Congratulations, you have been recently elected the mayor of the city of Cincinnati. Shortly after assuming your new position, you are contacted by Bob Castellani, the owner of the Cincinnati Reds. He is concerned about the aging facility of Great American Ballpark that is causing him to lose revenue compared to other franchises in the league. He has asked you for to publicly subsidize $500m toward the construction of either a new ballpark, or major renovations ($300m+) to Great American Ballpark to improve amenities, luxury boxes, and the fan experience. He has significant leverage in the situation. In fact, he has threatened to re-locate the Reds to Montreal, where they have promised a brand new stadium.

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You must choose one of the following options and justify your response using concepts, theories, and ideas from the course:

a). Authorize the use of public money to subsidize major renovations or the construction of a new ballpark to keep the Reds in Cincinnati.

If you choose this response, you might consider addressing any of the following: how much are you willing to subsidize and why? How will you raise funds for the new stadium in your city? Will you use taxes, debt financing, or another method and why? What are the pros and cons of your chosen payment method? How much of the stadium will you subsidize? If you choose to partially subsidize the stadium, where specifically will the public money go? What are the positive externalities from having the Reds and what are the negative? Do the positive outweigh the negative? The tangible and intangible? What is the overall economic impact of hosting the Reds in Cincinnati?

b). Reject Castellani’s request and risk losing the Reds to Montreal.

If you choose this response, explain why you think a public subsidy to keep the Reds is a bad idea? What are the problems with the ways in which city’s have traditionally financed publicly subsidized stadiums? What is not included in economic impact studies? What do you risk politically and why? What will be the response from the public and interest groups? How are you going to present your rationale to the public? What about the theory of public choice, is the Reds franchise a public good? What are the positive externalities from having the Reds and what are the negative? Do the negative outweigh the positive? The tangible and intangible? What economic impact would losing the Reds have on the city of Cincinnati?