Prince George's County is about to approve a boondoggle under the guise of cooperation between business and government.
Just when the county appeared to be putting its economic priorities in order, along comes Washington Capitals' owner Abe Pollin with an offer county officials feel they can't refuse.
Pollin set four conditions last week that he said are necessary to avoid selling or disbanding the hockey team. The Caps, he said, must sell 7,500 season tickets, sell out the first 10 games for next year, pay lower rent to the Capital Centre that Pollin owns, and get a reduction in the county amusement tax, from 10 percent to one-half of one percent for the next four years.
The danger in Pollin's demand, which the county's elected officials have embraced so enthusiastically, is that it could open a loophole big enough for a score of Prince George's County businesses to leap through.
Already, some business people who are required to pay the amusement tax are grumbling because they don't think a special break for Pollin would be fair to them.
Somewhere in all of the sentimental boosterism and the shrewd campaign to save the woeful Caps is an inescapable fact. The franchise is a business. And like any other business, its fate should be determined by the marketplace and management's ability to operate it profitably--not a bailout.
Pollin says he has lost "in excess of $20 million" in the eight years he has owned the team. And now, after coming to grips with the reality that his investment hasn't paid off, he is demanding that Prince George's County residents share his financial burden.
The justification being offered by Pollin and county officials for saving the worst franchise in the National Hockey League is the claim that Caps' games have substantial spinoff benefits for the economy. But nobody has provided a dollar estimate of the so-called spinoff benefits realized by the paucity of hotels, restaurants and bars in the vicinity of the Capital Centre.
If the team is so valuable as a franchise and worth keeping in Prince George's County, why haven't investors rushed to buy it?
To be sure, four Washington-area businessmen have come forward indicating their willingness to invest in the team as limited partners, but the fallible four conditions that they set with Pollin's blessing limit their risk.
Meanwhile, county officials have rushed to draft legislation that would slash the amusement tax without asking some very basic questions about the impact on the budget or on dealings with other businesses that might feel they deserve a similar break.
This is a county whose elected officials won't devise a plan to restore the jobs of 500 teachers who were laid off in a budget crunch. What these officials seem to be saying is that a failing business that happens to be a franchise in the NHL is more important than the educational program.
This is a county that's so hard up for taxes that it's about to pass a bill that would increase substantially the amusement tax on video games operated by small-business people.
Prince George's officials say the Caps have paid an average of $233,624 annually in amusement taxes. At that rate the county would be out roughly three-quarters of a million dollars over the next three years if Pollin's demand is met.
Under his proposal, Prince George's County would actually collect no taxes from the Caps in the first three years of the plan because the tax payment would go to the state of Maryland.
Councilman William Amonett has been quoted as saying the county is going to lose the money anyway if the Caps leave " . . . so really what choice do we have?"
County officials can back away from Pollin's plan or insist that the subsidy he seeks be backed by certain guarantees so that the county won't be left holding the bag.
What if the team continues to lose and fans continue their eight-year apathy after the first 10 games?
Pollin refuses to comment on that kind of "speculation." Next season will be a "pivotal year" for the Caps, he said yesterday. "Our job is to improve the team and we plan to do that."
Pollin says he can reach the break-even mark if the four-point plan is carried out. But he added a kicker: The Caps would also need to sell 5,000 to 6,000 tickets for each of the last 30 games next season to break even, Pollin disclosed.
Late yesterday, the team had gone just over the halfway mark in season ticket sales but that's "a little misleading" because a majority of purchasers were season-ticket holders last year, Pollin explained. The "real crunch," he added, lies in a belated bid to get the business community to buy season tickets.
In the final analysis, Pollin is banking on a long shot. By now, most businesses would have eliminated a major drag on profits and cut their losses by getting rid of an unprofitable division.