The Super Bowl, Brought To You By Taxpayers
The National Football League is propped up by a wide range of public subsidies.
When the New England Patriots and Philadelphia Eagles meet Sunday for the Super Bowl, they'll play inside the newly completed U.S. Bank Stadium near downtown Minneapolis. The $1.1 billion stadium was built with almost $500 million from state and local taxpayers, with the city paying an additional $7.5 million each year for operations and maintenance.
Taxpayers got soaked again when the National Football League (NFL) picked Minneapolis to host this year's Super Bowl. The city had to negotiate against the NFL's 153 pages of specifications, which include 35,000 free parking spaces within one mile of the stadium, shouldering the cost of providing police and emergency services, and priority over all other city snow removal in case of a major storm.
No matter who wins the Super Bowl, the 2017-2018 football season will be remembered for headlines about off-field issues, from how it treats concussed players to whether those players stand or kneel for the national anthem. Yet public subsidies for the sport and its annual championship game are often glossed over. That should change.
People who care about the NFL's role in society—and taxpayers who care where their money is spent—should question the generous government support lavished on the NFL and its teams. Money that is spent on football stadiums could instead provide safer neighborhoods, better schools, improved infrastructure, or enhanced access to health care in their local communities.
The NFL and team owners often shakedown taxpayers by threatening to relocate a beloved team. By design, these threats create bidding wars between municipalities fighting over limited franchises. Faced with the threat of being remembered as the hapless losers who cost a city its beloved hometown team, mayors, city councils, governors and state legislatures all too often respond by offering lucrative "inducement payments." That's exactly what happened in Minnesota, where NFL commissioner Roger Goodell personally warned state lawmakers in 2012 that the Vikings could skip town if the team didn't get a new stadium.
More recently, an enormous taxpayer-funded bribe convinced the Oakland Raiders to move to Las Vegas. The city promised $750 million, paid for by a hotel room tax increase of 0.88 percent, towards an ultra-luxury $1.9 billion stadium. The Raiders' former owner, the late Al Davis virtually wrote the NFL's playbook on extorting money from local communities. In 1980, Davis was refused public funding to renovate the Oakland Coliseum, so he moved the Raiders to Los Angeles two years later. In 1995, Oakland coaxed the Raiders back north with $200 million in taxpayer money for stadium renovations. But in 2015, Davis' son threatened to move the team again unless the city paid for a new stadium.
In an attempt to prevent a repeat of history, Oakland and the state of California offered the Davis family 55 acres of land adjacent to the Raiders' current stadium to be developed as a stadium and mixed-use retail and residential property. They also offered to invest heavily in transit links to make that property development more valuable, including improvements to mass transit highways, and parking. In the end, the offer could not match the $750 million in cash offered by Las Vegas.
For two decades after the Raiders departed, the NFL held the threat of a move to Los Angeles over many cities, extracting massive subsidies. Voters in San Diego eventually rejected a 2016 ballot measure to pay $1.15 billion for a new $1.8 billion stadium with a staggering 4 percent hotel occupancy tax. In response, the Chargers announced that they were moving to LA. The City of San Diego had already paid $68 million to renovate the Chargers' football stadium in 1997, and was spending an additional $5-7 million each year for repairs and to subsidize operating costs.
NFL Commissioner Roger Goodell stated, "I know [Chargers owner] Dean Spanos and his family did everything they could to try to find a viable solution in San Diego." Forbes estimates that the Spanos Family is worth $2.4 billion, which should raise questions about whether they actually did "do everything they could."
In Los Angeles, the Chargers will share a new home with the Los Angeles Rams, which relocated from St. Louis despite the offer of $400 million in public financing towards a $1.1 billion riverfront stadium.
Paradoxically, the NFL used threats of relocation to Los Angeles to extract millions of dollars in subsidies from taxpayers elsewhere, but the new Chargers-Rams stadium will involve no direct tax funding. However, the City of Inglewood will ultimately pay an estimated $60 million as reimbursement for the development of roadwork, utilities and public parks on the site of the new stadium. In addition, the city will also reimburse costs of security, medical services, and shuttles to off-site parking during stadium events, which are estimated at about $8 million a year.
While damage to local pride when a team leaves is salient in places like Oakland, San Diego, and St. Louis, the damage to local economies is even worse when mercenary teams stay. When the Atlanta Falcons suggested they might fly away, Atlanta not only gave them $200 million towards the cost of their $1.2 billion stadium, but also pledged an ongoing revenue stream: the proceeds of a 2.75 percent tax on hotel rooms for a full 30 years, with no cap on how much money that could be over time. The total bill is expected to be about $700 million. Public funding also accounted for $444 million of the $1.2 billion cost of the Dallas Cowboys' AT&T Stadium, and $620 million of the $720 million cost of the Indianapolis Colts' Lucas Oil Stadium.
