Major League Boondoggles

An interesting article in Sunday’s Boston Globe explored the thinking behind the massive taxpayer subsidization of major league sports teams and stadiums, despite an abundance of evidence that such efforts fail to create jobs or spur economic growth:

For a decade and a half, the belief that sports teams were economic drivers helped persuade cities and states to shower billions of dollars on major league sports teams, most of it to build state-of-the-art stadiums like the Detroit Tigers’ Comerica Park, the Seattle Seahawks’ Qwest Field, and perhaps most famously the Baltimore Orioles’ Camden Yards-the 1992 ballpark that set the standard not only for how ballparks would look, but how they would be built and paid for. “Build the Stadium,” went a 1997 slogan for a new San Francisco football stadium, “Create the Jobs!” But Menino isn’t the only one to have had second thoughts in recent years about the wisdom of such largesse. Bitter public disputes have broken out in a few other sports cities over whether to give public funds to the local team. The most recent ballpark to be built, St. Louis’s new Busch Stadium, was paid for almost entirely by the Cardinals after city and state officials refused to commit public funds. A proposed Manhattan stadium for the New York Jets died last year when the state government refused to chip in the asked-for $300 million. The political battle over the funding of Miller Park, in Milwaukee, was so vitriolic that former Wisconsin governor Tommy Thompson refused to set foot in it for years after it was built. This new skepticism of public sports team funding is thanks in part to a small community of economists who have taken up and methodically rejected many of the claims made about the economic benefits of major league sports teams: that they create jobs or bring money to local businesses or otherwise spur economic growth. “Generally speaking,” says Andrew Zimbalist, a professor at Smith College and a leading sports economist, “the independent research suggests that we can’t anticipate any economic impact” from sports teams and stadiums. . . . . As for new jobs, sports teams and their stadiums do create them, but remarkably inefficiently, according to Roger Noll, an economics professor at Stanford University and co-editor, with Zimbalist, of “Sports, Jobs, and Taxes” (1997), one of the most comprehensive works on the public funding of sports. In Baltimore, he says, the cost per job created by Camden Yards was $125,000, whereas for the city’s other urban redevelopment programs it was $6,000 per job. And $125,000, according to Noll, is actually pretty efficient for a sports stadium. University of Chicago economist Allen Sanderson puts it another way. “Cities would be better off,” he says, “if the mayor were to go up in a helicopter and dump out $100,000.”

According to the article, there are several reasons that cities still fork over gargantuan sums for stadia, despite the paucity of economic justification for them:

  • Monpolistic major league sports organizations limit the supply of teams, driving up the “price” cities are willing to pay to have them (e.g., subsidies, land deals, stadium lease deals);
  • Politicians see major league sports teams and shiny new stadia as status symbols worthy of public funding;
  • Though they’re financial losers, stadiums can serve as catalysts for urban redevelopment and revitalization; and
  • Many people simply like sports and value them in a way that transcends traditional cost/benefit analyses.

It’s great to see the Globe take on this topic, as taxpayers in numerous cities have been sold a bill of goods over the last two decades. For more on the folly of taxpayer-subsidized stadiums in specific cities, check out Sam’s op-ed on Indianapolis’ proposed football stadium and convention center expansion, as well as Adam’s op-ed and Jacob’s article on D.C.’s baseball stadium.