Commentary

Government-Funded Stadiums Not Worth Price of Admission

Games and circuses once were provided by government. How better to satiate the desire of the Roman masses than to entertain them in the Arena?

Today, governments build stadiums to attract sports franchises for the same purpose. But the American masses seem to be tiring of transferring billions of dollars to billionaire team owners.

New York City is beset with wealthy supplicants: Major League Baseball’s Yankees and Mets, and the National Football League’s Jets all want new stadiums. So do the NFL San Diego. The MLB St. Louis Cardinals did too, before the legislature rejected most of their requested public subsidies.

Moreover, several states have been competing to win the Montreal Expos, a team operated by Major League Baseball in a city that has failed to support it for years. Portland, Ore., and northern Virginia have been in the race. So has Washington, D.C., whose mayor, Anthony Williams, offered to take $200 million from city residents for a stadium.

But in D.C.’s mid-September primary elections voters in two of the poorest wards tossed out their pro-stadium councilmen. A citywide stadium booster also lost his primary. The winners, including disgraced former mayor Marion Barry, all oppose taxpayer funding for a modern arena.

Stadium advocates have been amazingly successful in taking from the poor and giving to the rich. Some wealthy sports moguls, such as Managing General Partner Al Davis of the NFL Oakland Raiders, have turned mulcting taxpayers into an art form. Raymond Keating, chief economist for the Small Business Survival Committee, estimates that government has poured more than $20 billion (in current dollars) into sports ventures in recent decades.

Yet such facilities once were and continue to be built privately. The only reason more franchise owners decline to construct their own stadiums is because taxpayers so often relieve them of the need to do so.

But there’s no reason to sacrifice the interest of taxpayers to that of sports fans. Stadiums are not a good financial investment. Public finance experts Roger Noll and Andrew Zimbalist concluded: “no recent facility appears to have earned anything approaching a reasonable return on investment and no recent facility has been self-financing in terms of its impact on net tax revenues.”

Even an attractive project such as Baltimore’s Camden Yards, the home of the baseball Orioles, requires upkeep subsidies. Observed F.W. Walz, a Cleveland city councilman, who in 1928 opposed the nation’s first subsidized sports facility: “Of course, they say the stadium will pay for itself, but we’ve heard that story before.”

Moreover, new sports projects usually rearrange rather than increase local economic activity and tax collections. For instance, University of Maryland economists Dennis Coates and Brad Humphreys estimated that sports-oriented tax revenues and personal earnings from sports were well under a percent of total revenues and earnings for Baltimore and Maryland.

In fact, sports spending is primarily substitutional. Stanford University economist Roger Noll figured that only 5 percent to 10 percent of those attending games live elsewhere. Local fans divert their outlays from other leisure activities and other areas within the region.

Thus, government stadium “investments” have consistently generated meager results. Robert Baade and Allen Sanderson looked at a dozen metropolitan areas for The Heartland Institute and found no net employment hike. Separately Baade reviewed 36 cities and found no net statistical increase in economic growth.

There’s a more important philosophical point. Taxpayers do not owe their lives to franchise holders, restaurateurs, or property owners. Any increased profits for the latter are a private, not public, benefit.

Would a new stadium add value to wherever? Sure. But so would a new retail store or library. Or new cafes and restaurants.

Of course, as long as some politicians somewhere are willing to make their populations pay, sports moguls can threaten to leave. But so what?

Sometimes the threat is empty. Relocation is costly and risky, and thus rare. In any case, which city has suffered from losing a major league team?

Los Angeles prospers without a football franchise; Washington has lost little without a baseball team. People aren’t likely to flee San Diego if the city council ever has the courage to say no to endless financial extortion by the Chargers and Padres.

If the only way to prevent a team from moving is to shovel cash into some billionaire sports mogul’s hands, it isn’t worth it.

After his election win, Marion Barry offered some uncommon wisdom: “Unemployment is going up. Jobs are being cut and you want to spend taxpayers’ dollars for a stadium? Give me a break.”

Washington, D.C., New York City, or San Diego, city officials across the nation should welcome major league sports teams. But only if they are willing to pay their own ticket.

Doug Bandow is a senior fellow at the Cato Institute.