deal with D.C., because they know that such owners would pay for more of the stadium than MLB wants owners to pay. That is why MLB has refused to name an owner to date. It also explains the presence of Smulyan among the bidders -- he's been in the club, and knows how the game is played, apparently unlike some of the bidders, who are merely good businessmen.

I think cities should be able to build stadiums from tax dollars if they think it would be a good thing for the community. I do not think stadiums pay for themselves, in that the economic benefit they generate typically does not cover the costs. But if the owners of the team want to pick up some or all of the tab and reduce the burden on the city, they should be able to, no questions asked. In a free market this is exactly what you would expect. In fact, if D.C. wants to ensure that the latest baseball club doesn't flee like the previous two, it should make them pay for as much of the stadium as possible.