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Stadium Subsidies are Bad Deals for Communities Like St. Petersburg

*This post was originally published in the Tampa Times May 23


 

By John C. Mozena, president of the Center for Economic Accountability and a senior fellow at the Reason Foundation and the Better Cities Project. 


 

It’s clear to economists and other experts across the country that the people of St. Petersburg are being asked to make a bad deal to keep the Rays in town. 


To some extent, what’s happening in St. Pete is the same kind of thing that’s happened in city after city across the country, where team owners threaten to move the team with one hand while holding out wonderful promises of massive economic benefits with the other. But for all the claims that team owners and their cheerleaders make, the real-world evidence is incredibly clear: Pro sports stadiums aren’t worth what cities are being asked to pay for them. 


That’s not a view of just a few cranky eggheads, as MLB Commissioner Rob Manfred and others who profit from pro sports would have you believe. Instead, it’s one of the few things that can get economists and other experts from across the political spectrum to agree with each other. For instance, a 2017 survey of some of the nation’s most important and high-profile economists by the University of Chicago found just one single professor who thought stadium subsidies could be a good investment for a city, while the 83 percent of experts who came down on the “subsidies are a bad idea” side included seven Nobel Prize-winning economists. 


(Also, the one economist who thought stadium subsidies were a good idea was a Cubs fan who’d just watched his team break more than a century-long World Series drought, so he can be forgiven for being an outlier.) 


Or consider a study in 2022 by three of the best-known sports economists in the country, all three of whom have served as president of the North American Association of Sports Economists, that reached the same conclusion. In fact, the real-world evidence against stadium subsidies as economic development tools for a city or neighborhood is so overwhelming that they took the unusual step of discouraging other researchers from continuing to research the topic, as “additional studies are unlikely to have further influence beyond confirming what is already known to researchers in the field.” 


How could this be true? How could these big developments with all these shiny new buildings and crowds filing in and pouring out of them not be the “anchors for economic development” that we’re promised? 

Well, first off there’s the issue that as anyone who’s spent time on the ocean knows, the point of an anchor is to hold you still and keep you from going anywhere new. Stadiums and their parking lots take up a massive amount of land that then can’t be used for anything else and sit on that land whether there’s a game that day or not. They’re anchoring that neighborhood into a very specific focus, but it’s one that very rarely sees much activity. 


That’s one of the key factors that stadium cheerleaders don’t want you to think too hard about. Even a baseball stadium with 81 regular-season home games is only being used for a few hours a time on fewer than one out of every four days in the year. Most of us who go to stadiums for games or other events think of stadiums as busy and vibrant places, because that’s what they’re like when we’re there. But anyone who’s lived near a stadium can tell you that the true defining characteristic of these facilities is that they spend almost their entire lives dark, empty and silent. Most of the time, they’re not an engine for economic growth as much as they’re a black hole in the middle of a neighborhood, looming silently over empty parking lots and sidewalks. 


That then gets us to the next thing that stadium cheerleaders don’t want you to think about: Because they’re open and active so infrequently, stadiums end up creating fewer jobs and serving fewer customers than virtually any other form of business. 


Consider that an MLB team that draws three million fans in a season is considered to have had an excellent year in attendance. That’s true as far as sports teams are concerned, but that stops looking so good when you compare it to other businesses that are open for more than a quarter of the year. For instance, three million customers a year is roughly equivalent to the business done by a single decently busy Super Walmart store. 


To be fair, it’s better than other sports that play even fewer games – the average NFL team serves as many customers a year as the average American supermarket does, while an NBA or NHL team does business more equivalent to a moderately busy gas station with attached convenience store. 


That’s not nothing, but in terms of economic impact it’s certainly not worth billions of dollars in subsidies from taxpayers. 


Stadiums are also even worse than those kinds of businesses when it comes to job creation, as jobs there are overwhelmingly part-time and seasonal, usually serving as second jobs rather than primary employment. A baseball stadium that’s largely empty during an offseason that lasts from October through April is not a place that’s creating a lot of full-time jobs. 


