I’ve written a couple of pieces lately about proposals for ballparks to be financed by local governments. They seem to be quite the trend at the moment. So I was thankful this morning when someone brought my attention to this piece from Forbes, “Publicly Financed Sports Stadiums Are A Game That Taxpayers Lose.” It was written last year, but it’s spot on an worth a read. Among my favorite bits:
…it doesn’t matter if businesses take in more money than taxpayers shelled out to build the stadium; what matters is whether the taxes collected from all that activity are more than the up-front taxpayer cost. A visitor to the Super Bowl might spend $500 on an airplane ticket, $2000 on his hotel, $300 on food, plus $500 on the ticket to the game. That sounds like a lot of economic activity for just one visitor. However, the plane ticket generates roughly zero money for local and state governments (there may be some airport taxes but they will go toward running the airport). The hotel stay probably produces $200-250 in tax revenue, the restaurant bills another $20, and the game ticket another $35. That means the over $3000 in spending really amounts to around $300 in tax revenue.
Some of that tax revenue has to go toward government costs associated with the holding of sports events: extra police, traffic control, perhaps more public transit, etc. At the end of the day, only a very small fraction of total spending associated with stadium events is left over to help pay back the taxpayers for building a stadium.
Businesses near the stadium like restaurants and hotels might win from the extra local spending, but why should taxpayers pay so that a few favored businesses can see greater profits?
All important points. And he goes on to make some other important points about “substitute spending.” Well worth a read.
