NCPA - National Center for Policy Analysis


April 3, 2009

The recession is drastically shifting the decades-long debate over the value of subsidizing sports stadiums.  Local governments, which once had cash to burn, are suddenly heavily squeezed.  Consumers, once willing to fork over more money for seats in showcases, are seeing their disposable incomes vanish.  As a result, big facilities, like the one planned in Lee County, Florida for spring training for the Boston Red Sox, aren't receiving the same amount of supports as they usually do, says the Wall Street Journal.

Lee County officials plan to finance the new site from a hotel tax that primarily hits tourists:

  • Yet, when Lee County commissioners signed off on the deal that would require an initial investment of $100 million, the local jobless rate stood at 10 percent and local home values had fallen by half.
  • Nevertheless, advocates argued that the project would pay for itself several times over by generating hundreds of jobs, propping up the reeling construction industry and attracting more tourists to this Gulf Coast community.

But the economics of such projects remain murky, says the Journal:

  • Supporters point to a 2000 Florida-funded study estimating that a county derives $25 million in annual economic benefits by hosting spring training; a 2008 study estimated that the Sox could generate $45 million in annual benefits.
  • However, academics dispute those projections, showing that tax and sales revenue can remain stable in counties after they secured or lost major league baseball teams.
  • In Lee County, local taxpayers could be on the hook if the tourist-tax revenue shrinks in the coming years.
  • The County has commissioned a new study, but only 1.3 percent of respondents named spring training as the main reason for visiting the area.

Meanwhile, local government agencies in Lee County have been told to pare costs.  Among those facing cuts are the human-services department, which helps finance local charities, adds the Journal.

Source: Mike Esterl, "The Cheers and Jeers for a Costly New Ballpark," Wall Street Journal, April 2, 2009.

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