Characterizing a proposed financing deal for a St. Louis soccer stadium as “welfare for millionaires,” Missouri’s new governor ruled out in January the possibility of using taxpayers’ money or tax credits to entice developers to build stadiums in the state.
In December 2016, after Gov. Eric Greitens (R) first announced his opposition to the plan, the Missouri Development Finance Board, a state government agency tasked with “[assisting] infrastructure and economic development projects in Missouri by providing the critical component of the total financing for projects,” delayed plans to give $40 million in tax credits to an investor group attempting to attract a Major League Soccer team to St. Louis.
In April, lawmakers will ask voters to approve increasing sales taxes to pay for a planned $60 million contribution to the private-investor group.
Cites Lack of Economic Benefits
Graham Renz, a policy researcher at the Show-Me Institute, says the promised economic development benefits of sports stadium subsidies almost never materialize.
“We’re told the stadium’s going to boost the economy, it’s going to spur development, and it’s going to be a great deal for taxing jurisdictions, because they’re going to get all this new tax revenue,” Renz said. “When we look at the data, social scientists are telling us, almost flatly and unanimously, that these promises from stadiums never come through.”
‘Taxpayers Always Lose’
Renz says taxpayers lose when sports team owners receive handouts from the government.
“The taxpayers always lose,” Renz said. “Taxpayers never get a return on their investment. There’s opportunity cost, losing out on more meaningful investments that the city could make. There’s also just a continual rise in the cost of living and the cost of doing business in the area, which doesn’t make St. Louis any more attractive to businesses.”
Renz says government should get out of the stadium-construction business.
“We need to ask ourselves, ‘Is it the role of government? Is it the place for taxpayers to shoulder risk for private gain?'” Renz said. “That’s not an appropriate role for the government, and it’s not appropriate for public leaders to burden taxpayers for private gain.”
Previous Stadium Debt Remains
J.C. Bradbury, an economics professor at Kennesaw State University, says St. Louis taxpayers are still paying for a stadium without a sports team.
“They still have a stadium to pay off, and the Rams have left,” Bradbury said. “That’s one of the reasons why these stadium deals are such bad deals. “They still have a stadium to pay off, and the Rams have left,” Bradbury said. “That’s one of the reasons why these stadium deals are such bad deals. All it is doing is transferring local money from [entertainment venues] consumers were already spending money on locally.”
‘Bothersome’ Economic Facts
Bradbury says lawmakers consistently refuse to accept the facts about subsidies.
“As an economist, what is so bothersome about these deals is that they continue to happen over and over,” Bradbury said. “The overwhelming consensus among economists is that there does not appear to be any economic benefit from subsidies to sports stadiums, in terms of the return on investment they generate. It’s not even controversial among economists that these stadium deals don’t generate economic benefits.
“When these stadium deals are announced, they say, ‘We’re not going to listen to the conclusions of the people who have actually studied it,'” Bradbury said. “It’s deliberate ignorance of the subject.”