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.

For text:

http://www.huffingtonpost.com/ilya-shapiro/sports-stadiums-taxes_b_1537177.html

 

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