stadiums

Why Stadium Subsidies Always Win

Politicians always underestimate the cost and overstate the benefits of stadiums.

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J.C. Bradbury is the author of two baseball books, The Baseball Economist: The Real Game Exposed (2007), and Hot Stove Economics: Understanding Baseball's Second Season (2010). Bradbury, who teaches economics at Kennesaw State University, spoke with reason.com editor Nick Gillespie at July's FreedomFest about the economics of publically subsidized sports stadiums. View a video of this interview here.

Q: You're an economist and you write a lot about sports and big pork projects. There's a massive one happening in Atlanta. Can you tell us about that?

A: Just recently, the city of Atlanta decided it was going to give significant subsidies for the new Atlanta Falcons stadium. The stadium's going to be $1 to $1.2 billion and-

Q: That's what they say now, but by the time it's finished it'll be a little bit more, right?

A: Exactly. And that's one of the things we often find about these stadiums. They always underestimate the cost and overstate the benefits. It always takes longer than they say.

Q: We see this at every level of sports in every part of the country. Somebody will say, "This is a major boon to the local economy, it's going to create jobs, the money's gonna be falling out of the sky." That is never true. Talk about why these stadiums are not actual public works projects.

A: This is a great case of the seen and the unseen. People will see money going into stadiums, people spending their dollars at the stadium and going to the games and buying food. What people don't see is that, really, it's just a transfer from locals. Instead of spending their money on movies or going out to eat, they're going to a sports game. So it looks like it's generating a lot of money. And politicians love it because everyone seems to like sports.

Q: Taxpayers who are sometimes not even in the area where the stadium is located are on the hook for this.

A: Right, especially when you have state governments that are funding it for a city.

Q: Why does this keep happening? Everywhere we turn there's a new publicly financed stadium or a relocation deal going on. Why do we keep getting suckered?

A: Part of the reason is rational ignorance. What are politicians like? Most of the time you're looking at upper-income educated males. Huge sports fans. So if I'm a politician looking into this, unlike a library or a park or some other public project, I'm pretty much guaranteed season tickets for life if I help an owner get a stadium. So there's definitely some individual benefits to legislators and city councilmen.

Also, because of the concentrated benefits to owners and the dispersed costs, you're talking about something like 5 to 10 dollars per year coming out of a taxpayer's pocket. It's not worth forming opposition for. So I think that's why these programs are constantly getting through.

Q: What do you do with the argument, and I hear this a lot, especially in second-, third-, fourth-tier cities, that in order to be a world-class city we need to pay a lot of money out of our pocket? We're already broke, but we need to bust the budget in order to bring a minor league or a major league baseball team or update the stadium. Is there any way to combat that?

A: My main argument is that you need to force politicians to be honest. Try to keep politicians honest, because stadiums don't make money.

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70 responses to “Why Stadium Subsidies Always Win

  1. And politicians love it because everyone seems to like sports.

    Watching others have fun is great fun.

    I don’t get it. I’m going hunting. Toodles.

  2. I think Consol Energy Center was paid for by casino money. Evil casino money. Pittsburgh literally sold its soul to the devil.

    1. *ding* Winner! I’m fine with public financing as long as it’s voluntary financing in the form of a stupid tax like gambling. Anything else, and that includes my beloved consumption taxes, is pure waste and theft.

      1. Yeah, but just make sure it stays voluntary.

        Here in Sunny Minnesota we were told that if we allowed electronic pulltabs, those proceeds would be all that are needed to fund the new stadium for the Vikings. No need at all to dip into the general fund.

        Oops, electronic pull tabs raised $0 (that isn’t a misprint) for the stadium

        So instead we went back to the smoker well and decided to tax smokes and corporations to make up for the shortfall. That isn’t so voluntary.

      2. Taxes on gambling are not voluntary. The only way they could become voluntary would be to give each each person engaged in a gambling transaction the option of paying an extra amount to the government.

