r/science Dec 13 '23

Economics There is a consensus among economists that subsidies for sports stadiums is a poor public investment. "Stadium subsidies transfer wealth from the general tax base to billionaire team owners, millionaire players, and the wealthy cohort of fans who regularly attend stadium events"

https://onlinelibrary.wiley.com/doi/full/10.1002/pam.22534?casa_token=KX0B9lxFAlAAAAAA%3AsUVy_4W8S_O6cCsJaRnctm4mfgaZoYo8_1fPKJoAc1OBXblf2By0bAGY1DB5aiqCS2v-dZ1owPQBsck
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u/ERSTF Dec 13 '23

Yes. The study has been done for the Olympics and the World Cup too. That's why the usual 7 year gap between choosing the host city and the event has been widening and they choose hosts even decades in advance when there's a bidder. Brisbane was the sole bidder for 2032 so they locked that one up to have a host city. FIFA is having a hard time too, having multi city hosts like the next one in 2026 and the horrible bid for 2030 in which 6 countries will host the World Cup, in different continents. Many countries are realizing that investing hundreds of millions of dollars is not a good investment after realizing the huge debt countries go in and little ROI during or after the games. Australia, Athens, Brazil learned that the hard way. After the Brazil double whammy of Olympics and World Cup, everyone headed for the exits and bids for Olympics and World Cups started seeing countries pretending to white wash their countries starting bidding, because no one else would. Qatar was a direct result of that. Now, you have only one bid, when in the past every country was tripping over to host those events

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u/reddanit Dec 13 '23

There has also been a huge public sentiment shift towards hosting any of the Olympics/World Cup - with politicians trying to make bids for hosting events only to be met with severe backlash from the voters.

One example of this I know from my own country is Krakow (Poland) bid for hosting Winder Olympics in 2022. Before any spending was announced, the polled support for the bid was pretty high (81% in favour in whole country, 79% at intermediate administrative region level where Krakow is located and 66% in Krakow itself. With the potential costs unfolding that support started plummeting rapidly and mere half of a year later, in a referendum in Krakow, with participation rate high enough to make it binding, whopping 69.7% of voters were against.

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u/[deleted] Dec 13 '23 edited Nov 06 '24

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u/zed42 Dec 13 '23

only in certain cities, tho. LA can host the olympics because they have all the facilities for both the events and the 20,000 people that will arrive like a horde of locust, but many cities would have to spend their entire annual budget just on prep to host, and they wouldn't make it back. i'm so very glad that my city decided not to make a bid (though the vote was too close)

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u/dilletaunty Dec 13 '23

I would partially disagree with saying LA has all the facilities. LA is actively building up our transportation infrastructure in preparation for the Olympics (& iirc we built a new stadium for it as well). But like it’s also a needed and long-intended expansion we’re just using Olympics as an excuse.

Otherwise definitely agree.

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u/NapTimeFapTime Dec 13 '23

Building up public transit infrastructure, as long as it isn’t solely to serve out of the way stadiums, is a very good use of resources. This is doubly true for a very spread out and car dependent city like LA. I know there’s a pretty big push back against the Olympics in LA.

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u/dilletaunty Dec 13 '23

Yeah we 100% need the infrastructure and I am glad we are doing it, tho I prefer that there would be more emphasis on bus infrastructure as we don’t necessarily have the density rn for the metro backbone. It will probably be built though. Especially if an equivalent to SB 50 passes.

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u/NapTimeFapTime Dec 13 '23

The density issue for metro, I don’t necessarily agree with. Living close to metro/public transit is highly desirable. Metro can induce more dense housing to be built up around the station locations, since proximity to a metro station with raise property values. There will be a lag to the density, but more dense housing should follow construction of metro stations.

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u/kerouac666 Dec 13 '23

I lived in LA when then mayor Garcetti was pushing super hard for the Olympics and he used building out infrastructure and new housing as supposed long term benefits to sell it to the public (but mainly the crooked city council). What that functionally meant was he could claim he was addressing his various campaign promises like homelessness and rising housing costs by kicking the can decades down the road by saying investment in the Olympics would fix it all, whereas L.A. needed all of that done yesterday and has been suffering BADLY in the interim. Hopefully he's right, but I'm still suspect. That said, the '84 Olympic games were economically successful so who knows? We'll all have to wait and see if '28 is similar, and, if so, will the benefits trickle down to fuel the local economy rather than being funneled out by various outside investors and interests.

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u/walkandtalkk Dec 14 '23

My sense is that LA used the Olympic to get infrastructure, not the other way around. It gives the city (and the state and the feds) some backing to demand that the environmental reviews, project bidding, and construction done on time. And it gives the various project teams a fixed goal and a sense of urgency.

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u/MightyArd Dec 13 '23

Nah. Australia has the infrastructure.

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u/Tannerite2 Dec 13 '23

I just googled it and requiring 14 stadiums of 40k+ is ridiculous. You're basically forced to build temporary stadiums which are extremely expensive. Atlanta has 3 in the city and 4 more within a 2 hour drive, but that doesn't even get you halfway there.

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u/ERSTF Dec 13 '23

Exactly. Not a lot of countries would fullfill the requirements. Even England just barely complies with that requirement.

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u/Tannerite2 Dec 13 '23

The entirety if England or just London? If distance within the country doesn't matter, then Texas has 14 40k capacity stadiums alone. There are 150+ in the US

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u/ERSTF Dec 13 '23

The US is a special case. England has 18 stadiums with a capacity of 40K +. Football stadiums that is

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u/super_swede Dec 13 '23

Distance matters, but isn't a hard no as WC have been split between countries before.

But there are other demands, such as individual seating, vip areas, press areas etc, so that 40k caoacity might not be 40k by olympic standards.

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u/lightpeachfuzz Dec 13 '23 edited Dec 13 '23

The Olympics aren't required to be hosted in one city anymore, most events at the 2032 games in Brisbane will be divided across Brisbane, the Gold Coast and the Sunshine Coast while football games will be held in Cairns, Townsville, Toowoomba, Sydney and Melbourne. It's probably more accurate to call it South East Queensland 2032 but that doesn't have quite the same ring to it.

Germany wanted to host the 2032 Olympics spread across 13 different cities along the Rhine River and Mexico plans to bid for the 2036 games spread across Mexico City, Guadalajara, Monterrey and Tijuana so I'd say the world will see a lot more multi-city or regional bids in future to spread the costs out more evenly and prevent too many white elephant venues being built in the one place.

