NCPA - National Center for Policy Analysis

Bread and Circuses

August 5, 2003

The recent wave of sports stadium and arena construction is costing the U.S. Treasury more than $100 million annually because the projects have been financed with bonds that are exempt from federal taxes. This method of borrowing money is more often used by state and local governments to build roads, schools and other public projects.

According to the Washington Post:

  • At least 38 major league sports venues have been built or rebuilt using nearly $7 billion in tax-exempt financing since 1990.
  • Stadium construction plans for the District of Columbia and Virginia are likely to cost the Treasury $3 million or more annually.

All of this money, critics of this type of financing say, could be better spent.

The $100 million lost to stadium construction plays a small role in the $2.1 trillion federal budget. But critics of the exemption say the lost revenue is enough to cover some significant public programs. To take one example, $100 million is the amount the Centers for Disease Control and Prevention plans to distribute to help states boost their smallpox vaccination programs.

Some economists take aim at this federal subsidy, saying it generally serves no national purpose. For although it might make sense for a local government to subsidize a stadium -- either as a cultural attraction or in the belief that it will spur redevelopment -- they see no federal benefit in helping sports teams pit one city against another.

Source: Peter Whoriskey, "Stadiums Are Built On Federal Tax Break," Washington Post, July 28, 2003.

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