  3. Too many people are chomping at the bit to bring the SuperSonics back to Seattle, and of course there seems to be an implicit “with a brand new stadium across from SafeCo” assumption in that. And that in turn leads people to say “well lets make the new stadium have hockey as well and bring a NHL team to Seattle”. All of which we would all pay for, and which would also make the traffic and congestion around the fields even worse than it already is on game days. Yet I see people’s Facebook entries screaming for this or overhear morons at parties talking about how Seattle “needs” an NBA team, with nary a thought on the cost or the hassle. It’s incredibly frustrating.

    1. Have fun with that. Minneapolis is now – in addition to demolishing the metrodome – embarking on another round of bike lanes downtown. So very shortly we will have NFL, NBA and MLB traffic clusterfucks enhanced by fewer actual traffic lanes. AND we get a nice increase in sales tax on top of it. Sheer genius.

      1. That’s exactly what we’re in for if these people get their way. Luckily, after a fever pitch of screaming for this last year, it’s died down somewhat (probably because it’s football season and the Seahawks have the best record in the league). I expect it to flare up again after football is over.

        1. Now that the M’s have Rob Cano, they may make some noise in the summer.

      2. Tundra,

        Don’t forget we are the suckers who ended up paying for the Twin’s new stadium even after the owner was caught:

        a) Telling taxpayers that he would sell to a ownership group in NC. Turned out that the ownership group was a big sham that only put in a bid to pressure MN.

        b) Offering to pay a big chunk of the cost only to have it turn out that the payment was actually a loan from the owner to the state. The state would eventually pay him back for all the money.

        c) Telling MLB he’d be happy to sell them the team so that they could eliminate it.

        And we still bought the owner (Carl Pohlad a billionaire) a new stadium.

        1. Jimbo,

          I haven’t forgotten. Exactly the same shit that the governor and the Wilfs pulled. These deals are getting more absurd, as are the justifications by the politicians and the pontificating by “pro-business” groups. Fuck them.

          Wolves are improving. Care to wager on when they will start whining for a new arena?

          1. I choose Oct 29th

            I actually went to a game this year and the arena was half full. Until this year’s crop decides to play any defense at all, I’m not too worried about blackmail from an NBA champion.

        2. We all know that the city is gun shy to tell the owner to piss off because they don’t want a repeat of the North Star’s fiasco.

      3. Those bike lanes are very useful in the long Minnesota winter, aren’t they.

  4. Q: Taxpayers who are sometimes not even in the area where the stadium is located are on the hook for this.

    Yep! Sort of like when I was in college at UW-Madison and morons would blabber on about the need for a high speed rail train with stops in Milwaukee, Madison and Chicago.

    Basically, the taxes of people who lived outside of Milwaukee and Madison would have been forced to subsidize a train that could not possibly finance itself. This would be done for no reason other than to allow the privileged rich people in Madison to shop on Michigan Avenue once a month.

    My favorite were the people who would talk about that boondoggle as if it would bring money to Madison and Milwaukee.

    Really? What the hell would someone ever need in Madison or Milwaukee that they couldn’t get in Chicago?

    1. AR-15s.

    2. We go up there all the time for music and shopping- half the price and 10% of the hassle of Chicago. In fact, if the expected blizzard peters out tonight, we’re heading up to Fort Atkinson for a concert.

  5. There is no downside for the politician. They get to raise taxes to fund the stadium. Then they get to collect taxes on the income earned and transactions for building the stadium. Then they get to collect taxes on all the income earned from the performances at the stadium for the next 50 years.

    If they were truly altruistic in their desire to have a stadium for the betterment of the people, then they have the taxes earned from the performances at the stadium be given back to the people. Instead they just line their pockets either with the money directly or from the “capital” earned by being a politician with a larger slush fund.

    There are very few things that prevent a politician of a major metro from going after stadium. The reason Los Angeles doesn’t have a football team is less due to politicians desire for all the slush and more due to the problem that there is no place near the city center to put it.

    1. The reason LA doesn’t have an NFL team is that it allows owners to threaten to move the team to LA if the city doesn’t pay for a fancy new stadium. But if an owner actually went through with it, where would the next guy threaten to move to? Portland? Vegas?

      1. Eighteen years they’ve been running that bluff. Every con man alive must envy that kind of a long play.

  6. What the hell would someone ever need in Madison or Milwaukee that they couldn’t get in Chicago?

    A new copy of Mao’s Little Red Book?

