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No. 339

April 5, 1999

SPORTS PORK

The Costly Relationship between Major

League Sports and Government

by Raymond J. Keating

Executive Summary

During the 20th century, more than $20 bil-

Before the Great Depression, sports subsidies

lion has been spent on major league ballparks, sta-

were rare; today, they are the general rule. The eco-

diums, and arenas. This includes a minimum of

nomic facts, however, do not support the position

$14.7 billion in government subsidies that has

that professional sports teams should receive tax-

gone to the four major league sports--Major

payer subsidies. The lone beneficiaries of sports

League Baseball, the National Football League,

subsidies are team owners and players. The exis-

the National Basketball Association, and the

tence of what economists call the "substitution

National Hockey League--including more than

effect" (in terms of the stadium game, leisure dol-

lars will be spent one way or another whether a

$5.2 billion just since 1989.

stadium exists or not), the dubiousness of the

These numbers (all in 1997 dollars) exclude the

Keynesian multiplier, the offsetting impact of a

billions of dollars in subsidies provided through

negative multiplier, the inefficiency of govern-

the use of tax-free municipal bonds, interest paid

ment, and the negatives of higher taxes all argue

on debt, lost property and other tax revenues not

against government sports subsidies. Indeed, the

paid on facilities, taxpayer dollars placed at risk of

results of studies on changes in the economy

being lost if the venture failed, direct government

resulting from the presence of stadiums, arenas,

grants to teams, and the billions of dollars spent

and sports teams show no positive economic

by taxpayers on minor league facilities.

impact from professional sports--or a possible

Looking to the rest of 1999 and the next sever-

al years, considering what is already agreed to and

negative effect.

what various teams and cities are seeking or

Unfortunately, many of the proposals for

proposing, another conservative estimate indi-

resolving the issue of subsidized stadiums and

cates that at least $13.5 billion more will be spent

arenas, such as government ownership of sports

on new ballparks, stadiums, and arenas for major

teams, only make matters worse. A step in the

league teams. Taxpayers are expected to pay more

right direction would be a measure requiring vot-

than $9 billion of that amount (in nominal

ers to approve any government subsidy for profes-

terms).

sional sports.

___________________________________________________________________________________________

Raymond J. Keating is chief economist for the Washington-based Small Business Survival Committee, a weekly columnist

with Newsday in New York, and a partner with Capitol Hill Research, a political and economic analysis service. He is coau-

thor of D.C. by the Numbers: A State of Failure (1995) and author of New York by the Numbers: State and City

in Perpetual Crisis (1997).