The Mills report, the Manley subsidy proposals, and the business of major-league sport

This article examines the debates over subsidies to professional sports tea ms that have been the focus of much attention and passion in Canada over th e past several years, debates that led to the report by Dennis Mills, Sport in Canada: Everybody's Business, and to John Manley's ill-fated proposals to offer subsidies to Canadian professional sports operators. The article r eviews the arguments put forward by the sports industry: that major-league hockey and baseball teams make substantial economic contributions, both dir ectly and indirectly, to the cities in which they are located and that Cana dian teams, especially those based in smaller cities, need substantial redu ctions in their public costs (taxes and/or rents) in order to "level the pl aying field" with their U.S. competitors. The authors argue that the commis sioned studies on which these claims are based systematically overstate the economic impacts of professional sports and are not supported by independe nt research. The authors also argue that the difficulties facing Canada's " small market" teams are not primarily the result of higher taxes; rather, t hey follow from changes in the sports industry over the last decade (notabl y, much higher player salaries). This means that in order to remain competi tive, teams must be able to generate far greater revenues than were needed only a decade ago. When one examines the new economy of professional hockey , in particular, with its heavy reliance on local television and advertisin g revenues and on the purchase of luxury seating by the local corporate sec tor, it is hard to avoid concluding that even with public subsidies teams b ased in provincial Canadian cities may no longer be able to compete in the major leagues. Finally, the authors consider the cultural argument that NHL hockey is a Canadian tradition and warrants support on "heritage," as oppo sed to economic, grounds. However, the authors conclude that both professio nal sports and Canada have changed so much in recent decades that commercia l sport is not an appropriate candidate for public subsidy.