    Naah, you could probably get one on any street corner in most parts of Chicago.

  7. OT: If only it were true…

    http://www.politicususa.com/20…..-jobs.html

    1. Hahahahahha.

      So in 1998 when federal government spending was 2 billion dollars less than it is today, why were these poor government employees not having problems doing their jobs then?

      My God! Clinton must have been an anarchist.

      1. It’s because of all the inflation we aren’t having.

        1. The first graph actually contains a line showing what we would expect spending to be through population growth and inflation.

          It’s approximately a trillion dollars less than our current spending.

          I just realized that in my first post I said 2 BILLION but obviously I meant trillion.

          1. I didn’t read the article. I was having a joke at Shrek’s expense.

    2. It is really irrelevant which federal agency, or part of the government, is understaffed or staffed with employees who are dissatisfied, worried about job security, or under attack for doing their jobs.

      Really? So all Federal agencies are equally important and perform equally vital work?

      1. Duh. If it weren’t vital they wouldn’t be doing it.

      2. Interesting tweet battle

        lil ol’ me lol. Ocares 2k pages alone morphed into 20k pages of regulations. how many regs u think are out there? – 21 Dec

        unnamed proggie: Who’s talking abt OCare? Talking abt cutbacks to gov’t employees, but you’re missing the point

        1. There are not limits to the mendacity of these people. Take a look at this:

          Big government? Bloated government? Out of control government that must be reigned in? According to the New York Times the recent jobs report shows that, even while the U.S. population has increased greatly in the past 47 years, the size of government today is smaller than it has been since 1966. The report includes not just the federal government, but state and local government as well.

          “Big government” is less than half the size today, than it was 47 years ago.
          In August of 1966 the U.S. government employed 2,721,000 people. The newest jobs report, released in early September of this year, shows that our ‘big government’ now employs 2,723,000 people. That is just 2,000 more jobs in government today than we had 47 years ago.

          Looking at in terms of population, the truth about ‘big government’ becomes even more clear. In 1966 about 4.3 percent of all jobs were government jobs. In 2013 the government accounted for just 2 percent of all jobs. To clarify that, the supposedly out of control, big government is less than half the size today, that it was almost 50 years ago.

          1. @Randa – Your article is completely wrong and you should remove it. You can orient yourself to correct employment numbers at the National Income & Product Accounts Table 6.4B. Once you do that you will see that in fact the federal government civilian employment is at a record high. You will also see that the #1 largest year for growth of federal civilian employment over the last 60 years was 2010 and the #5 highest growth year was 2009.

            And the response?

            You do realize that part of that growth in 2010 was due to temporary census workers right? According to the US Constitution a census must be performed every 10 years.

            Right, we haven’t had any censuses in the past 60 years other than 2010. And 2009, I guess?

            1. This total lie is also based on completely ignoring government contractors.

              Edward Snowden was not technically a government worker. The company Booz Allen Hamilton gets 99% of its funding from the Federal Government.

              Those people are government employees in everything but name. When your entire job involves doing things for the government, it’s completely ridiculous to not count those people as government employees.

            2. I don’t know where they got their numbers…

              The US Census says that in 2011 there were 3,779,258 full time state government workers and another 1,534,267 part time state government workers.

              They also say there were 2,854,251 federal employees – obviously excluding the military. And contract workers.

              Add in another 10,786,166 local government full time employees…. well, you can see where this is going. That’s 20 million people working directly for the government. At a time when the population of the country was under 180 million. With a predominantly male workforce and a youth-oriented demographic there couldn’t have been much more than 60 million in the workforce. So we are going to pretend that 1/3 of the national labor force used to work directly for the government – excluding military, which would account for another couple million? I don’t think so.

              Even today if you add in military and direct government contractors you get an unhealthy 10% or more working directly for the government at some level. Add on direct dependents such as social security and welfare recipients and dedicated government suppliers like military equipment manufacturers and you’ve got way too many voters getting their meal ticket from the government.

