Sport Stadiums and the Economy

Full article: https://research.stlouisfed.org/publications/page1-econ/2017-05-01/the-economics-of-subsidizing-sports-stadiums/

On May 23, 2017, Module 5 discussed information regarding the correlation between sport and the economy. The article above focuses on sport stadiums specifically. It provides information and analysis on spending, economist's point of view, and opportunity costs, which parallels the discussion of Module 5. Following are some of the points, made in the article, on each of those aspects.

Spending:

• stadium subsidies are justified because of their economic impact on the community
• proposed Rams Stadium in Inglewood, CA predicted to cost $3B
• estimated economic impact of people who attended St. Louis Cardinals home games in 2015 was $343.9 million
• stadium construction can be proposed as an economic development initiative pending the location of construction

Economist's Point of View:

• 86% of economists agreed that local and state governments in the U.S. should eliminate subsidies to professional sport franchises
• oppose the provision of taxpayer money in the form of subsidies
• 83% agree that providing subsidies will cost the taxpayer more than the economic benefits generated

Opportunity Costs:

• opportunity costs are often not accounted for when calculating economic impact
• options that increase productivity, and are thereby investments, are recommended by economists
• roads, education, environmental improvements--among other things--are thought to be better investments
• increased productivity has the potential to increase the rate of economic growth and also increase the standard of living

U.S. Bank Stadium, home of the Minnesota Vikings. It is the newest NFL
stadium.

Billions upon billions of dollars are being proposed for the construction of new stadiums all across the United States. With research already showing that it is in fact taxpayers who are paying the largest sum of money for these projects, we cannot help but wonder if the return on those "investments" is worth it. Take, for example, the Minnesota Vikings' new stadium. It was a $1.1 billion project, of which nearly half of the money came from state and local governments. That may sound like a fair trade, but it may not be when one considers the fact that those are taxpayer dollars being used. Since 1995, taxpayers, whether they know it or not, have spent approximately $7.5 billion on the construction and renovation of NFL stadiums alone (Farren 2017). Including other professional sports aside from the NFL, 101 new stadiums/facilities have been built within the last two decades (Module 5). They have not only cost taxpayers money, but cities as well.

As the article above and Module 5 stresses, stadium projects cost cities millions, if not billions of dollars (Citi Field will cost New York approximately $177 million), and yet we consider them to be good public investments. We understand that not every public investment we make will turn up a profit, or return the investment in some way. However, economists argue, if money is to be lost, why not lose it in paying for projects that increase productivity and the standard of living? Why lose tremendous amounts of money for incredibly complex stadium projects?

The government has the opportunity to make a change in what they decide to fund. They could, after all, devote larger sums of money to other infrastructure or education, or even both. Instead they use over half--on average--of public funds to pay for the following projects (Wolla, 2017):

• $710M--Lucas Oil Stadium (Indianapolis Colts)
• $1.1B--AT&T Stadium (Dallas Cowboys)
• $1.6B--MetLife Stadium (New York Jets/Giants)
• $1.1B--U.S. Bank Stadium (Minnesota Vikings)

Those are just to name a few. In fact, 29 of the 31 NFL stadiums have been paid for, in part, by public funds (Farren, 2017). Public funds, as I have come to emphasize, are taxpayer dollars. We, as citizens, are willing to contribute to the greater public good, but we should not be contributing to economically devastating projects, which is what these massive stadiums have to come to represent.

Below is a video from 2012 outlining the economic impact of sport stadiums, which includes input from economists who strike down the claim that these stadiums/events have an overall positive effect on the economy.

Additional Source(s)/Reference(s):

Farren, M., & Philpot, A. (2017, February 27). Raiding taxpayers' pockets. Retrieved from https://www.usnews.com/opinion/economic-intelligence/articles/2017-02-27/subsidizing-new-raiders-stadium-in-las-vegas-is-a-bad-deal-for-taxpayers

The economics of sports stadiums [Video file]. (2012, August 18). Retrieved from https://youtu.be/ouQJJ4mP4hI

Wolla, S. A. (2017, May). The economics of subsidizing sports stadiums - page one economics - St. Louis Fed. Retrieved from https://research.stlouisfed.org/publications/page1-econ/2017-05-01/the-economics-of-subsidizing-sports-stadiums/