NCPA - National Center for Policy Analysis

Public Money for Sports Stadiums Can't Be Justified

January 10, 2002

From 1953 to the present, more than $20 billion in public money has been lavished on construction of sports stadiums in the U.S. That is two-and-a-half times what wealthy team owners have contributed.

Proponents of taxpayer financing of stadium facilities try to justify their desires on economic grounds -- primarily that they contribute to cities' development and economic well-being of other businesses and citizens themselves.

But in study after study, economists have reached the conclusion that subsidies for stadiums yield negligible economic benefits.

A good overview of the economics literature is provided by John Siegfried of Vanderbilt University and Andrew Zimbalist of Smith College in "The Economics of Sports Facilities and Their Communities," published in the summer 2000 issue of The Journal of Economic Perspectives.

  • They argue that there is little reason to suspect that a new sports stadium will generate sufficient revenue to justify its cost.
  • If it did, the owners would be willing to make the investment themselves -- which they are not.
  • The extra money fans spend at the ballpark means they spend less money at movies, concerts, plays, golf courses and restaurants -- since the money people spend on entertainments is fairly inflexible.
  • Per capita income might even decline in the cities that subsidize stadiums because so much of the income garnered by players and owners is spent outside the host city -- only 29 percent of pro basketball players, for example, live where they play.

Former New York City Mayor Rudolph Giuliani has proposed spending nearly $1 billion in public funds to subsidize new stadiums for the Yankees and Mets -- enough to increase school spending in the city by $1,000 a student or cover the fire department's entire budget for one year.

Even longtime sports fans are becoming fed up. As one noted, "We are dunces if we continue to support them while they pull the wool over our eyes."

Source: Alan B. Krueger (Princeton University), "Economic Scene: Take Me Out to the Ballgame, But Don't Make Taxpayers Build the Ballpark. The High Cost and Low Benefit of Sports Subsidies," New York Times, January 10, 2002.

For text

http://www.nytimes.com/2002/01/10/business/economic-scene-take-me-ballgame-but-don-t-make-taxpayers-build-ballpark-high.html?scp=1&sq=Economic%20Scene:%20Take%20Me%20Out%20to%20the%20Ballgame,%20But%20Don't%20Make%20Taxpayers%20Build%20the%20Ballpark.%20The%20High%20Cost%20and%20Low%20Benefit%20of%20Sports%20Subsidies&st=cse

For JEP abstract

http://www.aeaweb.org/jep/contents/Summer2000.html#siegfried

 

Browse more articles on Tax and Spending Issues