News Release

October 27, 2004

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Baseball in D.C. won't be a home run for the economy
New report challenges mayor's justification for subsidizing ballpark

WASHINGTON--A taxpayer-subsidized ballpark for Washington's new baseball team will not improve the district's economy, according to new research presented in a Cato Institute report released today.

Economists Dennis Coates of the University of Maryland, Baltimore County, and Brad R. Humphreys of the University of Illinois, Urbana-Champaign, examined all 37 U.S. cities that had one or more professional football, basketball, or baseball teams between 1969 and 1996. Their findings, presented in "Caught Stealing: Debunking the Economic Case for D.C. Baseball," suggest that the district can expect at best no economic impact and at worst a negative effect on the local economy.

They found that the presence of pro sports teams:

• had no measurable positive impact on the overall growth rate of real per capita income
• had a negative impact on the level of real per capita income
• had a negative effect on the retail and services sectors of the local economy
• tended to reduce wages in eating and drinking establishments by about $162 per year

Mayor Anthony Williams proposes a "ballpark fee" that the district's highest-grossing corporations will pay toward stadium construction. Thus, he argues, district "residents will not be asked to pay one dime of tax dollars toward this ballpark."

Coates and Humphreys, however, point out: "Whether it is a surcharge or an increase in the corporate income tax rate, this so-called fee is a tax increase, pure and simple... Corporations do not pay taxes, people do. Whether it is in the form of lower wages for workers, lower asset values for corporate owners, or higher prices for consumers of the goods and services those companies provide, this tax increase will touch D.C. residents in some way."

The authors concede that a Washington baseball team might produce some intangible benefits, but those benefits are not reason enough for the city government to subsidize a major league ballpark. "District policymakers should not be mesmerized by the faulty impact studies that claim a baseball team and new stadium can be an engine of economic growth," they conclude.

Briefing Paper no. 89