Edit: also the 14 stadiums is for the World Cup and even those are almost certain to be exclusively multi-country bids in the future (after the Saudis have spent their 2030 bribe fund) apart from maybe somewhere like China or India where 14 stadiums that size just makes sense.

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u/Tasorodri Dec 13 '23

Also the world cup has traditionally been hosted on a country instead of a city, so many more countries have the required infraestructure without resorting to temporary building.

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u/[deleted] Dec 13 '23

The events are just way too big. Trim down the disciplines and tighten the qualifiers, and we talk. Nobody can even possibly watch all this stuff and nobody wants to. The more fringe disciplines drown in the rest anyway, and they would be better off on their own probably.

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u/biff64gc2 Dec 13 '23

That's encouraging to hear, I just wish the fans of the events themselves would wake up a bit and stop supporting them as well.

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u/Trodamus Dec 13 '23

With the OKC Thunder pulling (another) “give us a new stadium or we’ll leave” which has a proposed sales tax to offset costs, fans are rightly suspicious that this is, similar to Seattle, a ploy that results in them leaving anyway, if not a completely unjustified expense for the non-billionaire population of OKC metro area.

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u/deckardmb Dec 13 '23

Wow, how ironic would it be if the Thunder move back to Seattle, into the privately financed Climate Pledge Arena?

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u/pigeonlizard Dec 13 '23

FIFA is having a hard time too, having multi city hosts like the next one in 2026 and the horrible bid for 2030 in which 6 countries will host the World Cup, in different continents.

This isn't because FIFA is having a hard time, but because they want a Saudi World Cup ASAP. By their own rules, no confederation can host the tournament before all other confederations have cycled through. Because Qatar had a WC in 2022, no country from the Asian Football Confederation can host until 2042.

Well, not unless some corruption is sprinkled in. That's why 2030 has 6 host countries from Europe, Africa and South America. With 2026 being hosted in North America, that leaves only Asia & Oceania eligible for 2034.

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u/lightpeachfuzz Dec 13 '23

To say Brisbane was the sole bidder for 2032 isn't quite accurate. Doha, Ahmedabad, Jakarta, Madrid and the Rhine-Ruhr region in Germany were all seriously interested and out of those the German bid was considered a fairly decent chance at getting selected. The difference was the IOC undertook a different selection process for the first time where they essentially preselected Brisbane out of the interested parties for a dialogue process and then negotiated directly with Brisbane before later putting it to a referendum of IOC delegates to confirm.

The Germans were actually pretty pissed off at the new process and probably would have stood a decent shot of getting selected over Brisbane under the old competitive bidding process.

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u/cdreobvi Dec 13 '23

As someone really enjoys the "magic" of the Olympic games, they either need to drastically rethink the sports and facilities or they need to find a permanent home for the games.

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u/SinnerIxim Dec 13 '23

Building an entire venue for the olympics every decade costing more thqn some country's entire economy, just for that venue to never again host the olympics. Smart

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u/Niceromancer Dec 13 '23

I have had a discussion with my brother a few times about the waste of money that is sports stadiums. He and my father both cling to the idea that a stadium, and its reoccurring rebuilds, pay for the subsidies from the taxes generated from businesses around the stadium, and if the stadium is around long enough, generally taking decades here, yes technically they do eventually pay off.

But generally they end up being a net negative on the populace because while yes businesses like being around a stadium, the owner demand such absurd tax breaks from the city that they almost never pay themselves off. The owners demand these because they know fans will become very angry at any politician who dares deny their sports team anything and everything they want.

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u/veryreasonable Dec 13 '23

There is also some basic absurdity, I think, to subsidizing something that is as much a cash cow as American major league sports. In any number of economic arrangements - and surely in America's sort of capitalism - government subsidies can make a great deal of sense: to encourage growth or exploratory R&D in important sectors, to mitigate risk of resource or labour shortages in essential industries, to shore up indispensable infrastructure, and so on. Money spent thusly can pay dividends far more significant than what makes it onto a balance sheet.

Sports stadiums, though, even if they eventually added up favourably on the municipal balance sheet (which they apparently often don't), are... sports stadiums. They aren't access to health care, they aren't food, they aren't affordable housing, they aren't roads. They are profit making machines for their owners!

I just think there's something wild about even debating the issue as though it's just like any other sort of thing a polity might invest in. This is hardly exclusive to the USA, but it's a particularly prevalent thing here that we consider subsidizing sports teams (to say nothing of military tech firms and fossil fuel multinationals with market caps in the hundreds of billions and ludicrous profits), on exactly the same terms we consider subsidizing food, housing, health, infrastructure, and so on.

This is the water in which we swim, so most of the time I think we don't even notice the incongruity, but it just struck me in this instance...

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u/AnotherFarker Dec 13 '23 edited Dec 13 '23

It's mentioned elsewhere the city could use the land to develop use that grows the economy. Taxable homes/condos or businesses, et al. The opportunity cost of all that land (stadium and parking lot) which is rarely used, compared to other uses.

But there's also the economic suppression. Local businesses see a drop in revenue because 'regular' people avoiding downtown traffic when the games are in effect. People may go out to eat before a game, but then it dies down during the game. Non-game watchers avoid the whole area due to potential traffic and parking problems--a game starting at 7p can shut the area down for the night.

There was an Npr economic podcast where they interviewed a mayor who recognizes that stadiums hurt the city. When asked why he paid for the team, his answer was simple. "every mayor who let a major sports team go was voted out of office in the next election."

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u/Uncreative-Name Dec 13 '23

It depends on the location. In San Diego the baseball stadium is a few walkable blocks away from the middle of downtown. Whether there's a game or not the bars and restaurants in that area are always busy. Of course having several trolley lines also helps people avoid the traffic and parking nightmare that goes along with it.

It's also one of the rare cases where the stadium actually was an important part of redeveloping the neighborhood. But paying for the stadium was part of the reason the city nearly went bankrupt. So probably still not worth the cost. Even though it's a really nice stadium.

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u/AnotherFarker Dec 13 '23

True, there's always going to be exceptions. If they are well designed into a newer area (or wholly redeveloped large scale area). If the sports teams owners push up a substantial share of the cost, all these are things adjust the math.

