Stadiums. Don’t. Work.

The economics literature is clear, but Orlando leaders just don’t care

St. Petersburg is about to get the yanked-fingernails treatment from Major League Baseball.

Last week, MLB Commissioner Bud Selig signaled that he would intervene in stalled negotiations over a new ballpark for the Tampa Bay Rays. The Rays’ attendance is the league’s second worst – ahead of only the woeful Miami Marlins – which MLB blames on Tropicana Field, the ugly-as-sin lopsided white dome the team has called home since 1997. The Rays want a new stadium. And if St. Pete taxpayers don’t fork over $500 million to build one – even though the Rays are contractually bound to play in the Trop until 2027 – the team is threatening to move. Now MLB is flexing its muscles on the Rays’ behalf.

Here’s an idea: Bring them to Orlando. Our local leaders have yet to meet a taxpayer-subsidized sports facility they didn’t love.

As much as I detest this con game – cities spending millions to build playgrounds for billionaires – and Orlando’s naïve willingness to play, I confess a certain ambivalence about the proposed $115 million stadium for Orlando City Soccer (“Goal rush,” May 8). So long as tourism tax dollars can’t be spent on things we really need – which is a really dumb law, by the way (“Hands off!” Aug. 14) – we might as well put them to use downtown.

But the economics literature is clear: Taxpayer-subsidized stadiums are losers. Full stop. Anyone who says differently is either lying or woefully misinformed.

We’ve known this for some time. Back in 2000, economists Dennis Coates and Brad R. Humphreys wrote in the journal Regulation: “Despite the beliefs of local officials and their hired consultants about the economic benefits of publicly subsidized stadium construction, the consensus of academic economists has been that such policies do not raise incomes. … Subsidies of sports stadiums may actually reduce the incomes of the alleged beneficiaries.”

The economic impact studies teams bandy about – Orlando City, for instance, promises a $1.2 billion impact over the next 30 years – are hocus-pocus. They “overstate the contribution that professional sports make to an area’s community. … Specifically, because of sport- and stadium-related activities, other spending declines as people substitute spending on one for spending on the other.”

In the 37 metropolitan areas Coates and Humphreys studied, building a stadium had no discernable impact on the growth rate of real per capita income. Once you factor in the cost of building the stadium, per capita income actually decreases.

That’s just one study of many, before and since, that all reach the same conclusion. In the words of economists Roger Noll and Andrew Zimbalist, authors of Sports, Jobs and Taxes: The Economic Impact of Sports Teams and Stadiums, “A new sports facility has an extremely small (perhaps even negative) effect on overall economic activity and employment. No recent facility appears to have earned anything approaching a reasonable return on investment.” Writes economist Phillip Miller: “Neither the existence of sports teams nor the construction of sports stadiums provide a catalyst for economic development in terms of employment and output growth.” Says economist Victor Matheson: “Building a new arena doesn’t seem to have any effect on a city’s employment, per capita income, hotel occupancy rates, [or] taxable sales.”

And yet all over the country, cities keep buying in. In bankrupt Detroit, even as city workers’ pensions evaporate and cops are laid off, taxpayers are on the hook for a $444 million hockey arena that the city’s emergency manager claims is “going to be a boon for the city.” The Miami Marlins, owners of MLB’s lowest attendance numbers, just a few years ago conned taxpayers into building what Forbes called “baseball’s most expensive disaster,” a $639 million facility that, because of its financing scheme, will cost Miami $3 billion before all is said and done.

Orlando, meanwhile, has built the Orlando Magic a $480 million arena, committed about $200 million renovating the Citrus Bowl and is now contemplating a soccer stadium financed by at least $70 million in local and state taxes. Of that, $20 million will come directly from city coffers in the form of land and tax breaks, even while Orlando is nursing a $12 million budget deficit.

The verdict is in: This is bad public policy. We’re just not paying attention.

So maybe Bud Selig should give Orlando a call. We’re gullible enough.


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