Behind the rhetoric about public employees bankrupting cities, there are a few silent drains on city budgets (and now London faces the likelihood that its hopes for a post-Olympics windfall, like nearly every other city in history, won’t materialize.) Sports stadiums are perhaps the biggest single subsidy packages doled out, and nearly every study shoes that they don’t pay off fiscally in the long run. Here’s a good synopsis:
With all this evidence that public subsidies for sports teams and their stadiums are not justified on the basis of economics or civic pride, why are they still doled out? With a limited supply and a more or less credible threat of leaving a city, sports teams are able to appeal to the risk-averse part of city leaders’ brains: People forget about $100 million lost here or there, but the departure of a sports team will be written in a mayor’s obituary.
Efforts to end the subsidization of stadiums via the federal tax code — by limiting the exemption for municipal bonds used for stadiums — are promising in an era when these exemptions are under close scrutiny. But a previous effort to do just that backfired and, in fact, helped create the situation we are in today.The real solution would be weakening the bargaining power of the teams or strengthening that of mayors. With the breakup of professional sports monopolies unlikely and a non-compete agreement among mayors unenforceable, the future will likely hold more stadiums built with public money.