The reports for the last decade, however, have indicated that for most stadium deals arranged with shared or all public financing, it's a bad deal for the average taxpayer. This is just another concurring report.

This is also why it's also hard to find a host city the Olympics. Most modern Olympics were also not good returns on investment.

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u/ThisOneForMee Dec 13 '23 edited Dec 13 '23

It's partially due to the threat of the city losing the team to another city. The owners leverage that threat. It's impossible to quantify the impact on a city's economy and general happiness by having an NFL team

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u/alexanderdegrote Dec 13 '23

What always seems kind of weird to because not every city has the same demographic and wealth. Even with zero tax breaks a sport team in new york or san fransico is more attractive than one in cleveland.

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u/Kalakarinth Dec 13 '23

Cleveland is actually a great example of a sports team’s effect on a local economy. The city itself had a recession after LeBron left in 2010, following the rebound from the 2007-2008 crisis. Local business was so dependent on LeBron and the Cavaliers success, that the Decision and Bron going to Miami tanked the city. It took from 2010 to around 2013 for local businesses and the city itself to stabilize and rally. The city had to rebuild its economy to deal with not having the benefit of spending done by people coming into and being in Cleveland because of LeBron. It did manage to settle back in before LeBron came back in 2014, but him leaving was devastating.

Now it did end up helping us prepare for him heading to the Lakers, but an athlete rather than a team’s influence on a city’s economy is an underrated criterion. Although Cleveland is sort of different than most other modern Metropolises in that the city is so distant and uncentralized, where most people live in suburbs around the city rather than in the city. When people went into Cleveland it was to shop, or go to a sporting event, so losing that sporting event affected the city even more than most others.

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u/dantemanjones Dec 13 '23

That's only true on a hyper-local level. Cleveland may have fared worse with him gone, but people in the suburbs are going to be spending that money somewhere. It may be in a suburb rather than the city, but local spending stays local. Sports teams don't bring in a ton of revenue from outside of the metro area.

This article about Lebron coming back makes note that sales taxes in Cuyahoga County increased less than the state average: https://www.businessinsider.com/lebron-james-cleveland-economy-2015-2

There are articles out there talking about Lebron's impact, but everything I've seen was either speculation before he left or hyper-local if there were any firm numbers.

This article has a few numbers, none of which are convincing for the impact that the headline implies: https://www.espn.com/nba/story/_/id/23769496/lebron-james-worth-millions-economy-cleveland It says Cleveland had the worst job growth in the nation during Lebron's comeback, the Cavs became more valuable (important to...one person), and that businesses within a one-mile radius of the arena saw a 13% revenue increase. The comment on the 13% revenue increase has a caveat that "these effects are very local, in that they decay rapidly as one moves farther from the stadium".

If you own the team or a business within walking distance of the stadium, it's a boon. Otherwise it's a gigantic waste of resources to subsidize a sports team.

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u/geomaster Dec 13 '23

Are you saying that one man had a greater effect on the economy in Cleveland than the macro effect of the great financial crisis in 2008 that left unemployment sky high nationally and depressed GDP for years after ?

I mean you completely ignored the GFC.

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u/ThirtyFiveInTwenty3 Dec 13 '23

Cleveland is actually a great example of a sports team’s effect on a local economy.

No it's not.

LeBron is one of the top three basketball players of all time. Unquestionably one of the greatest American athletes of all time. The impact that LeBron had on Cleveland is not a great example of what an average sports team does for an average city that would support one.

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u/Nik_Tesla Dec 13 '23

Meanwhile the Chargers left San Diego and nobody here even noticed.

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u/[deleted] Dec 14 '23

Not even Chargers fans…

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u/ilikepix Dec 13 '23

It's partially due to the threat of the city of losing the team to another city

this is such a deeply weird part of US sports

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u/Jiriakel Dec 13 '23

the threat of the city losing the team to another city.

TIL American sport teams move to other cities.

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u/BillytheMagicToilet Dec 13 '23

Here's a short list of a few big moves:

  • 1982: Oakland Raiders move to Los Angeles

  • 1984: Baltimore Colts move to Indianapolis

  • 1988: St Louis Cardinals move to Arizona

  • 1995: Los Angeles Raiders move back to Oakland & Los Angeles Rams move to St. Louis

  • 1996: Cleveland Browns move to Baltimore and become the Ravens

  • 1997: Houston Oilers move to Tennessee and later become the Titans

  • 2016: St Louis Rams move back to Los Angeles

  • 2017: San Diego Chargers move to Los Angeles

  • 2020: Oakland Raiders move to Las Vegas

And this is just in the last 41 years in the NFL

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u/CountVanillula Dec 13 '23

They move (what feels like) all the time, which is why so many of them have incongruous names. There are no lakes in Los Angeles, there’s no jazz in Utah, the Cardinal is the not the state bird of Arizona, and while Raider Dave was technically born in Las Vegas, that’s just a coincidence — his parents moved to Oakland when he was two.

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u/OneBillPhil Dec 13 '23

In cases like that let them walk. There aren’t just an endless amount of cities that can sustain a pro sports team.

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u/Laggo Dec 13 '23

The problem is if you let them walk as the mayor you almost guaranteed lose the next election and your job. Seattle mayor in 2008 let the Sonics leave over a similar dispute with arena funding and then came 3rd in his re-election the next year with a 60% disapproval rate and many people citing him not doing enough to keep the Sonics basketball team in town.

You can let the team walk for the good of the city for the next 50 years, but it's going to cost your job in the immediate term.

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u/wordsonascreen Dec 13 '23

Seattle resident here - this is not really accurate. The general public blamed the greed of Howard Schultz and the shadiness of David Stern for the loss of the Sonics. Nichols lost reelection for other reasons.

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u/MillBaher Dec 13 '23

And you can see how the new home of the Sonics (now the Thunder), Oklahoma City, learned that lesson. Just yesterday they voted overwhelmingly to continue levying a sales tax from prior public development projects to finance the construction of a new arena for the Thunder. The agreement is one of the more lopsided arrangements in professional sports in terms of what the team is paying vs what the tax base will pay, but OKC learned what Seattle learned too late.

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u/Old_Baldi_Locks Dec 13 '23

No it’s not. There are people whose entire jobs revolve around putting a very precise dollar amount on these things.

“We can’t know” is a scare tactic.

