Who Wins When Taxpayers Foot the Bill?

A popular trend in many major American cities is the funding of sports stadiums with private tax dollars. While many benefits are thrown in with the proposals of such in an effort to entice voters through a sales pitch, the actual economic benefits reaped by cities are minimal. Professional sports arenas, while in theory a good idea for spurring local economy, are a waste of tax dollars.

First, little or no evidence exists to support that a publicly-funded sports facility boosts a city’s economy. According to Professor Robert Baade of Lake Forest College in Illinois, who studied the economic impact of stadiums in 48 cities spanning 30 years, 27 of the 30 cities experiencing stadium growth showed no economic change. Additionally, 3 cities experienced a significant economic downturn. In his study, Baade argues that money spent at the sports arena is money that would have been spent elsewhere within the city, therefore only displacing expenditures, not increasing it (Utt 2).

Dennis Coates and Brad R. Humphreys, in “Caught Stealing: Debunking the Economic Case for D. C. Baseball”, call this phenomenon the substitution effect. “If the stadium simply displaces dollar-for-dollar spending that would have occurred otherwise, there are no net benefits generated. To classify all consumer spending on stadium- and sport-related activities as a benefit without taking into account the substitution effect greatly overstates the value of the investment” (Humphrey and Coates 3, 4).

Additionally, fans that travel to the games from surrounding areas will bring their money into the city, detracting from their own suburb’s economy. What will happen to the local businesses that count on residents’ income to support their cash flows?

Proponents of publicly-funded sports arenas argue that jobs are created. When a Ph.D-holding economist presents glossy literature to development boards, “creation of jobs” is another one of those catchy sales tactics that team owners like to emphasize. After all, it’s coming from a trained professional in the way of economics. However, the reality is, very few jobs are actually created by such ventures. In the case of Washington, D.C.’s baseball stadium venture, a report from the District’s Office of the Deputy Mayor for Planning and Economic Development claimed that the establishment would create 360 jobs earning an annual total of $94 million (Coates and Humphreys 3). While these claims are certainly appealing to cities struggling with economic downturns, past analysis of cities that built stadiums upon such hopes show no tangible evidence to support these vast claims (Coates and Humphreys 3).

Another important fact not to be overlooked is the issue of exactly who is calling the shots behind stadium development in U. S. cities. Tim Dahlberg, an Associated Press Sports Columnist, asserted in the April 22, 2006 issue of Sports News that “Owners Play the Stadium Game, Where Taxpayers Never Come Out Winners” (Dahlberg 1). Dahlberg states that it’s always a problem when a city asks its voters to pour money into a private venture that will ultimately benefit a billionaire owner (Dahlberg 1). While citizens of Seattle continue to pour millions of dollars into new sports stadiums, showing that taxpayers must exhibit support for such economic ventures, the taxpayers are doing so in hopes of benefiting the cities they inhabit. They are clinging to mirages of an economic spurring and, as noted above, these claims are largely false. “For taxpayers and voters, the spin is about economic revitalization and jobs” (Keating 2).

Of course team owners want taxpayers to contribute funds to their sports empires. The more money invested in a stadium, and thereby their team, the more they can sell the team for later. Money in, money out. But is this ethical? No. When presented with the idea that stadiums will be a city’s savior (“vote FOR it!”), despite the fact that no real evidence exists supporting claims of revitalizing a city’s economy, taxpayers are being intentionally misinformed by team owners and politicians alike.

It makes no difference whether teams are actually drawing crowds or not – the owners (and another select few) continue to push for the taxpayers’ contributions. Money should be contributed elsewhere – say, education – where rewards are more tangible. Even if education quality increases only minutely, it is an area that will benefit all taxpayers, not just a few that want a seasonal job at Hooters, or already-wealthy sports team owners.

When the owner of the NFL Baltimore Ravens, Art Modell, was pushing for taxpayer support to fund an arena, he was caught on record saying, “the pride and presence of a professional football team is far more important than 30 libraries, and I say that will all due respect to the learning process.” When influential figures such as Mr. Modell make these kinds of statements regarding education, even “with all due respect,” it somehow cheapens and deemphasizes the importance of getting a solid education. Not only are tax dollars being wasted, but the whole idea surrounding professional sports is casting a shadow on what’s truly important.

In conclusion, proponents of sports arenas should look elsewhere for funding. Almost every American is a fan of some sport, and sports should remain an integral part of our culture. However, team owners shouldn’t emphasize such obscure data as “economic growth” as part of their sales pitch. Overall, expenditures intended to be generated by large sports stadiums are not increased, only dispersed. When money spent is concentrated into one area, the surrounding areas can suffer. The creation of new jobs is also a sketchy claim. Any new jobs actually created are usually low-paying, seasonal ones with large turnovers. Taxpayers should beware of the propaganda used to enlist voter support on initiatives to publicly fund sports arenas – it’s money that could be better spent elsewhere.


Works Cited

Coates, Dennis and Brad R. Humphreys. “Caught Stealing: Debunking the Economic Case for D. C. Baseball.” CATO Institute Briefing Papers No. 89. 27 October,
2004.

Dahlberg, Tim. “Owners Play the Stadium Game, Where Taxpayers Never Come Out
Winners.” Sports News: 22 April, 2006.

Keating, Raymond J. “Taxpayers Shouldn’t Pay for Stadiums.” Newsday (New York):
10 April, 2006.

Utt, Dr. Ronald D. “Taxpayers Prop Up Sports Profits. The Heritage Foundation (www.
Heritage.org/Press/Commentary/ed073002.cfm). 30 July, 2002.