The Falcons may strike it rich in their Sunday NFC Championship bid against the 49ers; however, taxing Georgians to fund a new stadium would be a fool’s gold mining operation for the State. The simple truth is that a true business opportunity would attract the necessary funds in the private sector with no need for a taxpayer subsidy. The deeper truth is that the math doesn’t work. Stadiums rarely return the economic development on their investment dollars, they represent misplaced priorities for cash-strapped states like Georgia and they are not a core function of government.
Between 2000-2012, 28 new major league stadiums were built nationwide at a cost of over $9 billion dollars with over $5 billion dollars coming from public funding. The same story emerges for the prior decade. In fact, since 1909 there have been 186 stadiums constructed nationwide, costing $53 billion dollars (in 2012 numbers) with 61% coming from public financing. According to The Heartland Institute, local taxpayers typically spend more than $10 million annually on a sports facility.
Hard data generated outside the immediate sphere of influence (from chambers of commerce and team owner-commissioned impact studies) arguing for new team digs suggests these facilities set taxpayers back and do not pay for themselves. Sports economist Robert Baade at Lake Forest College has testified before Congress on his study of 48 metropolitan statistical areas (MSAs) with a change in the number of sports teams over 30 years who have shown “…no significant relationship between the presence of the teams and real, trend-adjusted, per-capita personal income growth.”
The myriad reasons why taxpayer-subsidized stadiums don’t pay are a telling indicator for why franchise owners continue to lobby for the subsidy to begin with; they are rooted in economic reality that the owner refuses to shoulder alone.
First, the subsidies don’t balance out the “opportunity cost”, that is, where the true “cost” of a resource (in this case, tax dollars) is equal to the value of the next-highest-valued alternative use of the same resource. Tax dollars to stadiums means fewer dollars available for more essential services alongside the increased pressure to raise additional tax revenues to make up the loss over time. Secondly, the presence of the new stadium does not create new revenues for the city because the stadium activities are still generating revenue off the same entertainment dollars that families have available to spend. It doesn’t generate more revenues, it simply re-allocates dollars from one activity, say, concerts at Lakewood, to stadium-hosted activities. In the case of the Georgia Dome where a stadium already exists, the benefit is even more negligible. Thirdly, the “intangible” of civic pride in the community doesn’t translate into an economic benefit to the taxpayer like a high performing school district or better public services. The former may give me something to brag about at the water cooler; the latter helps me raise the re-sale value of my home or generate my job from an outside business attracted to Georgia for a qualified workforce. Finally, polls show that nearly 80 percent of Americans oppose public subsidies for sports franchises.
Proponents continue to argue that the new stadium represents a win for economic development and civic pride, despite the subjectivity of both claims. It does often represent a windfall profit for franchise owners that cover the cost of improvements with taxpayer subsidies, then, recognize the full benefit when they go to transfer ownership.
The money game is clear. While the Falcons “rising up” to the challenge on the gridiron gives fans reason to cheer and spokesmen like Samuel L. Jackson something other than snakes on a plane to capture their attention, taxpayer funding for a new Falcons Stadium would be as misplaced as a field of dreams metaphor in this article.