It doesn't work that way in professional sports where team owners raking in guaranteed profits hold their host cities ransom every 20 years looking for a new public subsidized stadium. One that could be paid for out of pocket by investing a portion of the profit made over those 20 years.
Then maybe don't spend $1.1B for a stadium, and especially don't subsidize it with public funds unless the public either owns the team or then owns the stadium and leases it to the team.
In the US, stadiums are often funded by the taxpayers of the city/county. City governments (although often not the populace) are frequently obsessed with having pro sports teams. It's common to plow hundreds of millions of dollars to build a stadium to either get a new team or convince an existing team to not relocate.
Supporters typically claim that the economic benefit of a sports team offsets this cost, but the benefit is in fact completely negligible or even negative.
Sports aren't an inherent public concern, but the idea is that there will be a future return.
I don't claim that building a stadium/arena for a professional sports team will generate profit for the city. It's supposed to be an investment. The city foots the bill for the stadium. The team generates revenue over X years to cover the costs, and it also provides jobs for the city's residents. It's an idealistic win-win.
Stadium subsidies have repeatedly been shown to be one of the worst development deals local governments can make. Or get snookered into. While deals tend to vary, with some being less bad than others, local governments almost always lose in the long run: subsidies stadiums don't generate the expected economic gains, and the opportunity cost means subsidy funds can't be spent on infrastructure investments that would have a stronger, more immediate economic benefit. The perceived rational for stadium subsidies tends to focus on two main benefits: construction jobs, and a multiplier effect that's tied to tourism as well as local sports spending. One analysis, for example:
> In our forthcoming Brookings book, Sports, Jobs, and Taxes, we and 15 collaborators examine the local economic development argument from all angles: case studies of the effect of specific facilities, as well as comparisons among cities and even neighborhoods that have and have not sunk hundreds of millions of dollars into sports development. In every case, the conclusions are the same. A new sports facility has an extremely small (perhaps even negative) effect on overall economic activity and employment. No recent facility appears to have earned anything approaching a reasonable return on investment. No recent facility has been self-financing in terms of its impact on net tax revenues. Regardless of whether the unit of analysis is a local neighborhood, a city, or an entire metropolitan area, the economic benefits of sports facilities are de minimus.[0]
Multiple surveys of economists have shown a strong consensus against stadium and professional sports subsidies: one survey indicated that 86 percent agreed "local and state governments in the U.S. should eliminate subsidies to professional sports franchises" while another from 2017 showed "Providing state and local subsidies to build stadiums for professional sports teams is likely to cost the relevant taxpayers more than any local economic benefits that are generated."[1][2] Michael Leeds, a sports economist, put it this way: "If every sports team in Chicago were to suddenly disappear, the impact on the Chicago economy would be a fraction of 1 percent...A baseball team has about the same impact on a community as a midsize department store."[3]
But people love their teams, and the simple threat of moving is often more than enough to push subsidy deals past any roadblocks even when a move is highly unlikely. Plus, they're stuck with an old, empty stadium afterwards: when Rams left St. Louis for LA, the city was still carrying >$100 million in bonds from the old stadium's construction in 1995.[4] Plus another ~$17 million spent on developing a new stadium plan in the two years before the move. No wonder the city tried to sue.
Stadium subsidies are bad deals sold with irrational projections with fans' emotions used to grease the deal the rest of the way. The only thing worse than a city declaring victory with a stadium deal is a city actually winning an Olympic bid.[5] Apologies for the length; I got a bit carried away :).
With taxes they are partners. That's the reasoning behind public financing.
I think a better alternative is just tax breaks. The team can build a stadium but gets huge tax cuts on everything for a certain period of time to justify the build cost.
I also don't understand why stadiums have such limited lifespans. Wrigely field in nearly 100 years old.
The problem with this is that you're effectively forcing people who hate sports stadium to pay for them, not to mention those living nearby who are going to be affected by the noise, traffic jam and pollution caused by the stadium.
Why not let the teams crowdfund and build their own stadium like any other risky venture without capital?
> The bottom line here is very simple: The cost of building and maintaining these facilities should be borne by the people who attend these events via their ticket purchases, and not the people of an entire state and/or metropolitan region, the vast majority of whom will never set foot inside these enormously costly structures.
The article is arguing from a perspective that amenities such as stadiums should be user-pays. There's an alternative viewpoint though; it could be a principle beneficiary-pays. Who benefits? Well for example the land values in the surrounding area are likely to rise, benefiting land owners through no effort of their own. If a portion of this windfall gain could be captured via say a land value tax, then that tax could partially fund the stadium in a fair way. But I agree with the author that subsidies through income tax seems unfair.
I guess this would be similar to the way a lot of sports arenas are built. The public foots the bill to build it, and the team gets a cheap 20-year lease to use it. And the public the gets a sports team.
Why doesn't the city buy lavish buildings for other wildly profitable businesses? Professional sports don't need our tax money, they merely want it. If sports enthusiasts want to contribute money to the football stadium fund, they are free to.
From where I'm sitting, forcing those that enrich themselves from publicly-funded stadiums to shoulder the costs (if not all of them, than substantially more of them) is better than extorting communities to pay excessive amounts for dubious returns. Which one of those is wasting taxpayer money, again?
You could tweak the idea however you like. Whatever portion of the stadium is publicly funded could entitle the community to a matching portion of revenue generated from stadium events, for example.
At any rate, the idea (from both Easterbrook and myself) is more philosophical and humorous commentary.
Agreed. My thing is, if a sports stadium is gonna be built with public money, it should belong to the public and the team owner should have to pay rent and/or revenue share. Otherwise, why should a billionaire (or group of wealthy people) get a taxpayer-funded stadium for them to print money with?
What is the need for nationalization before a city should foot the bill? This isn't to say that cities should pay for a stadium, but there are definitely dynasty franchises that are guaranteed to generate income for many years. Would I build a stadium for the Rams? Not likely. Would I build a stadium for the Patriots? Immediately.
There is no question that public stadium subsidies are almost always a bad investment. However these type of articles never take into consideration that people generally like sports teams and want them to stay in the same region. It also isn't just people who attend the games or businesses around the stadium. A local sports team, unlike nearly any other private business, provides a huge but unknown amount of utility to a wide range of residents who never pay for a ticket or a piece of merchandise. Is it unreasonable for a sports team to want to benefit from that free utility?
Politicians shouldn't buy all of these stupid economic arguments for a simple fact they are often wrong. But governments aren't businesses. They don't have to make the smart economic move on every single decision. Creating a public park is rarely a smart economic move, but cities do it because that is what residents want. Politicians who let a sports franchise leave town without putting up a fight in negotiations are often quickly voted out (as well as politicians who offer too many incentives for a team to stay). So the people clearly want to keep teams when the cost is reasonable. The problem is what is "reasonable", especially when there is another city a few states over that has a slightly more generous definition of "reasonable"?
TL;DR - It is more complicated than "sports stadiums = bad" but these discussions rarely get deeper than that.
Well, they (and the others) should be getting even less. States or cities subsidizing stadiums isn't as beneficial as originally thought. Those making obscene amounts of money from a public resource should probably contribute more to the infrastructure required to make that money.
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