Stadium subsidy
[1][2][3] According to economists, state and local subsidies to build stadiums for professional sports teams are unlikely to result in economic benefits that exceed the costs to taxpayers.
[4][5][6] Stadium subsidies have distributional effects, primarily benefitting wealthy owners, players and other staff of sports franchises while imposing costs on the public.
[7] Stadium subsidies are widely criticized for using taxpayer funds to benefit franchise owners, who are often billionaires, to the detriment of public schools and infrastructure.
In 1951, MLB commissioner Ford Frick decided that league teams were bringing large amounts of revenue to their host cities from which owners weren't able to profit.
While Frick may have been a catalyst, this change has been primarily caused by the increase in bargaining power of professional sports teams at the expense of their host cities.
Many studies suggest that there are a number of direct and indirect economic benefits associated with hosting a professional sports team, although each city experiences this to a different degree.
[21] During this period, publicly funding a stadium grew in popularity as an effective incentive to attract professional sports teams to up and coming cities.
[23][24] Many NFL teams in recent years have asked for subsidies for the construction of entirely new stadiums, like the Atlanta Falcons, who were subsequently awarded the contract for Super Bowl LIII.
This monopolistic structure, coupled with the large geographic size of both the United States and Canada, has resulted in a considerable imbalance between the number of teams in the four main North American sports leagues and the number of eligible major cities and/or metropolitan areas in the United States and Canada who desire and/or can sustain such teams.
[28][29] A 2005 study of all sports stadiums and facilities in use by the four major leagues from 1990 to 2001 calculated a total public subsidy of approximately $17 billion, or approx.
Supporters further argue that the stadiums attract tourism and businesses that lead to further spending and job creation, representing indirect benefits.
Jordan Rappaport, an economist at the Federal Reserve Bank of Kansas City, estimates that this benefit is between $14 and $24 million a year, which can be compounded over the life of a stadium.
[97] Advocates for stadium subsidies also claim less quantifiable positive externalities, such as civic pride and fan identification, so that hosting a major sports team becomes something of a public good.
[94][98] When a city conducts a calculation to assess what they are willing to pay for a subsidy, they use an economic model that attempts to quantify the various social benefits for each dollar invested.
Economists consider all the economic effects of having a professional athletic team in a city, like the "sunny day" benefit, job creation, civic pride, increased tourism, decreases/increases in crime rates, etc.
In fact, this suggests that money being substituted towards concessions, tickets, and merchandise actively harms the economy surrounding a stadium.
[99] For example, the Little Caesars Arena in Detroit, Michigan, was subsidized by a bond issue, diverting taxes paid by local businesses into stadium construction.
According to the diagram, a fictitious city would like to acquire four teams, since at that point the social marginal benefit of recruiting a team still exceeds the marginal cost .
According to the diagram, a fictitious city would like to acquire three teams, since at that point the social marginal benefit of recruiting a team still exceeds the social marginal cost .