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Freedom's Phoenix

Public Private Partnerships Undermine Competition

June 3, 2014 - 3:25pm
Jim Iannuzo by Jim Iannuzo


Public-Private Partnerships interfere with free markets and are a form of crony capitalism rewarding those in politics and with political connections. Take a trip to Glendale, Arizona City Hall and see all the personally signed sports memorabilia outside of council offices and you will get a glimpse into the benefits awarded to those connected to the public-private partnership.

The idea that a monopolistic public-private partnership benefits local citizens is a modern fiction. This co-dependent relationship pales in comparison to the benefits of a competitive market where individual consumer choice is the deciding factor. Public-private relationships lead to exclusion and aggression via statute, further restricting competition in a quest to support the partnership. This outcome should be rejected by residents with the removal of politicians who fail to embrace free markets.

Glendale, Arizona is a city with budget problems partially resulting from a public-private partnership with the Phoenix Coyotes. The hockey team had ownership issues and was bought by the NHL in 2009. In order to keep the team in town, Glendale, AZ agreed to favorable lease terms at Jobing.com arena with a new ownership group IceArizona Co., which included paying them $15 million per year in stadium management fees and making up other shortfalls with taxpayer money.

Glendale, AZ now realizing that new parking fees, ticket surcharges and naming rights will not cover the annual management fees is looking to restrict local business which offer alternative lower cost parking for stadium events. Next door to the Jobing.com arena the Arizona Cardinals offer parking at their stadium for half the cost. The City of Glendale does not receive any of these parking revenues. Glendale City Council member Gary Sherwood wants police to block streets leading into the lower cost parking lots, thereby forcing guests to park at only city controlled lots. Essentially, using government power to benefit a public-private partnership in which they have a financial stake by forcing competitors out of business.

In a true free market, monopolies find existence difficult because others will compete for a piece of the action. Competition results in better products, lower cost and innovation. Free markets collapse when laws are passed that impose barriers to entry. If government exists to protect individual rights, then entry into the market via public-private partnership puts the fox in charge of the hen house.

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