Public Subsidies Should Have No Place In Building Private Stadiums

After what I’ve learned on public financing in the development of sports facilities I believe there needs to be more done and policy enacted to severely limit such extensive subsidies. Team owners and leagues operate at high revenues, and they will be able to remain solvent and still operate at a gain without spending tax payer dollars on their personal property. Economic projections of stadium construction are often exaggerated in several ways by proponents and sold to the public and politicians as noble public works projects. Too often these economic impact fantasies fall far short of expectations, as experienced first-hand in Oakland which is still paying off a $70 million debt of a long obsolete stadium remodel.

Relationships of publicly funding private interest projects is not new or a unique concept to professional sports. However, few would consider a new sports stadium in the same category as funding a critical public infrastructure project such as new power lines in a city. Although the power system is privately owned, it provides a vital resource to all citizens. Whether the power company should be privately owned in the first place is another debate in itself. I don’t inherently scorn privatization, and in such a case of bringing electricity to households and keeping the lights on, I fully support subsidies of private interest. Yet the appetite for sports in our country is so ravenous, much too often we have seen the laundry list of public projects in need of economic resources pushed to the back burner and sports facilities built instead. This is largely a result of squeaky wheel lobbying efforts of special interest groups and politicians and these exaggerated economic impact analyses relying largely on intangibles. Owen argues these intangibles are where the real value is for cities and regions, but I tend to side more with critics like Noll, in that the money could often be better spent.

Noll argues because of the monopolistic nature of most professional sports leagues and the limited number of teams, there will always be competition among cities and their willingness to pay for a team. He states, “Monopoly leagues convert fans’ (hence a cities’) willingness to pay for a team, into an opportunity to extract revenues.” By keeping the number of teams below the number of cities that could support a team a league maximizes their profits. Research shows in most cases local and state governments pay over $100 million in stadium subsidy, and in many cases have financed the entire development.

Unfortunately there is not much likelihood of subsidies ending all together. Yet there are many good ideas floating around to counter these proposals, and in some cases like the recent Carolina Panthers and San Francisco Giants stadiums, public subsidies have been majorly limited in comparison to all-out giveaways. For one, cities could organize into some sort of host-city association and collectively bargain together to theoretically counter-balance a leagues monopoly powers. Simply ending federal subsidies and tax exempt bonds that finance projects primarily benefiting private interest is a solution, but a longshot. Antitrust actions have significantly limited the ability of leagues to prevent teams from relocating and as Noll argues if other leagues were to follow the lead of the MLB and create antitrust exemptions, they would be more free to limit team movements. And lastly, good old fashion grassroots citizen movements maybe the best tools constituents have to resist subsidies. Ballot initiatives in Milwaukee, San Francisco, San Jose, and Seattle for stadium subsidies all failed. And though as they all got their new stadium built, the public subsidy was severely limited. . the fans didn’t lose their team and the city still got the new development.