How timely – the Atlantic has an column up about the risky economics of sports stadiums. (Stadia?)
Time after time, politicians . . . approve public funds, selling the stadiums as public works projects that will boost the local economy and provide a windfall of growth.
However, according to leading sports economists, stadiums and arenas rarely bring about the promised prosperity, and instead leave cities and states mired in debt that they can’t pay back before the franchise comes calling for more.
“The basic idea is that sports stadiums typically aren’t a good tool for economic development,” said Victor Matheson, an economist at Holy Cross who has studied the economic impact of stadium construction for decades. When cities cite studies (often produced by parties with an interest in building the stadium) touting the impact of such projects, there is a simple rule for determining the actual return on investment, Matheson said: “Take whatever number the sports promoter says, take it and move the decimal one place to the left. Divide it by ten, and that’s a pretty good estimate of the actual economic impact.”
Others agree. While “it is inarguable that within a few blocks you’ll have an effect,” the results are questionable for metro areas as a whole, Stefan Szymanski, a sports economist at the University of Michigan, said.
One economist expands on the topic at ThinkProgress:
The main problem, I think, with the public financing of sports stadiums isn’t that they happen, but that they happen so often because of how they are sold to taxpayers. Developers, team owners, and other interested parties love to sell stadiums as a major economic investment that will spur so much growth that they will ultimately pay for themselves. But as Matheson and other economists told us for the piece, that simply isn’t the case. These stadiums come at a huge cost, and the public money that is spent on them is diverted from funds that would otherwise pay for public services — firefighters, police officers, public pensions, roads and bridges, or any number of things that we use but don’t notice in everyday life.
If taxpayers knew the real cost of stadiums, they might choose to keep paying for police officers, firefighters, and other public services instead of spending $4 billion on professional sports facilities. Or maybe they wouldn’t. Maybe fandom is such that we would still prioritize a sparkling new arena or stadium even while we’re cutting those services. The point is, we don’t know, because we never get that discussion.
We should make the politicians who sign off on these projects sign pledges that they’ll never accept free hospitality at the stadiums they’re pledging taxpayer money for. Then see how urgent these projects are.