One other major factor that stadium cheerleaders won’t tell you about is where the money being spent at the ballpark is coming from. That’s because, for the most part, it’s coming out of the pockets of local consumers, which means it’s coming out of the bottom lines of existing local businesses. 


Think about it: Building a stadium doesn’t magically put more money in local residents’ entertainment budgets. Parents who take the family to a Rays game aren’t taking the kids to the beach, or out to dinner, or to a movie or bowling alley or concert or other local entertainment venue. A dollar spent on a beer or hot dog at the ballpark is a dollar not being spent on food or drink at some local restaurant or bar. 


In other words, stadiums don’t create more economic activity in a city any more than cutting a pizza into more slices creates more dinner for everyone. Instead, what they do is gather up existing economic activity in the region and keep it for themselves, at the expense of other businesses that (adding insult to injury) are paying the taxes to fund the stadium.  


There’s plenty of real-world evidence for this from across the country: Cities get and lose teams all the time, and there’s no meaningful real-world evidence that getting the stadium creates a boost to the overall economy in the city, or that losing one leaves the city worse off than before. (In fact, many places discover that they’re happy to finally have that white elephant gone and the land being used for something worthwhile. The former Pontiac Silverdome where the Detroit Lions once played something vaguely resembling football is now a busy logistics hub, employing more than 1,000 workers.) 


This is also why it’s silly to argue that stadiums are necessary to create an “entertainment district” of the kind being proposed by Rays ownership.


In city after city across the country, real estate developers have discovered that the best way to get their hands on desirable, high-value land for their project is to promise to put a stadium in the middle of it. They often claim that the stadium is necessary for the project, but what the stadium is truly there to do is get the taxpayers on the hook in a way they wouldn’t be without the stadium drawing in local politicians who want to take credit with sports-fan voters.

Recently, we saw this play out in Alexandria, Virginia where a major development project in one of the fastest-growing places in the country that had already had preliminary plans presented to local authorities suddenly “needed” a hockey and basketball arena to be viable. Then, when state legislators declined to come up with $2 billion, the project was announced to be moving forward regardless. 


Or, on the other side of the equation we also see the situation that’s played out in places like Detroit and Louisville where teams promised “stadium districts” in under-developed areas that failed to materialize once the teams got their stadiums built – and where the existence of a stadium failed to suddenly make those neighborhoods any more attractive for development. 


If there’s a market-driven demand for development in an area, a stadium isn’t necessary. And if there’s no market for the proposed development, a stadium won’t suddenly create it. That’s what makes the proposal in St. Petersburg to sell a large parcel of land for below-market rates such a bad deal for local residents – the very fact that the land is worth more than it’s being sold for means that the stadium isn’t necessary to incentivize development on that land. 


From a national perspective, that’s what appears to be happening in St. Petersburg: People who stand to profit either financially or politically are using sports fandom and civic pride as tools to try to jam a bad deal down local taxpayers’ throats. 

However, what’s also happening in St. Petersburg is something we’re just starting to see happen across the country: People are beginning to realize that this isn’t a good deal for their community, and they’re coming together to push back against it. It truly is a wonderful thing to see – as someone who’s been involved in these debates across the country, I’m always struck by the way people of very different political views can end up with the same conclusions and share common cause in fighting against these corporate welfare deals. It’s not a question of asking people to set their differences aside, as much as it is recognizing that their differences have led them to the same place of caring about what’s best for the community they share.  


In what’s often a very deeply divided country, it’s a good sign that we can still find this common ground. 


(Well, that and hating the New York Yankees. If we lose that, we lose America.) 

  

John C. Mozena is an advisor to No Home Run. He is the president of the Center for Economic Accountability and a senior fellow at the Reason Foundation and the Better Cities Project. 

 



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