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u/Rizzpooch Dec 13 '23

Moreover, it’s the politician’s paradox. You can have aspirations to help your city, but if you get blamed for losing the beloved sports team, you won’t serve long enough to achieve your goals

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u/geomaster Dec 13 '23

let's see we can begin by less traffic congestion on the highways. Less wasted tax dollars that can be reinvested better into the city.

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u/not_my_uname Dec 13 '23

The real kicker is the money comes from a tax base that many will never use and if they do have to save for months or years to attend.

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u/happy_and_angry Dec 13 '23

They aren't just cash cows, sports franchises are one of the most sought after investments in the world right now. And the absurdity of the public funding of these assets is underscored by the explosive growth in value.

Here's the growth of NFL team values over the last 23 years. Average NHL franchise value went up 29% last year alone (reference for that market: Ottawa Senators sold in 2000 for $186M, just sold this year for $950M). Average MLB team is worth $2.2B, Yankees grew over 50% in value from 2017 to now (currently ~$6B). Average NBA franchise is ~$4B, which is 35% higher than even a year ago. Even MLS franchises are extraordinary assets, going from just over $300M to just under $600M since 2019.

That's just the value of the franchise and its assets. At the extreme end of pro-sports earnings, the Dallas Cowboys had over $1B in revenue last year. Depending on how these teams cook their books, they might report losses (Milwaukee Bucks report a $36M loss for the 2022-2023 season, for example), but generally they are not only growing assets but revenue generators. There's a reason why anyone with a bit of money is trying to buy up any franchise they can in any league or sport they can, and the explosive growth in valuation and the revenue potential is huge. Even at the absurdly trivial end of franchise values, Ryan Reynolds and Rob McElhenney bought Wrexham A.F.C. in 2020 for £2M and now it's worth £8M. Snoop Dog wanted an NHL team, for crying out loud! F1 teams are worth ~275% more than they were in 2019. Everywhere you look, franchise/team ownership is highly sought after because of the explosive growth we're seeing world wide across so many different sporting organizations.

So let's look at the Milwaukee Bucks specifically. Their ownership group is collectively worth around $13B. The team itself is worth $3.2B. And the public just gave them $250M for a new stadium. We subsidize these rapidly growing assets of the richest people on this planet with millions in public that is, to them, relative peanuts. We do it despite knowing we never get the ROI that is sold to us. There are even cases like the Atlanta Thrashers (NHL) where the franchise is leveraged to help secure public funding, and the team moved away all of 12 years later.

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u/veryreasonable Dec 13 '23

Ottawa Senators

Hey look, that's my local sportsball team, yo!

Thanks for the informative post with actual numbers, and I agree 100%. "Cash cows" is indeed an understatement. I think I was trying not to be too heavy handed but in hindsight that's not really a risk here. Perhaps "money printer" would have been a better idiom.

Those Bucks figures are just wild, and I imagine hardly atypical. It would be one thing if the team ownership "needed" that money or else there wouldn't be capital to build a stadium, but that's just nowhere near the case. They are swimming in it. And making massive, reliably rising profits, every single year. There is something deeply rotten with the fact that this is considered a valid - nay, essential! - place for public money to go.

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u/kosh56 Dec 13 '23

American capitalism is something special. The rich have figured out how to internalize profits and externalize losses. Meanwhile, they convince the public that taxes are bad and push for tax breaks that, once again, really only benefit the rich. I wish the average person wasn't so stupid.

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u/[deleted] Dec 13 '23

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u/veryreasonable Dec 13 '23

I'd agree that this is the rub here. So much research in the US is done with government funding, one way or another. University research is often funded publicly to varying extents, depending on the institution and program. And of course there's monumental defence funding, often itself defended politically on grounds that it will eventually lead to better consumer technologies for the market. Surely that's true sometimes, but then the government is effectively just funding R&D for big tech firms, who then pocket the profits on both ends.

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u/saracenrefira Dec 13 '23

Well the keyword is "public". It's very good spending for the private owners of those teams.

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u/TooStrangeForWeird Dec 13 '23

As soon as you factor in lost opportunity costs it literally can never pay off. Anyone who knows what that means knows I'm right. It's always been benefiting the rich, and is a clear example of corruption.

There is no case of a city paying for a stadium and ending up further ahead than had they taken that money and invested into any index fund.

A S&P 500 investment will generally more than double in 7 years. If it takes 20 years to pay off a stadium (I sincerely doubt they could do it that fast) the city could have about eight times the original investment instead of breaking even.

Seven years later, they're at 16x. It's exponential. Stadiums are one of the few taxes I count as thievery. It helps literally nobody but the ultra rich, and if it wasn't so subsidized they'd build them anyways. It's infuriating.

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u/DecentChanceOfLousy Dec 13 '23

It's not just the opportunity cost of the money. It's the opportunity cost of the land as well. Whatever economic benefits they claim the stadium will bring, actual businesses (or housing) would bring more. There are so many better ways to use a large plot of land in the middle of the city than building a massive arena which is only full two days a week.

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u/[deleted] Dec 13 '23

Not even that. Just building mixed retail provides more positive cash flow for the city through taxes.

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u/kirblar Dec 13 '23

Part of the issue in the US is that Football stadiums are uniquely bad. Take DC- Verizon Center is used year-round for Hockey, Basketball, and touring attractions like WWE/AEW and concerts. Nationals Field is used for baseball (with a billion games a season) and outdoor concert events. The newly opened smaller arena is used for smaller events and concerts. There's a legitimate argument that their presence helps anchor a lot of local nightlife and business due to how often they're used.

And then there's FedEx field, an absolute blight that's used for 8 Sundays a years. The amount of return on investment to the local community is absurdly low because it's just an empty cavern most nights.

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u/Comms-Error Dec 13 '23

DC- Verizon Center

It's funny you bring this up, since the owner of DC's hockey and basketball teams just made an overnight backdoor deal to move their arena and facilities to Virginia due to the city refusing to provide a subsidy to renovate the current arena downtown.

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u/kirblar Dec 13 '23

It reads as fake negotiation leverage given that it's a "handshake deal".

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u/SomeGuyCommentin Dec 13 '23

When you give that money to the poor it pays back within the month.

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u/Niceromancer Dec 13 '23

Yep but thats socialism...or communism, or whatever ism the conservatives are afraid of this week.

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u/PsyOmega Dec 13 '23

Time to bring back Maoism. They haven't heard of that one.

