Politicians and Team Owners Snooker Sports Fans and Taxpayers
June 5, 2012
Minnesota's governor just signed a deal that state lawmakers struck with the owners of the Minnesota Vikings to build the team a new stadium. But throughout the negotiations, an important party was missing: taxpayers who are stuck with the check, says Ilya Shapiro, a senior fellow at the Cato Institute.
The specifics of the Minnesota deal highlight how large the burdens of these massive stadium-financing plans are.
- The stadium costs $975 million on paper, with over half coming from public funds.
- $348 million will come from the state and $150 million will come from Minneapolis -- the city government will pay for its share through the implementation of a new city sales tax.
- In return, the public gets an annual $13 million fee and the right to rent out the stadium on non-game days.
In order to sell the deal to the public and to local officials, signing officers made the same outlandish economic claims that always accompany stadium deals:
- Local establishments will supposedly see a rise in game day sales of $145 million.
- Jobs will be created, including 1,600 in construction worth $300 million (a projection that pegs each job as being worth $187,500).
- Tax revenues will increase $26 million.
The emptiness of these promises has been demonstrated time and again by numerous economic studies of similar deals.
- Dennis Coates and Brad Humphreys performed an exhaustive study of sports franchises in 37 cities between 1969 and 1996 and found no measurable impact on per-capita income.
- The only statistically significant effects were negative ones because revenue gains were overshadowed by opportunity costs.
- An older study looked at 12 stadium areas between 1958 and 1987 and found that professional sports don't drive economic growth.
- A shorter-term study looked at job growth in 46 cities from 1990 to 1994 and found that cities with major league teams grew more slowly.
- Stanford economist Roger Noll has noted that the majority of attending fans come from within a 20-mile radius, such that money they spend would otherwise have gone to another form of local entertainment or recreation.
Source: Ilya Shapiro, "Politicians and Team Owners Snooker Sports Fans and Taxpayers," Huffington Post, May 22, 2012.
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