Want Economic Stimulus? Don’t Build a Sports Stadium!

Posted by on Jul 11th, 2010 and filed under National. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

(Warner Todd Huston/The Union Label) – For the last few decades sports teams across the country have nosed up to the public trough and demanded that states and cities chip in millions for the construction of new sports stadiums. To justify the public expense the claim has been made that these monstrous construction projects bring a wealth of jobs and spending on entertainment and are a boon to any city that will fund them.

But are they? Do these multi-million dollar projects bring such lucrative benefits to the cities and states that pay through the nose for them?

For many years the “economic boom” idea of building stadiums seemed to make sense and city after state pumped billions of taxpayer’s dollars into such projects. But starting in the early 2000s, economists began to have enough data to show that the claims of beneficial end result of building stadiums was not as advertised.

In fact, these days economists that disagree amongst each other about so much have developed a wide consensus based on the belief that sports teams in and of themselves are not great economic engines for a city and that building giant new stadium complexes are not the automatic boon to the area such as they were sold.

The reason that these stadiums are not as great an investment as previously thought is threefold according to Andrew Zimbalist, the Robert A. Woods professor of economics for Smith College and renowned sports economist. Zimbalist spoke in early 2009 to Freakanomics author, Stephen J. Dubner in the pages of The New York Times.

For one thing, Zimbalist says, the money that will be spent on the events held at the new sports arena or stadium is money spent by local residents. This is not new money but money that would simply have been spent on other entertainment in the metropolitan area if the stadium didn’t exist. Secondly, the big money that goes to players, owners and investors does not stay in the area but is invested elsewhere. Third, the city or state is often chipping in up to a third of the continuing costs and this is tax money wasted, not revenue made.

The third point is most important to dwell upon in this time of one of the worst economies in 70 years. “’… in the typical case,’ Zimbalist says, ‘the city and/or state contributes roughly two-thirds of the financing for the facility’s construction and takes on obligations for additional expenditures over time.’”

There are other problems with these projects, as well.

For one thing, the jobs created are for the most part low paid, part time and offer no benefits. Because of this “jobs” are not really created by a sports complex. Also, very few ballparks have been much of a boon to surrounding businesses. Few people that attend sports events stay around the area in which the stadium sits to shop, eat, or look for other entertainment. They go to the park and then they leave. About the only thing locals get are traffic nightmares and litter.

Yet, with all these solid negative economic facts on the table, cities and states still flirt with the idea of sinking millions of taxpayer’s money into these projects. Los Angeles, for instance, is discussing a new downtown stadium giving Staple’s Center owner AEG environmental passes and buckets of money in order to “bring back the NFL” to the city.

The entire state of California is over the edge of insolvency, her politicians can’t even agree on a budget to reverse her collapse, yet L.A. wants to spend millions of city, country, and/or state tax dollars on a dubious project for a team they don’t even have. This way lies madness.

So, where is the wisdom in this waste of taxpayer’s money?

As Edmund Burke once asked, “what is liberty without wisdom, and without virtue? It is the greatest of all possible evils; for it is folly, vice, and madness, without tuition or restraint.” It is clear that these stadium projects are “follies” not worth the expense. If you want a stadium don’t hide behind false claims and warped economics. Just say you want a stadium and everyone will just have to pay through the nose for it. Let’s all drop the false pretense, shall we?

Naturally, one of the big winners in these sorts of deals is unions. Union labor makes out like a bandit with these sorts of projects. Like a mob protection racket, it’s just one of the payoffs that have to be made to push these projects.

