Why Do Taxpayers Keep Subsidizing Billionaire Sports Stadium Fantasies?
Robinson | a Smart Surfaces Coalition feature
For the past fifty years, cities have had complicated relationships with their professional sports franchises. On one hand, being able to host major sporting events, concerts and other activities in state-of-the-art venues puts a spotlight on a city that few other entertainment platforms can match. Millions of fans visit these venues every year and spend billions of dollars in the process.
On the other hand, however, city policy makers have allowed professional franchise owners to essentially extort them into subsidizing new stadiums or face the grim prospect of losing the franchise. Historically, teams from Maryland to California, and all markets in between, have vacated their premises like thieves in the night and relocated to more accommodating locations.
In the last few years alone, Oakland, California has lost two professional sports franchises; the National Football League’s Raiders, and Major League Baseball’s A’s, to Las Vegas. The question however, is “why do cities care?” In the past thirty years over 100 studies have analyzed the impact of stadium developments on local economies and the research overwhelmingly finds that, with few exceptions, the benefits of new stadium developments fall well short of the economic windfall cities are promised, and they almost universally fail to offset the billions of dollars in cost to taxpayers. In other words, billionaire owners reap the vast majority of any accrued benefits while taxpayers are left holding a mostly empty bag.
Yet, the number of stadium deals are accelerating across the country with cities, counties, and state policymakers unable to get enough of them: new professional sports stadium plans are being unveiled in Buffalo, Jacksonville, Kansas City, Milwaukee, Philadelphia, and Tampa Bay as we speak.
One of the primary arguments in favor of stadium developments hinges on the hypothesis that stadiums generate significant peripheral spending; that restaurants, bars, and other local retail establishments benefit from the influx of fans (and their spending) to the stadium. This argument is flawed for many reasons, but the primary reason this logic does not survive scrutiny is that local residents spend the majority of the money these stadiums rake in. Which means that stadiums are not generating “new” revenue, they are simply transferring spending from one part of town to another.
Put another way, as Bradbury, Coates, and Humphries note in their analysis …
[M]ost spending on game tickets, concessions, and associated hospitality near a sports venue would have occurred in other parts of the host jurisdiction without the presence of a pro sports team.
With or without a pro sports team, residents would still visit restaurants. They would still buy concessions, either at a movie theater, or some other entertainment venue. They would still support the local economy, in myriad ways. So, at best, stadium developments are an economic wash for the local economy.
But promised stadium benefits are not just economic. As part of their lobbying efforts to state and local policy makers, pro sports owners tout the educational, health, and quality of life benefits that their multi-billion-dollar playgrounds will provide to local communities. Yet, from coast-to-coast and north-to-south, public schools in these same cities remain chronically under-resourced, the social determinants of health remain obscenely inequitable, and the quality of life for residents is largely unchanged, even for those who reside mere blocks from a stadium.
Take Washington D.C. for example, where the Mayor and City Council recently used a $515 million public sweetener to lure back the pro-basketball and hockey teams who were in negotiations to move across the Potomac River to neighboring Alexandria, VA. Where did the D.C. government get half a billion dollars, and why aren’t these resources being directed toward urgent needs like high crime, unaffordable housing, public health disparities, and worsening urban heat island impacts as marginalized residents suffer from increasingly hotter and unhealthier climate crisis summers?
Because stadiums are an economic wash, and because the other promised benefits never actually trickle down to the communities they profess will benefit, stadium developments are actually a net negative to communities when factors like pollution, traffic congestion, and crime are considered. As communities grapple with the devastating impacts of the current climate crisis, these high carbon-emitting concrete structures provide no relief from extreme heat, and they offer nothing in the way of resilience for communities that are vulnerable to sea-level rise, storms, or flooding.
Meanwhile, in many of these same cities, policy makers bemoan the lack of adequate resources to meet the never-ending cascade of crises including mental health, food insecurity, education shortfalls, crime, and resilience. Yet, somehow, in city-after-city, taxpayers are asked to subsidize, on average, 73 percent of construction costs for new stadium projects.
There are however, three recent stadium developments that offer blueprints for other cities, residents, and developers. The first major development is the recent rejection of a sales tax by Jackson County, Missouri voters – by an overwhelming 58% - to fund the building of a brand new Kansas City Royals ballpark and renovate the current Kansas City Chiefs stadium. Even as owners promised to invest $1 billion, they wanted strapped residents to underwrite another $2 billion through taxes. Rightfully so, residents responded with a resounding “no.” to that lopsided deal.
Another ideal model to look at, in terms of how stadiums are powered, is Allegiant Stadium, home of the Las Vegas Raiders and the only National Football Leage stadium that’s completely clean energy powered.
In terms of financing, we should also look to the state-of-the-art SoFi Stadium which opened in Los Angeles in 2020 and is 100% privately funded. The construction costs were split between the Los Angeles Rams and Los Angeles Chargers owners, and the NFL provided the construction loans. Taxpayers, for once, did not subsidize the development and yet somehow, miraculously, without the use of public funds, the local L.A. economy did not crumble; local businesses didn’t opt to build elsewhere because public funds weren’t on the table, and nobody burned Rams or Chargers jerseys in protest because they were denied the opportunity to invest their hard-earned tax dollars for a stake in the team(s).
Now, admittedly, neither Allegiant nor SoFi are perfect. SoFi stadium lacks the full array of clean and renewable energy components of Allegiant Stadium (it primarily saves energy through the deployment of innovative environmental engineering), but the project makes up for that through full private financing and no stress on host governments. Allegiant stadium lacks the innovative funding structure (financing included $750 million in public funding) of SoFi, but it offers myriad energy efficiency benefits. And let’s go a step further: Governments can include as a requirement that these facilities don’t contribute to heat and flooding. All they need to do is mandate the use of relatively inexpensive Smart Surfaces strategies – such as a combination of tree planting, reflective and green roofing, decarbonized concrete usage, bioretention and porous pavement - as an equitable solution towards improved quality of life.
Imagine what a combination of these innovations would look like. While implementing these solutions, state and local governments should also require that teams are creating robust economic opportunities, including employment and small business contracts, for surrounding marginalized, low-income communities. All of this is a win-win that, as a bonus, probably wins more loyal fans for the teams.
Using this hybrid approach will ensure that if, in fact, any of the promised residual benefits from stadium developments manage to accrue to neighborhoods like Compton, Southeast D.C., Jacksonville’s North side, or Chicago’s South or West sides, it won’t be at the expense of the residents of those communities who subsidized a billionaire’s fantasy. It will be because we have found a better way to approach these developments without burdening already over-burdened communities.
REV. DR. JON ROBINSON is Senior Program Director at Metropolitan A.M.E. Church in Washington, D.C.