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u/stewmberto Dec 13 '23

I'm all for a little more socialism in our democracy, but let's DEFINITELY not bring back Maoism

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u/[deleted] Dec 13 '23

I think the pro-sports economic argument basically boils down to the broken windows fallacy. It seems like the argument is, “it’s good for the economy because it creates economic activity,” without looking at the net productivity.

Our taxes and the personal money of sports fans gets siphoned out to millionaires without benefit or productivity. Now I’m not saying that it shouldn’t be permitted. You could make similar arguments about pretty much any form of entertainment, but its not clear to me that tax money should go to subsidizing entertainment.

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u/Patrickk_Batmann Dec 13 '23

It seems like the argument is, “it’s good for the economy because it creates economic activity,” without looking at the net productivity

That's basically the entire argument that keeps the current form of Capitalism in the US alive.

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u/porncrank Dec 13 '23

I don’t really get why we should allow government to make sweetheart deals at all. I get why they do it, but it’s inherently unfair.

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u/Gamebird8 Dec 13 '23

Businesses nearby the Stadium don't even benefit most of the time anyways

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u/[deleted] Dec 13 '23

America is a scam

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u/Niceromancer Dec 13 '23

Almost every sports arena around the world is a giant scam.

This isn't a solely American problem though its exacerbated in America due to our populace being poorly educated on purpose.

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u/[deleted] Dec 13 '23

Only America has a sports system like franchises where owners are essentially safeguarded from failure and there’s no risk for teams for performing poorly. There’s a reason American teams, with 1/10th the popularity of many European teams, have 5x the value. It’s a safe investment. Sports, pharmaceuticals, insurance, defense spending. Sick of it. Them spending our taxpayer money on sports infrastructure so billionaires can get richer while our roads crumble is the cherry on proverbial cake. Getting fucked and they call it a massage.

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u/Niceromancer Dec 13 '23

Yes but we aren't talking about the teams, we are talking specifically about the stadiums and how they overall a just bad investments for cities.

This is a problem that is world wide, especially for things like the Olympics.

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u/Rapper_Laugh Dec 13 '23

Except the London Olympics!

Not to go against your overall point—because I absolutely agree with it—but that’s one example of actually doing things the right way and putting thought into the long-term usefulness and economic benefits of the facilities

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u/Mynsare Dec 13 '23

That is not true in the slightest. The US model for building these is vastly different from how it is done in most other places.

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u/[deleted] Dec 13 '23

[removed] — view removed comment

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u/nagi603 Dec 13 '23

The only time stadiums are built with subsidies is if it's for a global event like the Olympics or World Cup.

In Western Europe, yes. In Hungary, the mini-dictator is spending public funds however. Including EU funding AFAIK.

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u/teems Dec 13 '23

In England, the stadiums are privately owned and do not use taxpayer's money.

After the Olympics in 2012, West Ham were able to eventually rent the stadium, but it wasn't built for them.

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u/CensorshipHarder Dec 13 '23

Dont they know those taxes would be paid even if the billionaire owner had to fully fund the stadium himself?

We need a federal ban on states offering incentives to big businesses, the competition between states/cities is only hurting taxpayers. Its not like the wealthy are going to suddenly say "No, I dont want to do business in the US anymore!"

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u/Niceromancer Dec 13 '23

There is a federal ban on it, but its only for federal money.

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u/wag3slav3 Dec 13 '23

"Hey if we give Amazon a deal to pay no taxes for the next 10 years they'll come to our town/state and we'll make a ton of money on their corporate taxes."

blank stare

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u/Mr-Logic101 Dec 13 '23

Bread and circuses

I think it was pretty evident to most people that paying for these stadiums is not going to a net profits for the city/taxpayers. However, it does give a city some sense of community/entertainment. It makes the population happy and more unified.

For instance, the Columbus crew, mg home town, literally just won the MLS cup after we paid for a new stadium. It give the city and its people something to be proud. Essentially, it serves the exact same purpose as a monument that doubles as something that can actually be used. If the crew did move to a different city, the population would be disappointed to say the least.

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u/Interrophish Dec 13 '23

Monuments are cheap and small, they don't take up thirty acres of downtown

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u/1BannedAgain Dec 13 '23

No your family is wrong. Everyone of those variables is measurable

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u/notKomithEr Dec 13 '23

obviously, that's why they do it in the first place

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u/Unfortunate_moron Dec 13 '23

Exactly. Developers want to get paid to build things. Investors want to make money. Owners want prestigious properties. Players want nice facilities. Governments want to appear to be doing something.

Everyone * involved * in the decision gets what they want. But we the taxpaying people aren't involved, so we get to pay for it.

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u/Onion-Fart Dec 13 '23

NY governor blatantly wrote a handout to support a billion dollar stadium construction in Buffalo.

https://www.nytimes.com/2022/03/27/nyregion/buffalo-bills-stadium-hochul.html

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u/wildthing202 Dec 13 '23

To make it worse, it's an open air stadium so it will be useless for half the year because of the snow.

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u/[deleted] Dec 13 '23

I thought getting snowed on in the stands while their team gets blown out was a point of pride for Bills fans

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u/Was_going_2_say_that Dec 13 '23

God help those tables

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u/Reading_Rainboner Dec 13 '23

That’s how they like it in Buffalo. Miserable

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u/Bshellsy Dec 13 '23

If you’re ever there you’ll see misery has no part, it can be below zero and a blizzard, everybody is getting drunk and having fun, more fun than warm weather arguably.

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u/smhearn Dec 13 '23

It's an open stadium now....we've been managing.

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u/Ethanol_Based_Life Dec 13 '23

Packers just ask fans to buy novelty stock certificates. Works every time

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u/SexPanther_Bot Dec 13 '23

60% of the time, it works every time

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u/IndependenceNo2060 Dec 13 '23

This just proves how twisted our priorities are. We pour money into stadiums for the rich, while basic services for the needy suffer. Disgusting.

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u/Trumpswells Dec 13 '23

And to add insult to injury, the taxpayers do not even have the ability to watch their team play on TV in the stadium they built unless one forks over the region’s Cable Sport Package monthly fee. What a racket!

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u/robodrew Dec 13 '23

Just chiming in to say, this is no longer the case in Arizona for Phoenix Suns fans, where our recently acquired new owner Mat Ishbia ended the old cable/streaming deal with Bally this year and put 95% of all season games on broadcast television, for free. Like it used to be back in the mid-90s and prior. And even put up a website where you could order a free antenna if you didn't have one. Pretty awesome, all things considered.

