Minnesota Economic Association
Hamline University, October 2013
Is commercial sport a wise use of
taxpayer money?
“Without professional sports the Twin Cities are just a cold
Omaha” – H.H. Humphrey, 1976
“Stadiums should be like libraries. If the taxpayers build it,
they should be able to use it for free.” – Jesse Ventura, 1999
“This should be the ‘people’s stadium’.” – Mark Dayton, 2013
Stadium construction since 1990
League
Stadium
Projects
Cost
(Nominal)
NFL
28 (out of 31)
$ 10,537
$ 6,380
61%
MLB
26 (out of 30)
$ 9,393
$ 5,511
59%
MLS
17 (out of 18)
$ 2,340
$ 1,249
53%
NBA
26 (out of 30)
$ 6,115
$ 3,126
51%
NHL
26 (out of 30)
$ 5,451
$ 1,974
36%
Total
111 out of 127
$ 31,201
$ 17,612
56%
Public Cost
Public
Percent
Stadiums Opened
35
30
25
20
15
10
5
0
Number of
Stadiums
Cost of Stadiums
* 2007 dollars.
Percentage Financed by Public
A closer look at the NFL
Team
New Orleans
Giants/Jets
Kansas City
Dallas
Indianapolis
Arizona
Philadelphia
Green Bay
Chicago
New England
Houston
Detroit
Seattle
Pittsburgh
Denver
Cincinnati
Cleveland
Tennessee
Buffalo
Baltimore
Tampa Bay
San Diego
Washington
Oakland
Carolina
Jacksonville
Stadium
Superdome (repair and rehab)
New Meadowlands Stadium
Arrowhead Stadium (rehab)
Cowboys Stadium
Lukas Oil Stadium
University of Phoenix Stadium
Lincoln Financial Field
Lambeau Field
Soldier Field
Gillette Stadium
Reliant Stadium
Ford Field
Qwest Field
Heinz Field
Invesco Field
Paul Brown Stadium
Browns Stadium
LP Field
Ralph Wilson Stadium (rehab)
M&T Bank Stadium
Raymond James Stadium
Qualcomm Stadium
FedEx Field
Oakland Coliseum (rehab)
Bank of America Stadium
Everbank Field
Built
2011
2010
2010
2009
2008
2006
2003
2003
2003
2002
2002
2002
2002
2001
2001
2000
1999
1999
1999
1998
1998
1997
1997
1996
1996
1995
St. Louis
Atlanta
Edward Jones Dome
Georgia Dome
1995
1992
Total
Cost (Nominal)
$
505
$
1,600
$
375
$
1,150
$
720
$
371
$
285
$
295
$
600
$
325
$
300
$
300
$
300
$
230
$
365
$
400
$
283
$
290
$
63
$
220
$
169
$
78
$
250
$
200
$
248
$
121
Public Cost
$
490
$
$
250
$
325
$
720
$
267
$
228
$
251
$
450
$
33
$
225
$
219
$
201
$
150
$
274
$
400
$
255
$
220
$
63
$
176
$
169
$
78
$
70
$
200
$
52
$
121
Public Percent
97%
0%
67%
28%
100%
72%
80%
85%
75%
10%
75%
73%
67%
65%
75%
100%
90%
76%
100%
80%
100%
100%
28%
100%
21%
100%
$
$
280
214
$
$
280
214
100%
100%
$
10,537
$
6,380
61%
MN Vikings - Bucking the Trend
Total stadium cost:
Public cost:
State contribution (gambling)
City contribution (downtown)
Private cost:
NFL subsidy
Naming rights ($6-8/year)
Personal seat licenses
Vikings/Zygi Wilf
$975 million
$498 million
$348 million
$150 million
$477 million
$200 million
$125 million
$ 80 million
$ 72 million
Who benefits from stadium
subsidies?
Owners?
Players?
Fans?
Cities?
“Economic Impact” Studies
 Often commissioned by groups with a vested interest
in the outcome of the study. Used to justify public
subsidies.
 Typically measure gross economic impact not net
economic impact.
 Generally ignore substitution effects, crowding out,
and large leakages from sports.
 Exaggerate opportunities for outside events.
Independent Economists
 Look back after new stadiums, new/relocated
franchises, work stoppages, or mega-events.
 Measure income, GDP, employment/unemployment,
taxable sales, tourist arrivals, or hotel occupancy.
 Remarkable agreement among economists, finding
that spectator sports result in little or no measurable
economic benefits on host cities.
 Expensive methods to promote local development.
 As a rule of thumb, take whatever the boosters say
and move the decimal point one place to the left.
The sales job – Wrigley Field
The reality – U.S. Cellular Park
The reality – HHH Metrodome
Policy implications
The sum total of the independent evidence does not
suggest that sport subsidies standing alone produce
social value in excess of their social costs.
As part of a larger redevelopment plan, expenditures
on teams, facilities, and sports mega-events may
induce an increase in economic activity in the urban
core, but that may come at the expense of other parts
of the metropolitan or regional economies.
Why do teams get subsidies?
Classic special interest problem in political economy.
 A small number of people stand to make huge profits –
owners, players, construction
firms, media, etc.
 A large number of people stand to
lose a small amount over a long
period of time.
 Jerry Jones – spent over $1 million
lobbying for new stadium in Arlington.
Opponents spent $20,000.
Conclusions and policy implications
Professional leagues are extremely effective at exerting
their monopoly power to pit city against city and
neighborhood against neighborhood.
Cities can and should take steps to prevent sports from
“playing” cities rather than the other way around.
A final comparison
Marathons vs. professional sports
 Boston Marathon is worlds oldest,
most prestigious (and fastest)
marathon in the world.
 Attracts roughly as many live
spectators each year as the
Patriots, the Bruins, or the Celtics.
 Among the most “non-local” races
in the world.
The Boston Marathon
The Boston Marathon receives no public subsidy.
Honolulu Marathon, which generates as many new
net arrivals as the Pro-Bowl, receives no subsidy
while the Pro-Bowl receives a direct payment in
excess of $5 million from the HTA.
Why?
No one has a monopoly on the distance 26.2 miles.
Substitution Effects
 Most fans at sporting events are local residents. Their
spending at sporting events displaces spending
elsewhere in the economy.
 Evidence? During 2002 Winter Olympics, retail sales
at hotels and restaurants rose by $80 million, but…
sales and general merchandise stores fell by $152
million.
 More evidence? Attendance at cultural institutions
and theaters during sporting events.
Crowding out
 Crowds and congestion associated with sporting
events deter other visitors.
 “Nobody goes there anymore. It’s too crowded.” – Yogi
Berra
 Evidence? NFL Pro-Bowl in Honolulu. Attracts
28,000 out of state attendees. Visitor arrivals in Hawaii
are only 6,000 above normal during Pro-Bowl week.
 More evidence? Ski resorts in Utah 2002.
 More evidence? Broadway and London shows.
 More evidence? Great America vs. SF 49ers.
Leakages
 Nationwide, roughly 95% of the labor force lives full-
time in the metropolitan area in which they work.
Most workers are also local hires.
 In the NBA, 20% of players live during the offseason in
the city for which they play. Almost none live locally
prior to hiring.
 Mega-events have additional issues. Prices increase
but wages don’t. Also, specialized labor may be
imported for the event. (Back)
What does $660 million buy these days?