The Center for Economic Accountability’s position on government subsidies for professional sports franchises is simple: Pro sports teams should “Pay For Their Own Damn Stadiums.“
Americans — including the team at the CEA — love sports. But when it comes to professional sports in America, team owners and leagues have figured out that they can use our love of sports to get taxpayers to fund massive — and massively expensive — new stadiums.
The thing is, stadium subsidies are a terrible idea. They sit empty and useless most of the time, coming to life for a few hours on gameday and then going dark and silent again. This makes them virtually worthless from the standpoint of economic development or job creation: Even baseball stadiums, home to 81 home games a season, only bring in as many customers as a mid-sized Walmart or other big-box store does over the course of a year.
Or, consider an NFL football stadium. The average NFL team drew roughly 530,000 fans to home games in 2019. That’s a lot of economic activity in the surrounding area on gamedays, but it starts looking a lot less impressive when you spread that out over the other 357 days of the year. In that light, the average daily impact of an NFL team spread out over the course of the entire year is equivalent to the customer traffic of a single decent-sized convenience store or small grocery store. That’s not worth the hundreds of millions of dollars that many NFL stadiums ask for — and receive — from local politicians.
In fact, it’s hard to find anything that economists agree about more than the futility of stadium subsidies: In 2017, the University of Chicago’s Booth School asked some of the world’s most eminent economists whether subsidized sports stadiums are likely to cost taxpayers more than they return in benefits. The panel – which included an incredible seven Nobel Prize winners in economics – was virtually unanimous in its skepticism with 83% agreeing that stadium subsidies aren’t worth the cost, 11% not sure and just 4% in favor of them.
It’s also important to realize that sports compete for our entertainment budgets. People in cities without pro sports teams don’t just sit home and do nothing. Rather, they go out and spend their entertainment dollars on other things that create jobs and economic activity. This is why team owners’ claims of economic development ultimately end up falling through: They generally assume that all the money spent at the stadium wouldn’t be spent elsewhere, in but real life a dollar spent by a fan at a subsidized stadium is a dollar they’re not spending at some other business in the community.
At the end of the day, for all that sports are hugely important in our culture, the reality is that they’re not a major economic factor and we should stop treating them like they are.
For instance, in 2019, the average National Basketball Association team brought in roughly $305 million in revenues. That’s not pocket change, but it’s not a giant growth engine in a local economy. By way of comparison, that’s about as much business as five average-sized auto dealers do in a year, combined. Yes, it’s nice for a big city to have that business going on, but it’s not going to make a large-scale difference in the community one way or the other.
There’s also the issue of what kinds of jobs people are being hired to do. Unlike an NBA team, where a few people make millions but most stadium jobs are largely seasonal and part-time, those five auto dealers would create a wide range of full-time professional and blue-collar jobs. (Additionally, sports teams are unusual in that their spending is hugely concentrated in player salaries. That limits the local economic impact, as players generally spend half their season playing road games in other cities and frequently don’t even live in their “home” city during the offseason.)
Pro sports teams in virtually every other country manage to pay for their own stadiums without help from taxpayers. It’s time to tell America’s team owners to do the same damn thing.
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The CEA on Stadium Subsidies:
- CEA Blog: Don’t Let Economic Impact Claims Distort the Progressive Field Stadium Subsidy Debate
- Providence Journal: Subsidizing a soccer stadium would be a bad bet for Pawtucket
- Buffalo News: Keep emotions out of Buffalo’s soccer stadium debates
- Cleveland Plain Dealer: Public subsidies for sports venues like Rocket Mortgage FieldHouse just aren’t worth it
- St. Louis Post-Dispatch: Emotion defeats common sense in St. Louis’s MLS stadium deal
- Indianapolis Star: Indy’s proposed soccer stadium deal unfriendly to taxpayers
Field of Schemes on Stadium Subsidies
Expert Research on Stadium Subsidies:
HARGER, KAITLYN; HUMPHREYS, BRAD R. & ROSS, AMANDA
JOURNAL OF SPORTS ECONOMICS
“We find no evidence of any effect, positive or negative, of new sports facilities on new businesses around these facilities.”
“An analysis of industry-level data does not uncover any specific patterns of new business openings or increased new employment at new businesses after the opening of a new sports facility.”
“Opening a new stadium or arena does not appear to generate new business formation in nearby locations.”
COATES, DENNIS & HUMPHREYS, BRAD. (2008)
ECON JOURNAL WATCH
“The evidence reveals a great deal of consistency among economists doing research in this area. That evidence is that sports subsidies cannot be justified on the grounds of local economic development, income growth or job creation, those arguments most frequently used by subsidy advocates.”
“There now exists almost twenty years of research on the economic impact of professional sports franchises and facilities on the local economy. The results in this literature are strikingly consistent. No matter what cities or geographical areas are examined, no matter what estimators are used, no matter what model specifications are used, and no matter what variables are used, articles published in peer reviewed economics journals contain almost no evidence that professional sports franchises and facilities have a measurable economic impact on the economy.”
“The large and growing peer-reviewed economics literature on the economic impacts of stadiums, arenas, sports franchises, and sport mega-events has consistently found no substantial evidence of increased jobs, incomes, or tax revenues for a community associated with any of these things.”
SIEGFRIED, JOHN, J., AND ZIMBALIST, ANDREW. (2000)
JOURNAL OF ECONOMIC PERSPECTIVES
“Few fields of empirical economic research offer virtual unanimity of findings. Yet, independent work on the economic impact of stadiums and arenas has uniformly found that there is no statistically significant positive correlation between sports facility construction and economic development.”
“The conclusion that sports teams and facilities do not stimulate economic growth is surprising to many people. With live telecasting of games, daily coverage on television news and in the sports sections of newspapers, professional sports play a huge role in U.S. culture. Yet sports teams are small businesses. Yearly average team revenues in 1999 are around $55 million in the NHL, $75 million in the NBA, $85 million in MLB and $100 million in the NFL. For a medium-size city like St. Louis, the baseball team accounts for less than 0.3 percent of local economic activity; for a large city like New York, a baseball team contributes less than 0.03 percent of economic output.”
“Sound businesses move in search of a more qualified or less expensive labor force, a convenient location for inputs or sales, a good infrastructure, a sound fiscal environment with amenable tax policy, attractive government services, and appealing cultural opportunities. The latter may include the quality of the local theater, opera, symphony, parks, art museums, hospitals, public schools, universities or sports teams. If the first half dozen or so items are equivalent between two cities, then the business may look at cultural amenities and within them may consider sports. It does not seem plausible that the presence or absence of sports teams would be a decisive location factor for more than a few companies. There is no systematic evidence that business relocations follow sports teams.”