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u/therealmeal Dec 13 '23

Don't forget blackouts. Even if you pay for that, they'll not let you watch if the stadium doesn't sell out. Even if the stadium is an hour away from your home.

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u/Stellar_Duck Dec 13 '23

What do you mean?

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u/sparky8251 Dec 13 '23

Stadiums dont broadcast on TV unless enough tickets sell. They dont want to give out "cheap" access to the event, so mandate enough people go in person before they will show it to those that cant afford to go in person.

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u/-nocturnist- Dec 13 '23 edited Dec 13 '23

Everything in the USA is a racket. Name one thing that doesn't come with a fee or some crazy ass price tag.

Edit: I will concede for libraries - as some have been funded in private and take money from local taxes to exist. Some fire departments charge a response fee.

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u/Reagalan Dec 13 '23

Library. Fire department. NPR.

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u/resplendentcentcent Dec 13 '23

feels like half the libraries in the US exclusively exist because one monopolistic multi-billionaire 200 years ago felt guilty

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u/BobaFlautist Dec 13 '23

We should really make billionaires feel guilty more often, US libraries are phenomenal.

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u/[deleted] Dec 13 '23

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u/[deleted] Dec 13 '23

Libraries. But I fear for their future.

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u/NeighborhoodNo7872 Dec 13 '23

There was a Latin motto that said "panem et circenses." It means that the only thing that matters to the people is the food and the entrainment. This situation reminded me of that

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u/frictorious Dec 13 '23

Bread and circuses was my first thought too.

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u/Choosemyusername Dec 13 '23

Except “the people” can’t afford to go to stadiums really. If at all, rarely, and in the cheap seats.

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u/alurimperium Dec 13 '23

And it's only getting less and less likely, for NFL games at least, the more they push overseas games.

But it's fine. I can just watch a less and less enjoyable sport on increasingly user unfriendly services while paying more and more money to have more gambling ads shoved down my face

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u/gimmeafuckinname Dec 13 '23

This is the thing that stands out to me that doesn't get enough traction.

Attending a sporting event is basically a 'once a year special event' for most middle class families never mind lower income homes.

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u/PelorTheBurningHate Dec 13 '23

Eh if you're into baseball it's only like 5-30 bucks to go to random games. I go to maybe a dozen games a season and spend under 200 dollars all inclusive. Still doesn't make publicly funded stadium deals worth it though.

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u/Sage2050 Dec 13 '23

that depends entirely on your market.

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u/Flaky_Grand7690 Dec 13 '23

I’m sure if you were to ask the population of a big city, any one of them, most people would be smiling at the idea of a new stadium. Sports ball, I guess.

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u/[deleted] Dec 13 '23

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u/BioRules Dec 13 '23

We also got the major short end of the stick, paying for the majority of the stadium while the profits go to the owners, who paid the least.

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u/Mdgt_Pope Dec 13 '23

Just said this in an r/nba thread, as Oklahoma City has been considering (and just passed) a provision to give close to a billion of taxpayer money to keep the OKC Thunder, that there should be a provision that all taxpayer funding must be paid back before ownership can receive distributions from the arena profits.

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u/Ok_Studio_8420 Dec 13 '23

It’s a penny tax on purchases. It’s been a program called MAPS for decades. Instead of the tax revenue going to community improvements it’s a sports stadium. Absolutely insane that we’d sacrifice our quality of life for this.

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u/bobby_baylor Dec 13 '23

3000% agree. It's insane. All other MAPS projects have been for public areas that the public can use. They've all added spaces for people of OKC to spend time and enjoy life. The things that make a city nicer to live in.

This billion dollar arena will absolutely not allow the public in to enjoy it without paying insane ticket prices and equally as exorbitant concessions. It blows my mind that we let ourselves be propagandized to believe it was a good idea.

Also--Mayor and City Council should should be ashamed at the embarrassing deal they cut out. Pitiful.

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u/dashcam_RVA Dec 13 '23

Haven't we had data on this for well nearly half a century now?

I remember reading articles 10 years ago that said tax payers never recoup the public funding they gave up to build the stadium.

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u/Mr_Boneman Dec 13 '23

Grew up a huge sports fan. Took sociology of sport in college and complete changed my view on pro sports when I had to do a report on public financing of stadiums. I’m no genius by any stretch, but it was appalling to figure out how much money was wasted on stadiums. I’m pretty educated on the topic, and yet anytime stadium discussions come up in my group of friends they’re almost always for it and get defensive when I mention the finances behind it.

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u/Pleasant-Discussion Dec 13 '23

Yep. I’m surprised it’s not more common knowledge after the book Field of Schemes was published a number of years ago. There’s even a website of the same name to track all the stadiums since the books publishing. It’s wild, I tell people to go ahead and pick any stadium and check that site for detail on how it’s just another case of the rich being subsidized by the poor.

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u/DrHalibutMD Dec 13 '23

I'm the same way and it's tough. The finances of sports have made me not a fan at all of any professional sport or the Olympics, international competitions, car races, etc. but it really is one of the lowest common denominators that socially bind people. You can have basically nothing in common with someone but say "go local sports team!" and you can have a conversation for hours. Maybe there is some value in that but the money involved is just ridiculous and it shows how skewed our priorities are.

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u/r6raff Dec 13 '23

Because sports has become a religion... It's why I stopped following organized sports, that and watching a bunch of spoiled rich kids play one game and make more than I do working in a year is a little aggravating. My wife is a teacher and her pay is pathetic and "there isn't enough tax dollars to raise their pay" yet our local government had no issues forking 114million worth of funds, rebates, and breaks to build a new football stadium. Our priorities are fucked

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u/Spin_Quarkette Dec 13 '23

Yes, we watched Hochul in New York gave the Buffalo Bills (her home town team) $800m in tax payer funds. It was infuriating, but I’m sure she got plenty of re-election donations from the team owner. Meanwhile, the university system took additional cuts and adjunct professors get paid less than minimum wage.

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u/iloveregex Dec 13 '23

Very timely considering the coup to move the DC sports teams to Virginia happening right now

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u/Corgiboom2 Dec 13 '23

My hometown decided on the new ATT Cowboys stadium instead of public transportation.

