Winners And Losers In The Sports Stadium Game
June 25, 2001
The Miami Marlins baseball team wants a $400-million-to-$500-million downtown stadium. The Miami/Dade County government has voted to contribute $100 million toward the new stadium, and the Florida state legislature is considering a further $150 million. Even the federal government may subsidize the project by issuing tax-exempt bonds for much or all of the construction debt.
Should professional sports stadiums be tax subsidized? Proponents justify large public subsidies for new stadiums with the argument that such expenditures carry economic benefits for the local economy. However, according to a new report from the James Madison Institute, on the whole, expensive stadiums are not worth the investment.
Relying upon the analyses of several specialists in economics and professional sports, the report concludes:
- The additional revenue a team receives from a new stadium cannot cover both additional profits for the team and the costs of the stadium; hence, team owners look for others to cover the costs, while they capture more profits.
- The net economic development or even the net economic spillover benefits of having a major-league team in a city appear to be miniscule at best.
- The main social economic benefit of having a major-league team in a given locale appears to be for fans who rarely attend games but enjoy following the team in the news and on free TV.
The main losers in this system are the citizens who (a) contribute through taxes to the subsidies, (b) relinquish social services or (c) suffer the negative external effects of the team/stadium such as congestion or community displacement.
Source: Charles P. Rock, "The Case Against Public Subsidies for a New Florida Marlins Stadium," Backgrounder, April 2001, James Madison Institute, P.O. Box 37460, Tallahassee, Fla. 32315, (850)-386-3131.
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