MAY: Stadium Funding Divides Taxpayers
The Front Runners

No city in the world showcases a unique relationship with its sports teams better than Cleveland.

The Cavaliers’ recent run to the town’s first professional championship in decades — led by local hero LeBron James — changed the downtrodden Ohio town into “Believeland,” redeeming decades of relative futility. For at least a few weeks, Cleveland showed just how much a team can lift its city.

But for all the good sports can bring to a town, there is often a dark side to the relationship, too. These more contentious aspects appear most often and most publicly when stadiums come into play.

Every team wants the best stadium with the most impressive amenities, preferably in a highly sought-after neighborhood.

This makes sense, of course, and few would criticize a business for wanting these advantages. Franchises, however, convince their cities to chip in on the bill for these stadiums.

As with any expenditure, the outlay of millions of dollars in public money to support a private business tends to create controversy to say the least.

Six stadiums intended for major professional leagues are set to open by 2019. Half, as well as the upcoming 41,000-seat football stadium for Colorado State University, will rely on tens of millions of dollars of taxpayer money from various levels of government.

For some, this massive expense seems perfectly justifiable.  Sports franchises and their venues, the argument goes, are major sources of jobs, tax revenue and civic status. Any city that seeks to take its place among the ranks of American metropoles must have its own major professional franchise.

Economists remain unconvinced. According to academic studies, the initial outlay of funds required to build a new stadium has little long-term benefit to the city footing the bill.

In an interview on the Stanford University website, Stanford economist and expert on the issue Roger Noll makes the case against public funding of stadiums do not generate significant local economic growth.”

This news is not exactly breaking either. In 1997, the Brookings Institute wrote, “No recent facility appears to have earned anything approaching a reasonable return on investment.”

The debate over the economic reality of public stadium financing long ago reached its conclusion. Why then do cities, states and counties continue to spend hundreds of millions of dollars on these facilities?

The answer lies in two distinct but related sources: The aforementioned relationship between city and team and the connection between democratically elected leaders and their constituents.

Both politicians and sports franchises survive on popularity, a common trait that explains how governments around the country continue to —in the eyes of economists — throw good money after bad when it comes to public stadiums.

No official wants to be the one who sent a beloved team packing. As the Rams franchise has proven over the last decade, a poor stadium and eventual move to a new city leaves legions of fans feeling bitter and betrayed.

Similar stories have played out in Montreal, Seattle and Baltimore. Politicians build careers around avoiding scandals, even ones that make economic sense.

Political cynicism and factually empty arguments aside, public funding for stadiums also depends on the non-monetary benefits a team brings to its city. This is where the Cavaliers and their recent triumph come into play.

Sports and the entertainment they provide are public goods. They reach out beyond those who have paid to watch in expensive and publicly funded stadiums into the population at large, and that is where defenders of tax dollars on the field may find their best argument.

Central Park charges no admission fee. Tickets to public museums, gardens and other cultural sites often do not cover the cost of upkeep, but rarely does a new acquisition at a government-funded museum cause the type of clamoring that stadiums sometimes incur.

The success of the Cavaliers surely enriched the life of the average Clevelander more than a new Anthony van Dyck portrait at the Museum of Art. For a supporter of government involvement in stadium financing, this has to partially justify the cost, at least.

Even this argument is flawed. The cost of a stadium is larger than that of a painting or park upkeep. A sports franchise certainly brings all sorts of benefits to its community, but the government funding also does not go nearly as far when massive building projects are involved.

Most importantly, however, a vital difference exists between a park or museum and a new stadium. Sports franchises are private enterprises designed to turn a profit, while parks and museums are most often government-owned or non-profit. Tax breaks and major expenditures for stadiums and arenas benefit a small group of private businesses — a fact that does not sit well with critics of the policy.

Proponents can fall back on the passion and emotions that sports bring every year, but justifying a nine-digit gift to a private business is truly an uphill battle.

Andrew May is a senior in the School of Foreign Service. The Front Runners  is a shared column and appears every Tuesday.

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