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Monday, November 22, 2021

Economists Pan Stadium Construction as Economic Development

Posted By on Mon, Nov 22, 2021 at 10:18 AM

click to enlarge The 15-year lease extension and upgrades come with a hefty pricetag for the public - CLEVELAND INDIANS RENDERING
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  • The 15-year lease extension and upgrades come with a hefty pricetag for the public

Most major American cities have likely been through some version of this: A sports team is promising to come or threatening to leave and the key is construction of a new stadium. And while the teams’ owners usually are millionaires or even billionaires, they demand big subsidies from taxpayers to complete the project.

When skeptics ask what public purpose is served by plowing public money into these cavernous edifices, the response almost always is that it will be good for the local economy.

That’s false, a panel of Ohio economists surveyed on the matter overwhelmingly responded last week. In fact, just two of 23 respondents said the economic benefits of publicly funded stadium projects outweigh the costs, according to the survey, which was conducted by Scioto Analysis.

“Sports is a business,” Baldwin Wallace University economist Kay E. Strong, wrote in the comment section accompanying the survey. “Stadiums are the ‘factory.’ Businesses operated for profit should be self-supporting.”

Ohio is no stranger to this debate.

Paul Brown Stadium, home of the Cincinnati Bengals, opened in 2000. By 2011, with the U.S. economy creeping out of the Great Recession, local governments across the country were looking at cutbacks like layoffs as tax revenues remained low and federal stimulus funds were running out.

Hamilton County faced a $30 million shortfall and stadium costs were soaking up 16.4% of the budget. The Wall Street Journal called it “one of the worst professional sports deals ever struck by a local government.”

Columbus also has seen stadium controversies. Under threat that the Major League Soccer team the Columbus Crew would decamp for Austin, Texas, the city government proposed to help build a new stadium downtown.

Reporting by The Columbus Dispatch showed that the city dramatically underrepresented the cost to taxpayers for work related to the soccer stadium and that government authorities were providing little oversight of how the funds were spent.

In any case, the $300 million project will sit idle much more than it’s in use.

According to its 2021 schedule, the Crew played just 17 home games this season. With the Columbus Clippers scheduled to play 72 home games next season and the Blue Jackets scheduled to play just 28 in the current one, it’s easy to see why the Arena District so often seems empty.

The city of Cleveland and Cuyahoga County are about to spend a quarter billion dollars of taxpayer money on upgrades for Progressive Field, even as some city and county councilmembers question the wisdom of the public's financial role in the deal.

In terms of money, publicly funded stadiums don’t pay for themselves, said economist Robert Gitter of Ohio Wesleyan University.

“In general, they are a losing proposition for the city in economic terms,” he wrote. “As to whether it is money well spent for something the citizens want, that is another story but there is not a net dollars and cents benefit.”

But economist David Brasington of the University of Cincinnati said stadiums can bring less tangible benefits.

“It’s national advertising for a city and promotes social cohesion,” he commented.

But Kevin Egan of the University of Toledo pointed out that if a city’s residents didn’t spend their entertainment dollars at sports stadiums, they’d spend them somewhere else nearby  — and he said there are more economically useful ways to spend tax dollars.

“Local economic impact is tiny since if (there is) no stadium/team citizens spend elsewhere,” he wrote in his comments. “More important is that there is MUCH better use of taxpayer dollars to subsidize education, walking paths, expanded public parks, better transportation infrastructure; all local things that actually boost local productivity.”

Originally published by the Ohio Capital Journal. Republished here with permission.

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