Subsidies often don't end once the stadium is built. Over the past decade, local taxpayers paid $263 million towards the $388 million renovation of the Kansas City Chiefs Arrowhead Stadium and $30 million towards $125 million in renovations and upgrades at the Brown's FirstEnergy Stadium, plus an additional $47 million for 10 years of repairs and upkeep. In 2013, the Carolina Panthers' Bank of America Stadium received $87 million of taxpayer subsidies to renovate. In exchange for that gift, the Panthers agreed to be "tethered" to Charlotte for 10 years, with a 6 year "hard tether" involving harsh financial penalties if the team moved sooner. No surprise, with that hard tether expiring in 2019, the NFL has already started the conversation around the Panthers' next home.
Cincinnati stands out as a particularly stark example of the ongoing costs of taxpayer-funded stadiums. In 2000, Hamilton County paid $425 million of the $450 million cost for the Bengals' Paul Brown Stadium. The County has since paid an additional $168 million towards maintenance and operating costs. The team doesn't even pay for utilities. A clause in the stadium contract promises that if 14 other NFL stadiums have a particular feature—like luxury box seats, or a holographic scoreboard—Hamilton County taxpayers must pay for Paul Brown Stadium to have the same amenity.
The stadium deal has been a financial disaster for the county. In 2011, 16.4 percent of Hamilton County's expenditures were related to the Bengals' stadium. That is money that could have been spent on police, schools, roads, hospitals, parks, trash collection, and other city services. Inevitably, the Bengals have already started talking about leaving Cincinnati when their stadium lease ends in 2026.
Glendale, Arizona, finds itself in a similar bind. Local taxpayers paid $308 million towards the $455 million cost of The University of Phoenix Stadium, home of the NFL's Arizona Cardinals. Today, 40 percent of the city's budget goes towards retiring stadium debt. Glendale, meanwhile, has trouble hiring police officers and EMTs.
When cities borrow to build stadiums, the interest on those municipal bonds is deductible on investor's federal income taxes. What is intended as a federal subsidy for local development of long-term infrastructure instead becomes a massive taxpayer gift for team owners. A study from the Brookings Institution showed that since 1990, tax-free municipal bonds have funded 36 NFL stadiums, costing federal taxpayers $1.1 billion, and that federal taxpayers spent a further 2.1 billion to subsidize tax-free municipal bond issuances for other professional sports stadiums.
Outrage over this is a growing bipartisan issue. Republicans and Democrats alike should be disgusted by this corporate welfare that diverts tax money from needed services and taxpayers. In 2017, Sen. Cory Booker (D-NJ) and Sen. James Lankford (R-OK) introduced a bill to remove the municipal bond interest deduction for professional sports stadiums; this measure was part of initial GOP tax reform proposals, but was not included in the final law.
One common justification given for the public financing of stadiums is that they create jobs. Construction and food service workers unions claimed that the new Las Vegas stadium would create 25,000 temporary construction jobs and 14,000 permanent service jobs in the Las Vegas area.
But decades of academic studies consistently find no discernible positive relationship between sports facilities and local economic development, income growth, or job creation. In a 2006 survey of economists by Robert Whaples, 85 percent of economists polled agreed that public funding for professional sports stadiums was a bad idea. In their paper, Sports, Jobs, and Taxes, Stanford University economics professor Roger Noll and Smith College economics professor Andrew Zimbalist find miniscule or negative economic benefits for every stadium they studied. The late University of Maryland Baltimore County economics professor Dennis Coates co-authored a paper with West Virginia University economics professor Brad Humphreys examining every city with an NFL, NHL NBA, MLB, or MLS franchise and found no positive impact on any area's economic economy, and actually found harm to the per-capita income of many cities.
NFL owners have far too much power over their local communities, and the primary cause is clear. Since the NFL merged with the American Football League in 1966, the NFL has had federal permission to flaunt anti-trust laws that apply to almost every other industry. Like any other cartel, the NFL maximizes profits by keeping the number of franchises artificially low. With fewer franchises than there are major cities in the US, the NFL can force cities and states into a never-ending cycle of moving and threatening to move, and profit off the response.
Players, fans, and commentators should take a principled stand for local communities, and against the economic interests of the National Football League and its franchise owners. As for local voters, San Diego has set the best example: Just say no to the NFL.
David Back is the founder of Zoomcar. Brandon Kirsch is the Medical Director of a dermatology pharmaceutical start-up in Colorado.