Public Funding for Sports Arenas

Al Renner

The wide world of sports has definitely changed. It is no longer the case that the professionals have to get a supplementary job to earn a living. Today, sports are multibillion dollar industries. Since the 1950’s there has been a shift from privately owned teams to governmentally subsidized franchises. A new era began in 1953 when the city of Milwaukee opted to pay five million dollars for a new stadium so that the Boston Braves would become the Milwaukee Braves.

Forty-six stadiums were built between 1990 and 1998, and in 1999, forty-nine new arenas were in the works. All of these will be subsidized by the government. Of the forty-six stadiums built, over two thirds of the money came from the government and the tax payers. This process has been going on for quite some time and is likely to continue. Why did the government start giving professional sports teams giant gifts in the forms of stadiums?

Sports franchises today could easily survive without government funding. However, they would take a huge hit, owners’ salaries, would go down along with player’s salaries, and teams would be a lot more content to play in a stadium that is twenty to thirty years old. These old stadiums are a lot less profitable for the teams. The game has changed, and so have the fans. Today’s sports fans are no longer your common person. The average person attending sporting events has an income well above the mean income. It is because of this that teams have the potential to extract a lot more money by way of additional seats and luxury boxes. Many teams would like to trade in their old stadiums for new ones, but they wouldn’t be willing to put up their own money to do it. This is where the city government comes in.

There is a trend seen in the four major leagues of sports (NFL, NHL, MLB, and NBA). The leagues have teams which occupy almost all of the biggest cities, but the leagues always leave room for more teams in new bustling areas. Right now the NFL has teams in New York, Chicago, Miami, and Dallas. But, very big metropolitan areas are without teams such as Los Angeles and Las Vegas. By leaving these cities without a team, the league is able to excise power from the cities that do have teams.

The teams can always threaten to move if they don’t get what they want, and what they usually want is a new stadium. The team’s task then is to convince the city that the amount of money they will lose if the team leaves town is greater than the amount they will lose if they build the team a new stadium.

Most of the time the city government agrees to build teams new stadiums. It seems that the city officials usually vote this way because the arguments of the teams and supporters are usually stronger than the oppositions’. There is a reason for this. The people who do benefit from the team staying benefit a lot where as there aren’t any people who are ruined because the team stays. Therefore, the people who do want the team to stay are more likely to become political. The stadiums usually get built, but do the teams really help the city, and is it fair for the government to take tax payers money to use on something as non-beneficial as sports?

It is very hard to judge the economic impact of sports franchises. There are so many factors involved and so many individual cases that no conclusive evidence has been found to support either side of the argument. The teams of course claim that they promote economic development in the cities, but many studies have been conducted and they usually don’t show a positive correlation between the construction of sports arenas and economic growth. In fact, many studies show a negative correlation.

A study was done by The Journal of Economic Perspectives to determine the economic impact. They compared cities of equal populations with and without sports teams. They tried to control aspects that effect the economy. Their study showed that sports didn’t lead to economic growth, but higher graduation rates and more spending on police did.

This seems surprising to many people, but there are reasons why this is true. It would seem as if many people spend money to go to the games. However, a lot of these people are people from the city, and instead of their money going back into the city, their money goes into the sports franchise. This doesn’t apply to the money coming in from out of towners. People think that these people come into the city to watch a game, and they spend a lot of money around town that helps the economy. However, most of these people were already coming to town. They weren’t brought to town by the event, but decided to go to the event when they were already in town. Many of the players have huge salaries, and people figure that a lot of their money would go back into the city. But, very few of these athletes live in the same city they play for so their money goes somewhere else. Even the influx of money coming from the media that covers the game is balanced out when the hometown media goes to away games. The economic impacts aren’t as great as they appear.

The government is taking away money from tax payers and giving it to private franchises. Is this fair? What are the benefits of sports teams. Some people do come to the city just to see the game. This is good for local businesses. Also, the stadium is a perfect venue for many companies to advertise. Also, the feeling of civic pride that the team brings unites some of the people. But, what about those people who aren’t sports fans? It doesn’t seem fair to take money away from people so that others can watch sports.

It isn’t fair. But, no studies can conclusively show that sports hurt the economy. Also, this country is packed with sports fanatics. People who don’t like sports seem to be in the minority. Studies have been done in most of the cities where stadiums were planned to be built. These surveys show that most of the people would be willing to pay taxes to support the teams. This process is not fair for the non fan, but the non fan is the minority, and the cities have been following the rule of the majority.