          2. It also ignores state and local governments, ignores government contractors, which is the primary driver of government growth, ignores the fact that a lot of things that used to require menial paper pushers are now done with computer which allows those 2,723,00 workers to be far more intrusive in the daily lives of Americans…ignores spending adjusted for inflation.

            I could go on. Anyone who seriously thinks the government is not larger in 2013 than 1965 is more interested in cherry picking a single statistic than engaging in reasonable debate.

  8. its like the Roman Coliseum, keeps the masses happy and ignorant…so they don’t see how bad things around them really are

  9. So SF dumped the cost of the new 49er stadium on the south bay folks (not for lack of effort by SF politicos to spend SF tax money). But now Oakland isn’t stylish enough for the basketball folks and they think a stadium right on the waterfront would be just ducky!
    Now, why an enclosed stadium would be sited on the waterfront is a question no one has answered, and we (SF taxpayers) are assured that it won’t cost us anything (ha and ha), and as far as objections to traffic, the owners point out that none of the games coincide with Giants games (that stadium is 1/4-mile away).
    Goody; 82 times a year, you can’t use the Embarcadero ’cause Giants games. If they get their way, X more times a year you won’t be able to use the Embarcadero.
    Hey, Oaktown NEEDS you guys! Stay there!

    1. I’m sure Oaktown will want to build something if the Oakland A’s abandon them for San Jose.

  10. “I’m pretty much guaranteed season tickets for life if I help an owner get a stadium. So there’s definitely some individual benefits to legislators and city councilmen.”

    Being able to take the people you want to influence out to a sporting event is a huge benefit. It’s not about sitting there, watching the game, and making local politicians feel like a big shot either. It’s like the benefit of taking a girl out on a first date.

    The first time you meet a chick, you don’t try to get into her pants. You ask for her phone number. You ask if you can buy her a cup of coffee. Then maybe you ask her out on a date. After a date, when she knows you better, then maybe you have a chance.

    Making friends and influencing people is like that, too. One doesn’t simply call up an official and ask them to work with you on a problem. People don’t even bother to return your calls if they don’t really know who you are. And if they help you, how do they know you’re not going to embarrass them in public? Ask them on a date first!

    That’s what all those luxury boxes are about. They’re the deal making equivalent of parking on lovers’ lane. You go into the VIP buffet at a Lakers’ game, and it’s all Hollywood stars, music people, hot chicks, and commercial real estate, and they’re all working to close a deal.

    Yeah, that’s why local politicians want a new stadium with more luxury boxes–more dates is better!

  11. The fad in Penna. is for mid-size towns to host rookie league baseball teams. It is usually easier to stop such stadium boondoggles because the supporters can’t as easily make the claim of visitors money flowing in. I helped stop one such effort with just a couple letters to the newspaper – use “Traffic congestion, noise” as one important issue to rile up the locals. Then taxes. And, we were lucky, the guys who wanted to start the local team were well-known millionaires, so it was easy to paint them as crony capitalists looking for taxpayer handouts.

  12. With big screen TV’s and the internet why the hell should anyone (except a few of the truly deranged) care where a team plays?

    I pissed a lot of my buddies off when the Vikings were whining for a new stadium. They were all worried that they’d go to LA. I told them that that was fine.

    In 98 I was working in Tokyo and was able to watch that season from there just fine. I was also able to read the local sportswriters online too. It was pretty much exactly like I follow them now. I sit in my house and watch them on a big screen HD tv, drink beer I like for a reasonable cost and best yet … if they stink I can just stop watching and go have fun outside.

    I get that in the old days, you wouldn’t be able to watch all the games and the local newspaper wouldn’t devote in depth coverage to them. But all that has changed.

    1. I stream all my games from wiziwig forum links. Often I get English feeds, and let me tell you there’s something… interesting about hearing a British accent commenting on a football game.

      1. It can’t be as bad as listening to Gus Johnson do a soccer game. 🙁

        I forget which Olympics it was, but I heard a Radio Australia commentator doing a baseball or softball game. The guy was clearly limited in his knowledge of the game, commenting that somebody hit a ball all the way to the “warning area”. But damn if he didn’t do a good job of making the game exciting.

