Latest posts by Jesse Hathaway (see all)
- Military Shouldn’t Be Empowered to Draft People’s Daughters – or Their Sons - November 30, 2017
- Brady’s Tax Reform Proposal Could Unleash America’s Economic Engine - November 29, 2017
- Kentucky’s Public Pension Crisis Illustrates the Need for Pension Reform - November 18, 2017
Elected officials often say using taxpayer money to pay for the construction or renovation of sports stadiums is an easy way to boost local economies and revitalize the flagging fortunes of downtown areas. But what really happens is that these teams pit cities against one another in competition for franchises, using their scarcity as a way of wresting ever-greater subsidies from taxpayers while team values rise to astronomical levels.
Instead of misusing their taxing power to take money from regular people and give it to super rich team owners, players and other sports professionals, cities and states should work with owners to reform how sports teams are organized. One way to do that is to empower local residents to become direct shareholders in the team business. That would break the arms race for more corporate welfare and deliver a better product for fans and taxpayers alike.
In St. Louis, owners of the hapless Rams receive $24 million a year in taxpayer money. This year, the Rams — and their enablers in government — are seeking to pump $400 million of public money into building the NFL team a new stadium.
St. Louis taxpayers aren’t getting a good investment, or even receiving a good show, in return for how much they’re forced to pay the owners. The Rams haven’t had a winning season since 2003, and tickets and amenities for a family of four for a single game cost about $427. Fewer fans are attending games at Edward Jones Stadium; average home game attendance has declined by 12% between 2006 and 2014. Yet the city and county continue to throw taxpayer money at the owners, hoping to convince them not to relocate to Los Angeles.
Elected officials often claim subsidizing sports teams bolsters the economy and benefits workers. Unfortunately, this is a “just-so story” justifying corporate welfare for the home team.
Using data from the U.S. Census Bureau, University of Maryland-Baltimore County economics professors Dennis Coates and Brad Humphries discovered sports stadiums actually depress wages locally.
Every dollar spent by consumers on rooting for the team is a dollar not spent on other forms of entertainment or other services, reducing the average annual earnings of people in other entertainment- or amenity-related fields. For example, they found sports stadiums depressed hotel employees’ earnings by $42.49 per year and actually depressed employee wages in sports-related businesses by $42.12 annually. The effect is small, but it’s negative and not impressively positive, as stadium deal proponents claim.
“The negative predicted impact of the vector of sports variables on annual average wages does not support the notion that professional sports are viable engines of economic development in cities,” Coates and Humphries conclude.
Instead of sidling up to lawmakers asking for a handout, sports teams should be emulating the model of an NFL team with much more success than the hapless Rams: the Green Bay Packers.
The Packers are owned by the fans, and the fans are voting shareholders. The team can never threaten to leave if taxpayers don’t agree to cough up more of their hard-earned money, unlike teams that threaten to move if they don’t get shiny new stadiums on someone else’s dime. If a team doesn’t want to trade ownership shares for public support, the city should let them go their own way.
As Joseph Bast, president of The Heartland Institute writes, “The spread of fan-owned teams would break the subsidy culture that now grips all of the major sports leagues.”
Giving fans a direct stake in the home team solidifies the bond between sports teams and fans and cuts the chains otherwise burdening taxpayers. Sports teams in all professional leagues, not just the NFL, should copy the Packers’ model for success on the football field and off.