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Are you ready for some (subsidized) football?

by Christopher Koopman on September 5, 2013

in Government-Granted Privilege, Study of American Capitalism

This weekend marks the start of the NFL season, and with it comes the fanfare and attention that being the most lucrative professional sport in America has come to demand.  However, this success has fueled the lucrative stadium financing deals that have been secured by these teams over the past 20 years, often at the expense of taxpayers.

Olympic Stadium London - Anniversary (Blended)Take, for example, the stadium deal given to the Cincinnati Bengals by Hamilton County in Ohio. Still the most lucrative subsidy in the history of professional football, taxpayers were left paying 94 percent of the $449.8 million tab. This amount doesn’t include other costs in the generous lease, such as the agreement by the county to cover all of the costs of operation and capital improvements. The lease also leaves taxpayers on the hook to fund projects that have not even been invented yet, such things as “ticketless entry systems,” “stadium self-cleaning machines,” and even “holographic replay machines.”

The Cincinnati Bengals are certainly not alone in getting these sorts of publicly-funded gifts. The Buffalo Bills recently obtained $95 million in subsidies for stadium upgrades.  In return, the state of New York will be given a luxury suite to promote the sorts of corporate handouts that the state can give to other businesses.  Meanwhile, the Atlanta Falcons will receive $200 million from the city of Atlanta toward a new stadium, funded through bonds backed by the city’s hotel-motel tax.  The Kansas City Chiefs and the Carolina Panthers have also recently received generous taxpayer-funded stadium deals.  The list goes on.  Nearly every NFL stadium built since 1997 has received some public funding.

And what do these deals really do to promote economic development?  Almost nothing.  According to economists Robert Baade and Victor Matheson, researchers looking into the economic impact of new sports facilities “have almost invariably found little or no economic benefits.”  This should come as no surprise to economists and policymakers.  Dennis Coates and Brad Humphreys have surveyed the literature and found “a great deal of consistency among economists doing research in this area. That . . . sports subsidies cannot be justified on the grounds of local economic development, income growth or job creation.”

Why, then, do politicians continue to hand out these privileges at the taxpayers’ expense? One answer is that these sports teams are well-connected and well-organized, giving them an inherent lobbying advantage over a multitude of unorganized taxpayers.  For example, the owner of the Miami Dolphins has created an active political group to attack lawmakers he blames for a failed measure to provide taxpayer support for a $350 million upgrade to Sun Life Stadium.

Another possible explanation is that people love their hometown teams, and most politicians are eager to associate themselves with anything that appears popular.  Even if that means giving these teams handouts at the taxpayers’ expense.

So as the football season begins and continues to play out over the next 6 months, you ought to take some time to enjoy your hometown team.  Odds are, you are already paying for it.

  • Stupid is as stupid does!

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  • Mike

    What are the economic benefits of having a sports team at all? I’d assume that there is always the inherent threat…..”help me build a new stadium so I can make more money. If not I might move the team….”. These days it doesn’t seem like an idle threat. So, is there an overall economic gain or loss to a community for having a sports team? Jobs (part time/full time/pay levels), taxes, additional law support, costs to the community, etc. How much money is brought into the community vs. how much leaves the community? What amount of money do the sports teams invest into their communities? Even if this ended up as a financial benefit to a community I’d have to think it still ends up with the haves and have not’s or those that are paying do not get a proportionate share of that benefit….but I’m guessing……

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