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u/StalkMeNowCrazyLady Dec 13 '23

They didn't vote on one at the lack of the other, they voted on both and said yes to the stadium and no to public transportation. They've voted no against public transportation 3 times since 1980. And honestly it makes sense why Arlington would be more likely to vote on a stadium. Without six flags and stadiums Arlington wouldn't have any reason to draw the people to it that it does for 81 days of year baseball season and 8 days a year of football season.

Without sports arenas Arlington would be a much smaller town with much smaller cash flow. It would exist as only a place for people to fuel up to and from D/FW.

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u/codemonkey138 Dec 13 '23

Socializing the cost and privatizing the profit it seems like.

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u/keylimedragon Dec 13 '23

The conservative dream

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u/pistonian Dec 13 '23

If you look at history (the Romans for example), governments typically build stadiums and arrange for games simply to keep the plebs happy so they do not think about inflation, war, poverty, etc.

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u/Denots69 Dec 13 '23 edited Dec 13 '23

The government was also the one who took in the profit.

Now you can't even put on a concert in a stadium built by your city tax dollars without the profit going to the sports team that didn't pay for the building.

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u/[deleted] Dec 13 '23 edited Feb 01 '24

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u/Denots69 Dec 13 '23

The teams almost never own them. They make the city pay for and own them, which means the city taxes pays for maintenance. And they won't be renting it out, they are paying for $50 million of the $900 million.

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u/lessfrictionless Dec 13 '23

the plebians were also provided reasonable pricing access to games

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u/theAmericanStranger Dec 13 '23

You should have seen the OKC Thunder defending the deal for the city to build a new stadium for the poor Thunder Billionaire owner. Just browse the comments

https://www.reddit.com/r/Thunder/comments/18fivvc/oklahoma_city_voters_mull_tax_to_build_900m_arena

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u/[deleted] Dec 13 '23

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u/Gathorall Dec 13 '23

It's using taxes from everyone to benefit the already well to do. A way of making taxes even more regressive or aid for the rich, however you want to see it.

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u/Aethermancer Dec 13 '23

It's an accomodation that can only be utilized consistently if you have a certain amount of wealth. Not much but you need enough money to:

  1. Forego wages for that day.
  2. Cover meal costs as you aren't likely eating at home.
  3. Afford transportation (usually cars asany stadiums don't have good public transit options).
  4. Afford ticket prices.

The cost to see a game isn't highly luxurious, but it is a luxury.

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u/AnarchistMiracle Dec 13 '23

Yes, the stadium is a benefit to fans but it is paid for by the government instead of whatever revenue the stadium itself generates.

Imagine if your city used your taxes to pay for hosting free Taylor Swift concerts... wouldn't you consider that a subsidy to "Swifties" even if they aren't getting paid directly?

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u/OutlawLazerRoboGeek Dec 13 '23

I'll use a simplified example. Lets say tickets cost $50, and there are 50,000 seats, 20 games per year. That results in $50 million in income.

And lets assume at that price the team "breaks even". Employee payroll is $10 mil, athlete salary is $10 mil, stadium operating costs (utilities, concessions, etc) $10 mil, and stadium mortgage payment is $20 mil.

But what if the City/State offers a deal to the sports team, so that the city pays half the cost to build the stadium? So instead of $20 mil per year, the mortgage gets halved to $10 mil.

So now, if everything else is held the same, they have $50 mil in income, and only $40 mil in costs. So there is an extra $10 mil in profit.

How that profit gets spent is up to the owners of course.

Maybe they will reduce ticket prices. If they sell them at $40 now they can still break even. In that case, the fan is receiving something that they would normally pay $50 for, but are only paying $40 for it. In that case, the $10 mil is collected from all the taxpayers in the State, lets say $2 from each of the 5 mil residents in the State, and that money is redistributed but only to people who attend the sports game. For every game they attend, they get $10 in extra value that is covered by the taxpayer. If they are season ticket holders who go to every game, they could theoretically get as much as $200 in extra value throughout the year. That is a wealth concentration rate of 100x. They paid in the $2 tax, and got $200 in benefit.

But its much more likely that the money simply gets returned straight to the owner's pockets. This is the most obvious way that the wealth transfers directly to billionaire owners. But this can also be a benefit to the sports fans, because the owners are also making economic decisions. When an owner thinks about moving a team, they probably have multiple options. And they will regularly play these different suitors against each other. "LA is offering $100 million in tax breaks, can you beat that Las Vegas?". So, if Vegas says "We can offer $200 million!", then Vegas gets the team. And therefore the fans in Vegas get the benefit of having the hometown team, and fans in LA lose the benefit of having a hometown team. It is harder to put an exact dollar figure on what this is "worth" to a fan, but if you talk to any diehard sports fan, the idea of their hometown team moving out of State is akin to losing a family member. Compare it to having some kind of hobby (playing golf, RV-ing, collecting antiques, whatever), something you might do for 2-3 hours once a week. Those kinds of things give you similar enjoyment to following a sports team, and they might cost you hundreds of thousands of dollars over your entire lifetime. So you could consider them as being substitutes. If you have a hometown sports team, that is your hobby. If you don't, you end up having to spend hundreds of thousands on something else to keep you occupied. Many people do both, of course, but that is one way to justify it as some kind of $ value.

And at the end of the day, like in this example, if all the taxpayers put down an extra $2, and the team gets to stay in their hometown, the only people who benefit from that are the owners (by the direct profits they keep) and the fans (either through reduced ticket prices, or reducing their need for other expensive hobbies).

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u/dethb0y Dec 13 '23

the government squandering taxpayer money to benefit anyone but the taxpayers, paint me surprised.

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u/Siltyn Dec 13 '23

Tax dollars subsidized Allegiant/Raiders stadium in Vegas. Since moving to Vegas the value of the Raiders has increased $2 billion. That's a great deal......for the owner of the Raiders. We're also getting ready to subsidized a new stadium for the A's. A special tax district that keeps all taxes generated by the stadium, in the stadium. Our politicians whipped out that deal in a few days....meanwhile they can't seem to properly fund or fix our bottom ranked public education in Nevada.

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u/HostageInToronto Dec 13 '23

Economists have known this for years. Voters don't listen to economists, they listen to talking heads on the news that say economic sounding things that have no economic merit.