2 Responses for “Want Economic Stimulus? Don’t Build a Sports Stadium!”

  1. Anaconda says:

    I’m not sure I agree with this position (not sure that I disagree either). But a few devils advocate/contrary thoughts, below, to stir discussion, if nothing else:

    1. Unions who have a stranglehold on politicians here would REQUIRE prevailing wage if a stadium was built here. These are NOT LOW PAYING, PART TIME, NO BENEFIT JOBS. Unions wouldn’t allow it, so that isn’t a good argument. County Commission that has the final say in a stadium are 100% died in the wool democrats. Low paying jobs are not an option in this scenario.
    2. Jobs are jobs. Period. With an unemployment rate that is the highest in the country, the thousands of construction jobs alone will help the local economy. Sure, they will not be permanent when the stadium is done, but atleast it will help the local economy now, at its worst time. Yep, unions make out, but that old saying, a rising tide raises all ships is certainly appropriate. Hate to say it where unions stand to benefit, but so does the average union and nonunion worker (40% of whom are Republican, by the way). Furthermore, the tax base, and the general economy during the construction phase will benefit. That isn’t even arguable.
    3. To rebut the claim that this is money that would be spent in other places locally, that may be true during times that money is being spent by people that actually have money to spend. But in this economy, people don’t have it to spend, especially those who are unemployed. Give them a construction job, then they have money to spend, thus helping to stimulate the general economy. And, I’m not sure I buy the premise that people would spend money elsewhere if there wasn’t an event to spend it on. If that were true then we would see a decrease in money spent in other entertainment venues at times that big events come to to town, but you don’t see that at all.

    For example, when the NBA All Star game was here, you didn’t see llocal people spending less money at the Circus Circus amusement park, or out at dinner, or movies, etc., but you did see a lot of money spent at the basketball game by tourists who were here specifically for the event, as well as locals who were interested in going to the event. Likewise, The NFR brings new/more people to Vegas to spend money that would not otherwise be spent here (because the people wouldn’t be here but for the event) during a very slow time of the year (1st week of December). Or how about the trade shows that bring people here. That’s NEW money that wouldn’t be spent elsewhere because it is money that is coming in from outside of Las Vegas. I could go on and on and on with other examples, but the point is that the argument against a stadium doesn’t fit for a tourist/entertainment and trade show exhibit destination like Vegas. Bottom line is: a new stadium with more/new events will generate MORE/NEW income. It is not a situation where one businesses gain is another businesses loss. Yes, other entertainment venues will lose out to contracts at a new stadium, but a new stadium will attract new entertainment entities, and it will keep some events from leaving. Case in point, the Country Music Awards. They left Vegas and they aren’t coming back. Why? Because they needed a bigger venue, one that Las Vegas just couldn’t handle. Jerry Jones and the folks in Dallas have it now.
    4. To rebut the claim that very few ballparks are a boon to surrounding businesses, I beg to differ! Many businesses have doubled their business on gamedays after the new Dallas Cowboys stadiums were built. So goes the story at Heinz Field in Pittsburgh, two of the newer stadiums. Sure, some businesses have lost business to other, newer businesses, but the numbers don’t lie. Businesses have benefited overall where new stadiums have been built in the vicinity of the stadiums.
    5. And speaking of Dallas Cowboys stadium, Jerry Jones has already made it VERY clear that he intends to take Vegas head-on for some business that has no good reason to stay in Vegas. NFR, for one, would be a tremendous loss to the Vegas economy if Jerry Jones has his way. The best way to keep it here is to build a new multi-use facility somewhere near or on the strip. As stated earlier, the CMA awards already left for Texas. It won’t be the last if we don’t build a bigger, multi-use stadium.

    And this is the element that makes a new stadium facility in Vegas different than all the other cities.

    I don’t like taxpayer funded stadiums. I don’t like unions gaining more power. I don’t want my taxes raised, even a little. But I don’t like what Las Vegas stands to lose if we don’t build a new multi-use events center.

  2. Al Hill says:

    Those of us who pay the taxes don’t get any benefits from tax subsidized stadiums. We still have to pay sky high ticket prices to attend.

    Let Jerry Jones screw over the taxpayers of Dallas. Las Vegas won’t fail without the NFR.

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