Why Stadium Subsidies Always Win
Politicians always underestimate the cost and overstate the benefits of stadiums.
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.