How to Stop Sports Stadium Madness: Is Fan Ownership the Answer?

March 9, 2012

Owners of major sports franchises have repeatedly sought to employ taxpayer dollars in order to revamp stadiums and subsidize sports teams.  In this endeavor, they claim that taxpayer support for the team will have a net positive return to the community.  This claim, however, is largely unfounded, says Joseph L. Bast of the Heartland Institute.

  • According to a 2008 report by Dennis Coates for the American Enterprise Institute, since 1990, Major League Baseball (with 30 teams) has opened 19 new stadiums.
  • The National Football League (32 teams) has opened 17 new stadiums and done major renovations to four others.
  • The National Basketball Association (30 teams) has opened more than two-thirds of its 30 arenas since 1990.
  • With all of these new or renovated facilities in 17 years and the subsidy per facility ranging from $249 million to $280 million, the annual price tag come to about $1 billion a year.

A study by Economist Robert Baade, in which he studied 48 cities and their surrounding metropolitan statistical areas (MSAs) over a 30 year period, found that this enormous cost is rarely paid off.

  • Of the 32 MSAs where there was a change in the number of sports teams, 30 showed no significant relationship between the presence of the teams and real, trend-adjusted, per-capita personal income growth.
  • Of the 30 MSAs where there was a change in the number of stadiums or arenas 10 years old or less, 27 MSAs showed no significant relationship between the presence of a stadium and real, trend-adjusted, per-capita personal income growth.
  • Of the five cases in which results were significant, it was found that four of them (Baltimore, St. Louis, San Francisco/Oakland, and Washington, D.C.) were significantly negative.

To avoid this problem, the fan ownership model demonstrated by the Green Bay Packers should be further implemented, as it eliminates the ability of rent-seeking owners to move a team in response to subsidy incentives.  Supporting this claim is the fact that the Packers are the least-subsidized pro sports team in the country.

Source: Joseph L. Bast, "How to Stop Sports Stadium Madness: Is Fan Ownership the Answer?" Heartland Institute, February 2012.

For text:

http://heartland.org/sites/default/files/02-23-12_bast_on_subsidies_to_sports_stadiums_web.pdf

 

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