"Join Me Thursday At The American Enterprise Institute To Talk About Stadium Subsidies"
I posted about this last week, but I wanted to remind you all that tomorrow I’ll be participating in a lunchtime panel discussion at the American Enterprise Institute about whether cities and states should continue handing over millions of dollars in public subsidies to finance sports stadiums (details to RSVP are here, and if you can’t make it, you can watch a livestream at that link).
As you probably know from reading my work on the subject here, I’m not a fan of cities subsidizing sports stadiums. While these projects are sold as massive public works projects that create jobs and bring major benefits to the metropolitan areas around them, virtually all of the academic research on stadium subsidies has found that they don’t actually do so. There are many reasons for that, but the reality is that these projects often leave cities and states buried in debt that has to be paid off by either raising taxes on the middle and lower classes or by cutting services that those populations rely on — whether it’s public transit, public hospitals, or other public goods.
There’s plenty of real-world evidence supporting that view. Look to Minnesota, where the financing mechanisms for the Vikings’ new stadium are already falling far short of revenue projections. Or look to Cincinnati, which sold off a public hospital to help finance a stadium for the Bengals. Or look at Miami, Glendale, or any of the other cities where this has happened. There are also studies showing that new arenas and stadiums don’t lead to economic growth in the metro area; in fact, they may slow it relative to other options.
That doesn’t mean there are no benefits to having a stadium or the professional sports franchises that come with them. Sports can have a coalescing effect on their local populations, bringing together people who don’t share common bonds and wouldn’t interact otherwise. Some research, though not much and certainly not all, has suggested that the presence of pro teams and sporting events has happiness and health benefits. These are benefits that aren’t tangible and can’t be measured in simple dollars and cents.
It also doesn’t mean that we should absolutely avoid public involvement in such projects, given current situations. Today, more than any time in the past, it’s simple reality that a city that is steadfast in its opposition to footing at least part of the bill for a new stadium either isn’t going to attract a team or isn’t going to keep the one it has. The problem isn’t necessarily that we finance stadiums — cities and states finance projects all the time that aren’t necessarily the best, most efficient use of public funds. It’s that the public is misled into believing that these projects will spur development and job growth that will raise enough revenue to completely offset the cost of the project.
That just isn’t true. These projects, like many others, have a cost, and they are best understood as bringing certain benefits that have a not-insignificant cost attached. If I had my druthers, the mega-wealthy owners who benefit from these deals — especially the ones that happen simply because an owner thinks his stadium has too few luxury boxes for him to maximize profits — would foot the bill themselves. But ensuring that would require cities and states banding together to eliminate sports subsidies (a majority of economists agree that they should), and that isn’t going to happen any time soon. So absent that, we need cities and states to at least sell us these projects honestly, and to be honest themselves when it comes to financing them in a way that will do as little damage as possible to the rest of the city budget so that we can also afford projects and services that have much more actual economic utility to local residents. This is, more than anything else, about a city, state, and population’s priorities.
Anyway, I hope you’ll either attend the panel or follow along online. I’m joining AEI economic fellow Kevin Hassett, University of Maryland economics professor Dennis Coates, and Grantland’s Steve Marsh. AEI fellow and Washington Examiner columnist Tim Carney will moderate. It should be a great discussion.