NCPA - National Center for Policy Analysis

STADIUM SUBSIDIES CONTINUE DESPITE ECONOMIC DOWNTURN

September 18, 2009

From California to New York, tax payers remain on the hook for billions of dollars in subsidies for stadium projects, even in the midst of the worst fiscal downturn in state and local budgets in decades, says Andrew Moylan, a researcher with the Heartland Institute.

Moylan referenced secondary work on stadium subsidies:

  • New York City taxpayers paid a whopping $1.8 billion in subsidies for construction of two stadiums for the Yankees and Mets; despite the franchises being worth more than $2.1 billion collectively, the teams pitched in just over $800 million.
  • Soon after New York officials dispensed the subsidies, the bottom dropped out of the city's balance sheets, yet in May of 2009, Mayor Michael Bloomberg (R) unveiled a budget loaded with tax hikes to close a gap threatening to approach $5 billion in 2011.
  • In California, despite the states $21.3 billion dollar deficit, the city of Santa Clara struck a deal promising more than $150 million in taxpayer money to help build a stadium for the NFL's San Francisco 49ers, a franchise worth nearly $800 million.

Subsidies hike stadium costs, say researchers:

  • A 2007 study by the National Taxpayers Union Foundation found heavily subsidized stadium projects were significantly more expensive on average than largely privately funded projects.
  • Stadiums where taxpayers bore majority of the cost were $65 million more expensive on average than those for which private entities paid the bulk of the tab.
  • Average taxpayer subsidy per stadium is on the rise; the amount taxpayers paid for each facility rose 41 percent in just the eight years leading up to 2004.

Stadium subsidy advocates often claim such projects drive economic development, however that is not the case.  According to Moylan:

  • Consumers shift their entertainment spending from another outlet to a sports venue; the implication is that instead of going to a movie or a restaurant, a family may decide to attend, say a baseball game, leaving the local theater or sidewalk café with less business than before.
  • Much of the money spent on stadiums goes into the pockets of wealthy athletes and team owners, most of whom live in suburbs far from the communities funding their stadium.
  • The tax hikes most often funding these projects are counterproductive because they destroy more economic activities than the stadium creates.

Source: Andrew Moylan, "Stadium Subsidies Continue Despite Economic Downturn," Budget &Tax News, Vol.  7 No.  8, September 2009.

 

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