The True Economics of Taxpayer Funded Stadiums

Apr 18, 2013 by AFP

There are multiple bills working their way through the Florida legislature this year that all aim to secure taxpayer money to renovate professional sports facilities.

The front runner is SB 306/HB 165 which aims to give the Miami Dolphins $3 million a year from state general revenue funds for the next 30 years, in addition to the $2 million a year they already receive, and also allow Miami-Dade voters to increase the county hotel tax giving the team another $7.5-$10 million a year in tax dollars for 26 years.

The Jacksonville Jaguars also want a raise – they currently receive $2 million a year from state taxpayers but want that increased to $4 million.  Orlando wants pro-soccer teams to be able to qualify for $2 million a year and the Daytona 500 wants in on the deal too.  There’s also an effort to increase the subsidies given to facilities for spring training.

The proponents of these bills insist that stadiums are economic engines for communities and that they are wise investments for taxpayers.  However, economists from around the country disagree with the pro-sports teams claims, noting that these projects end up being funded almost entirely by taxpayers, provide little to no economic benefit for communities, and that the big games teams use to coerce public funds don’t return anywhere near the amount the public ends up spending.

Here’s what independent analyses have shown on the true economics of the public subsidizing professional sports facilities:

  • A study by Harvard professor Judith Grant Long found that, on average, 78 percent of stadium costs fall on the taxpayers, with only 22 percent being paid for by team owners.
  • Phillip K. Porter, an economist at the University of South Florida, found the public has funded the majority of stadium costs in Miami, Tampa, Orlando and Jacksonville. In fact by 2009, public subsidies had funded 125 percent of the cost of Jacksonville’s stadium, almost 124 percent of Tampa’s three stadiums, and 110 percent of Orlando’s stadium.
  • Porter has also studied the economic impact of spring training for professional baseball, and states that the evidence is irrefutable that spring training does not provide any economic benefit to a host community.
  • Victor Matheson, an economist at Holy Cross who has studied the economic impact of stadium construction for decades, states that the true economic benefit of major events like the Super Bowl or championship games is typically one-tenth of what supporters like the NFL and team owners claim.
  • Matheson also points out that stadiums aren’t new revenue generators because most tickets are purchased locally, money that would have been spent at another local business if not at the stadium.
  • The report “Superbowl or Super (Hyper)Bole?” by economists Robert A. Baade and Victor A. Matheson found that the true economic impact of a Super Bowl is at best $90 million, however for a location like Miami that is already a winter vacation destination the economic impact is more like $40 million.
  • The report notes that:

The National Football League (NFL) uses the promise of an economic windfall to convince skeptical cities that public investment in new stadiums for their teams in exchange for the right to host the event makes economic sense. In fact the recent average public contribution for a new or renovated NFL stadium, $209 million, is less than the size of the economic impact estimates.

So we have to ask – is giving handouts to professional sports teams a responsible use of tax dollars or is this money better spent somewhere else?  The answer seems clear.  Our elected officials need to stand up for the taxpayers and stop giving out taxpayer-funded corporate welfare to professional sports teams.