When Billionaires Build Stadiums, Taxpayers Get Whacked

When Billionaires Build Stadiums, Taxpayers Get Whacked
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As a Minnesota Vikings fan, I was glad to see the Atlanta Falcons knock off the Green Bay Packers on Sunday night, September 17, by a score of 34-23. The Falcons also opened their impressive new stadium – Mercedes-Benz Stadium – that night.

In fact, 2017 is the year for new stadiums in the Atlanta area. At the start of the baseball season, the Braves also moved out of Turner Field in the city and into a new ballpark – SunTrust Park – in Cobb County.

The sports fan in me is intrigued by new stadiums. But both taxpayer and economist in me are simply disgusted. After all, there’s no reason that taxpayers should have to foot any part of the bill for a professional sports facility. Sports teams are no different than any other private businesses, and accordingly, teams should pay for their own facilities just like other private businesses.

As reported by the Atlanta Journal-Constitution, the Braves new ballpark will cost taxpayers more than $400 million, not including millions of dollars in transportation upgrades. Meanwhile, taxpayers will be sacked for more than $700 million for the Falcons new stadium over the long haul.

But what about those tremendous economic benefits derived from sports stadiums? Sorry, but no. That’s an economic fantasy peddled by politicians and team owners. All of the independent studies on pro sports facilities that look at what’s actually occurred in terms of subsidizing new stadiums and arenas make clear that such projects fail to boost incomes, jobs or overall economic activity. They’re duds when it comes to economic development.

As noted in an educational brief on the subject from the St. Louis Federal Reserve Bank, “In a 2017 poll, 83 percent of the economists surveyed agreed that ‘Providing state and local subsidies to build stadiums for professional sports teams is likely to cost the relevant taxpayers more than any local economic benefits that are generated.’ In their book, Sports, Jobs, and Taxes, Roger Noll and Andrew Zimbalist present a comprehensive review of stadium investments. In all cases, they find a new sports facility to have extremely small (or negative) effects on overall economic activity and employment. Furthermore, they were unable to find any facilities that had a reasonable return on investment. Sports economist Michael Leeds suggests that professional sports have very little economic impact, noting that a baseball team (with 81 regular-season home games per year) ‘has about the same impact on a community as a midsize department store.’”

What’s the deal? Well, given that consumers only have so many entertainment or recreational dollars to spend, if there isn’t a sports team in town, then the money will be spent on other forms of entertainment. In addition, the higher taxes tied to subsidizing teams and stadiums have negative effects on the local economy. In the end, the only true beneficiaries of stadium subsidies are team owners and players.

And before anyone decides to point out that the Vikings play in a new, expensive, taxpayer subsidized stadium – U.S. Bank Stadium – you’re absolutely right. And the taxpayers of Minnesota were ripped off, just like those in Atlanta and so many other cities across the country.

What if you’re a fan unwilling to root for a team playing in a subsidized facility? It’s slim pickings, but there are options. For example, the puck drops in October on the inaugural season for the NHL’s Vegas Golden Knights in their privately-financed T-Mobile Arena. For good measure, earlier this year, Bill Foley, owner of the Golden Knights, even complained about taxpayers getting hit up for $750 million to help fund a new stadium to bring the NFL’s Raiders to Las Vegas.

In the early half of the twentieth century, taxpayer handouts for pro sports were the rare exceptions. Now, unfortunately, subsidies are the rule, and Mr. Foley and his Knights are the exceptions.

Ray Keating is an economist and a novelist, with his latest thriller being Lionhearts: A Pastor Stephen Grant Novel, as well as being new to the world of podcasting with Ray Keating’s Authors and Entrepreneurs Podcast and Free Enterprise in Three Minutes.

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