The Worst-Kept Secret in Sports
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Controversial Stadium Funding: City Councils Bypass Public Vote
Recently, Charlotte, NC and Jacksonville, FL each made headlines by announcing massive renovations to their existing NFL stadiums. $650 million and $775 million, respectively, in public money will help keep the Panthers and Jaguars in their home stadiums for decades to come. Perhaps the most shocking aspect of this news was not the amount of taxpayer dollars being spent, but rather the manner in which these decisions were made. Typically, funding issues like these must be passed by the voting public in city-wide referendums, but in both cases, it was the city councils who made the decisions to allocate these massive funds. This begs the question: Is spending taxpayer money on professional sports facilities worth it?
In a recent video report by Straight Arrow News, business correspondent Simone Del Rosario sat down with noted sports economist and professor Victor Matheson. Dr. Matheson has researched the reasoning for and returns on public spending for stadiums for decades, and many in sports business and academia are familiar with the results of his studies, as well as those of colleagues. To those who keep an eye on such things, it comes as no surprise that these studies repeatedly find spending taxpayer money on sports stadiums is an “extremely poor” use of those funds, with economic impact “somewhere between zero and very low,” as Dr. Matheson notes.
Admittedly, I was shocked by Del Rosario’s interview with Matheson – not because of the facts themselves, but because they were being openly discussed in the realm of mainstream news. For the longest time, it seems only those around the sports industry have been clued in on this little secret. Many reading this article are well aware of the often misleading nature of economic impact studies for professional sports venues, which tend to promise the world in terms of new spending, jobs, and tourism, but these numbers rarely – if ever – come to fruition.
The Economic Impact: Poor Returns on Taxpayer Investments
That is not to say that there are not some benefits to the public from spending their tax dollars on public stadia. These benefits include sports teams commonly being considered a “public good” that produces feel-good effects for the local community. For example, Johnson et al. (2007) found that the Jacksonville Jaguars produced a value of public goods of $36.5 million or less, which is a fraction of the subsidies provided to attract the Jaguars – notably the $121 million cost of the stadium when it originally opened in 1995. Additionally, a recent study by Bradbury et al. (2023) found that “non-use values” – that is, the intangible benefits that come from having professional franchises – amount to “13% of total capital construction costs and 16% of public contributions.” These findings lead the authors contend that “intangible social benefits of hosting professional sports teams are well below levels needed to justify typical subsidies.”
The Hidden Costs: Infrastructure Projects Linked to Stadiums
Additionally, city infrastructure improvements are commonly included among the noted benefits of these projects for taxpayers. Widening roads, building new bridges and interchanges on highways and interstates, creating new stops on public transit, and much more often come with sports venue projects. Tens of millions of dollars are regularly invested into these improvements, but this money has to come from somewhere. Yep, you guessed it. The taxpayers are once again on the hook. Only, this time with less attention than the hundreds of millions (or billions) spent on the stadium project itself. Many citizens would be shocked to know how much of their money is also being spent on these stadium-linked infrastructure projects. For example, Gilette Stadium received fanfare when it was constructed for not requiring any taxpayer funding, but at least $70 million in public money was used for nearby road, sewer, and other infrastructure improvements. Similarly, St. Paul, Minnesota, spent a reported $18.4 million on public infrastructure projects around Allianz Field, paving the way for the new home of MLS Minnesota United FC.
While there are valid questions to be asked about taxpayer subsidies for professional stadia, it is important to add there are also examples of team owners privately funding these projects. Perhaps the most notable of these is SoFi Stadium, which was completed in 2020 with a massive $5 billion price tag and 100 percent privately funded by Rams owner Stanley Kroenke. In 2009, Yankees ownership also shouldered the load of the nearly $2 billion construction cost of the new Yankee Stadium but benefitted from a whopping $300 million of the aforementioned public infrastructure improvements paid for by the taxpayers of the City of New York.
The Shift in Public Opinion: Voters Push Back on Taxpayer-Funded Venues
I realize that this might come as a surprise, but I don’t hold a personal vendetta against using public money for sports facilities. However, like Dr. Matheson, I believe that the level of public funding that is actually justifiable is “way below” what we are seeing with today’s professional venues. A whopping $43.1 billion in public money has been spent on professional sports stadia in the United States since 2000. However, it has become clear that the public is generally weary of using their tax dollars for such projects.
In 2023, Tempe, AZ, citizens voted against providing taxpayer funding for an entertainment district that would have featured a new arena for the NHL’s (formerly Phoenix) Coyotes. Just this spring, voters in Jackson County, MO, voted against a referendum that would have provided hundreds of millions for a new Royals ballpark as well as significant renovations to the Chiefs’ Arrowhead Stadium. If a simple three-eighths cent sales tax renewal was too much to stomach for these voters, that doesn’t bode well for the future of public professional facility funding.
Most recently, an effort by the Cleveland Browns to construct a $2.4 billion domed stadium in the suburbs – half of which would be paid for with public money – has already been met with significant pushback. It would seem that the days of rubber-stamping massive investments of taxpayer dollars into such projects are long gone. According to Dr. Geoffrey Propheter at the University of Colorado – Denver, nearly 39 percent of public referendums for professional sports facilities failed between 1990 and 2023. Altogether, this evidence suggests the best-kept secret in sports might very well be on the road to becoming its worst-kept secret, and that’s quite alright by me.
