NCPA - National Center for Policy Analysis

Could NAFTA Rid U.S. Of Stadium Subsidies?

August 23, 1999

Hard-pressed American taxpayers who want to abolish stadium subsidies for well-heeled sports teams may find an instrument to aid them in an unlikely place -- the North American Free Trade Agreement. And Canadians may become their allies, riding that particular pact to their rescue.

Canadians are upset that U.S. cities can lure away their hockey teams with giveaways like publicly-funded stadiums and special tax breaks, which teams in their country rarely get. Also, Canadian team owners pay much higher tax rates than American businesses in general.

A trade law expert says NAFTA creates a continental market and prohibits offering premiums in one part of the market at the expense of another part of the market. Whether Canadian sports associations will sue the U.S. over the stadium issue is uncertain -- since they would most likely favor getting the same kind of subsidies from their own government, observers report.

Nevertheless, stadium subsidies have become a hot political topic here, with an overwhelming majority of taxpayers opposed to the give-aways.

  • This month, some 80 percent of respondents to a Howard Jarvis Taxpayers Association poll in California said they opposed stadium subsidies.
  • Four out of five Minnesota residents gave a similar thumbs down to subsidies in a Star-Tribune-KMSP TV poll in July.
  • Three-quarters of those surveyed by the Texas Poll in May opposed sports-facility subsidies.
  • Moreover, nine states have called upon Congress to intervene in the subsidy wars between sports teams and other interests.

Sen. Pat Moynihan (D-N.Y.) wants to sharply limit the use of municipal bonds, which are exempt from federal taxes, to finance stadium construction -- noting a report from the Congressional Research Service that found "almost all stadium spending is spending that would have been made on other activities in the U.S., which means that benefits to the nation as a whole are near zero."

While supporters of stadium subsidies claim that sports teams create jobs, study after economic study has found that the impact is not great -- and may even be harmful. Basics such as good schools and roads are much more likely to attract companies to locate in one city over another.

Source: John Berlau, "Stadium Subsidies Striking Out," Investor's Business Daily, August 23, 1999.


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