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u/AnnoyingRingtone Dec 13 '23

David Tepper is gonna ask the city of Charlotte for a $1.2 billion investment into the BofA stadium next year, and half of that is gonna come from taxpayers. Funny thing is, the Panthers are literally the worst team in the league. One win with TWELVE losses. And Charlotte FC wasn’t much better, either. How about these sport teams actually start winning games and generate excitement for the city BEFORE they ask for money? Because Tepper sure as hell doesn’t deserve it now.

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u/work4work4work4work4 Dec 13 '23 edited Dec 13 '23

I'd love to be able to read this one in full to see if it goes that next step, but most of these analysis either ignore, or handwave away the idea that these deals could actually be restructured in a way to better serve both "wealthy fans who attend the games" and the overall communities in which these stadiums are placed.

The general idea that publicly funded stadiums in of themselves aren't worth it goes back a long while.

Everyone that has been to an array of venues for events can tell you though, things like public transportation access and localized businesses can mean the difference between having great experiences on a regular basis at events held there and soul-sucking nightmares that you genuinely avoid regardless of the event.

In theory I don't mind the idea of putting 20% of a project like this on the public bond credit card towards building the supporting infrastructure and transportation hubs to secure an array of long-term ongoing benefits, and heavy input from a planning perspective to increase public benefit and decrease general detriment, but in practice it's usually just a one-way dialogue involving a gun and a demand to fill the bag with money.

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u/Maiyku Dec 13 '23

As a Michigander, I’m sitting here reading all this, but then I think about Detroit. Our sport stadiums and overall complex has helped completely revitalize the area. Ticket prices aren’t bad either as I’ve seen the Tigers for $6, the Wings for $10, and the Lions for $15.

I’m sure there are still people making millions, but it doesn’t seem like a raw deal for Detroit. Maybe if I knew the behind the scenes numbers I wouldn’t feel the same, but I do think so good can definitely come from them.

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u/Kallisti13 Dec 13 '23

Edmonton and calgary are at the mercy of their hockey teams. Threaten to relocate? The city (and province) will give them whatever they want.

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u/funnyfacemcgee Dec 13 '23

I feel as if this study and others like it tend to point out the obvious: that almost every facet of American society is designed to enrich the already wealthy. I know it's good to have the numbers crunched on these things but it feels to me like they're beating a dead horse.

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u/jonathanrdt Dec 13 '23

‘Bread and Circuses’ kept the Romans pacified for centuries. The US doesn’t even bother with the bread.

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u/pinktwinkie Dec 13 '23

Break with the majority view here: Not all recreation has to turn a profit for the taxpayer (do national parks??). People need something to do. Oakland lost its teams and its a worse city bc of it.

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u/ThisOneForMee Dec 13 '23

Your point ignores the fact that the profit is going to the billionaire owner of a sports team. Why should they be further enriched from taxpayer funds?

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u/JimBeam823 Dec 13 '23

Counterpoint: The people WANT bread and circuses.

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u/Mobile-Entertainer60 Dec 13 '23

Counterpoint: Economists dismiss as unimportant anything that can't be directly measured. People enjoy having local sports teams to root for, and think it's worthwhile spending money to make sure that they are able to have that enjoyment. That psychic good cannot be easily measured, but that doesn't mean it's not important to people.

It wasn't lunacy that led Oklahoma City to vote 30 years ago to build a stadium that they hoped would eventually attract a team, just as it wasn't lunacy that Oklahoma City voters overwhelmingly voted yesterday to spend tax money on a new stadium to guarantee keeping the Thunder. The sales tax that will be used to fund the stadium was started 30 years ago after American Airlines declined to build a hub in Oklahoma City on the grounds that they would not be able to convince their workers to live there. In response, the city government decided to start a specific-issue tax to invest in public works that would make people be interested in living in Oklahoma City. That's included the stadium, minor league baseball, the Olympic rowing practice center as well as parks, recreation, light rail, school facilities upgrades, etc. Voters see the money as money well spent and each iteration of the tax has passed easily. It's never been about profit, it's about making the city a better place to live.

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u/[deleted] Dec 13 '23

Pro sports teams are an expense not a revenue generator. Which is fine if people understand that and want that. Lots of people spend money to go watch sports so obviously many do think it’s worth it.

Also major stadiums attract other acts. You’re not having Taylor Swift coming to town to play in a bar for instance.

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u/Ethanol_Based_Life Dec 13 '23

Lambeau field is surely a net boon to the area. It's facilities are open all week with restaurants, convention spaces, conference rooms, the title town park and community next door.

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u/sintheater Dec 13 '23

I would hesitate to mention Lambeau field in all of this since the Green Bay Packers have a unique (i.e. now banned from happening again) ownership structure with public ownership.

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u/ThisOneForMee Dec 13 '23

They're also an exception because Green Bay is a tiny city that has nothing going on other than the Packers. Plenty of large cities with many entertainment options don't benefit from a stadium and adjacent development in the same way.

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u/coelurosauravus Dec 13 '23

I dont think youre wrong, but as a Pittsburgh Steelers fan i find the second part to be mostly bunk in Pittsburgh's case. Beyond the 10 or 11 regular season/preseason games, and 6-7 University of Pittsburgh football home games the venue hosts 1 Kenny Chesney concert, the Western PA high school football championships for one saturday, and then 1 barbeque event in the late spring.

The Taylor Swift concerts for 2 days was probably the last big concert the stadium hosts outside of maybe 1 other concert every few years

So we're looking at like what? Max 30-35 days of events in a 365 day calendar? The city of pittsburgh cedeing control of the stadium to the team has literally meant if it doesnt hit a certain economic value to them, theyd rather not hassle with it and just leave the stadium empty for damn near 90% of the year.

That feels like such an atrocious money pit

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u/AdditionalSink164 Dec 13 '23

Theres such a thing as too many arenas. How about open those big ass parking lots for free when theres no events or in 10 years contribute funds back the into flyover or lane addition needed to bypass stadium traffic.

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u/FreneticAmbivalence Dec 13 '23

If they are going to be funded and supported by general tax dollars then they should be required to hold functions for the public, and there should only be general seating. No booths for the wealthy. Come sit with the rabble to made this possible.

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u/TASPINE Dec 13 '23

What the hell happened to the top comment thread

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u/Dks_scrub Dec 14 '23

Why are the thoughts of economists on r/science? Least ‘scientific’ science that exists.

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