Want Economic Stimulus? Don’t Build a Sports Stadium!

by Warner Todd Huston

For the last few decades sports teams across the country have nosed up to the public trough and demanded that states and cities chip in millions for the construction of new sports stadiums. To justify the public expense the claim has been made that these monstrous construction projects bring a wealth of jobs and spending on entertainment and are a boon to any city that will fund them. But are they? Do these multi-million dollar projects bring such lucrative benefits to the cities and states that pay through the nose for them?

dodger-stadium-pic

For many years the “economic boom” idea of building stadiums seemed to make sense and city after state pumped billions of taxpayer’s dollars into such projects. But starting in the early 2000s, economists began to have enough data to show that the claims of beneficial end result of building stadiums was not as advertised.

In fact, these days economists that disagree amongst each other about so much have developed a wide consensus based on the belief that sports teams in and of themselves are not great economic engines for a city and that building giant new stadium complexes are not the automatic boon to the area such as they were sold.

The reason that these stadiums are not as great an investment as previously thought is threefold according to Andrew Zimbalist, the Robert A. Woods professor of economics for Smith College and renowned sports economist. Zimbalist spoke in early 2009 to Freakanomics author, Stephen J. Dubner in the pages of The New York Times.

For one thing, Zimbalist says, the money that will be spent on the events held at the new sports arena or stadium is money spent by local residents. This is not new money but money that would simply have been spent on other entertainment in the metropolitan area if the stadium didn’t exist. Secondly, the big money that goes to players, owners and investors does not stay in the area but is invested elsewhere. Third, the city or state is often chipping in up to a third of the continuing costs and this is tax money wasted, not revenue made.

The third point is most important to dwell upon in this time of one of the worst economies in 70 years. “’… in the typical case,’ Zimbalist says, ‘the city and/or state contributes roughly two-thirds of the financing for the facility’s construction and takes on obligations for additional expenditures over time.’”

There are other problems with these projects, as well. For one thing, the jobs created are for the most part low paid, part time and offer no benefits. Because of this “jobs” are not really created by a sports complex. Also, very few ballparks have been much of a boon to surrounding businesses. Few people that attend sports events stay around the area in which the stadium sits to shop, eat, or look for other entertainment. They go to the park and then they leave. About the only thing locals get are traffic nightmares and litter.

Yet, with all these solid negative economic facts on the table, cities and states still flirt with the idea of sinking millions of taxpayer’s money into these projects. Los Angeles, for instance, is discussing a new downtown stadium giving Staple’s Center owner AEG environmental passes and buckets of money in order to “bring back the NFL” to the city.

The entire state of California is over the edge of insolvency, her politicians can’t even agree on a budget to reverse her collapse, yet L.A. wants to spend millions of city, country, and/or state tax dollars on a dubious project for a team they don’t even have. This way lies madness.

So, where is the wisdom in this waste of taxpayer’s money? As Edmund Burke once asked, “what is liberty without wisdom, and without virtue? It is the greatest of all possible evils; for it is folly, vice, and madness, without tuition or restraint.” It is clear that these stadium projects are “follies” not worth the expense. If you want a stadium don’t hide behind false claims and warped economics. Just say you want a stadium and everyone will just have to pay through the nose for it. Let’s all drop the false pretense, shall we?


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Posted Jul 10th 2010 at 5:31 am in Earmarks, Economics, Featured Story, Local Government, Politics, taxes | 334 Comments