        1. These arrangements mostly just do a bent-pipe of the US network’s coverage during the game but cut to a talking-head setup including Brits and Americans. They seem to know about as much as your typical sportscaster. The strangest part of it is realizing that there must be Brits who stay up to watch the Sunday and Monday night games.

        2. A friend studied in London, and would occasionally catch hockey games.

          Apparently they cut away and don’t talk about it if there is a fight.

          1. “Apparently they cut away and don’t talk about it if there is a fight.”

            So, lots of commercials?

    2. In 98 I was working in Tokyo and was able to watch that season from there just fine.

      And it was so much fun the way that season ended. 🙂

      1. I take all the blame for that. I came back just in time for the playoffs. Sure they beat the Cardinals while I was back, but then came that turd of the NFC championship game.

        1. I’m a Packer fan, so I have no problem with the way that game ended.

          Or the 2009 NFC Championship game. 😉

  13. Start working at home with GOOGLE!YAHOO. ABCNEWS AND MORE GLOBAL SITES… It’s by-far the best job I’ve had. Last Wednesday I got a brand new BMW since getting a check for $6474 this – 4 weeks past. I began this 8-months ago and immediately was bringing home at least $77 per hour. I work through this link,
    http://www.cash46.com

  14. I keep waiting for some politician to try to seize a sports franchise under Eminent Domain or Asset Forfeiture, less because I think he should be able to than because either the locality ends up with the franchise, duplicating the arrangement of Green Bay (tho only rational ownership arrangement in the NFL) or you get a legal decision that starts to undermine Asset Forfeiture and/or Eminent Domain.

    1. Seeing as it has already been attempted, that seems likely.

      OAKLAND CITES EMINENT DOMAIN IN EFFORT TO REGAIN FOOTBALL TEAM

    2. With all the money that flows into these teams from the localities sports franchises are the property that I would be least concerned about being seized. That’s what happens when you deal with the devil. Sadly, any court cases would likely revolve around the special nature of the major league monopolies rather than the propriety of eminent domain.

  15. These thieves make it their job to destroy cities and lives.

  16. If the public is financing the stadiums, can the public have an actual ownership interest in the teams, too?

    1. Because – as usual – the Packers screwed up everything.

      It is actually against the NFL charter to have a team owned by the public.

  17. I’m looking forward to the FCC rule change that may make it much harder to locally blackout NFL games that don’t sell out (amazingly, this is mandated by regulation). Link: http://www.cbssports.com/nfl/e…..ckout-rule

    It’ll be interesting to see if the NFL can force the networks continue this policy after the rule is repealed.

    1. Damn, I always thought it was just something the NFL insisted on in its agreements. I say get rid of the rule, then.

    2. When I was bitching and complaining about the Vikings stadium, one of my suggestions was to build it in the Iron Range.

      For those of you who don’t pay attention to the internal political machinations (shame on you) of Sunny Minnesota, the Iron Range is a stronghold of the state Democratic party.

      One of my arguments was that if we built it far away from the major metropolis of the Twin cities, we would be immune from any blackouts.

  18. that makes no sense at all dude.

    http://www.PrivacyTru.tk

  19. I’m surprised nobody has mentioned the influence of labor unions. Building a stadium is a nice big piece of make work. This helps neutralize the opposition from the far left, which tends to oppose stadium build on principle (that principle being they don’t like sports).

    1. Kevin47|12.21.13 @ 10:33PM|#
      “I’m surprised nobody has mentioned the influence of labor unions. Building a stadium is a nice big piece of make work.”

      I remember reading about the Superdome in NO; the comment was ‘the only thing that matters is who’s writing the insurance; all else is commentary’.
      So it’s not only the unions.

  20. When I was a young teen I remember being excited about getting a publicly owned stadium, but then was disillusioned when I found out that you also had to pay to get in. Why do we still have to pay to get in if we OWN it, I kept thinking. It would be a good deal if we got in free, but otherwise it was a rip off.

    So I’ve never liked taxpayer built stadiums since I was fourteen.

  21. thats only lucky i think

  22. thats only lucky i think

  23. thats only lucky i think

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  25. Emergency Management Agency, which is responsible

  26. ou write a lot about sport

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