National Expert Doubts Claimed Benefits of Subsidies

Published May 1, 2007

Prof. Allen Sanderson of the University of Chicago, who has extensively studied sports facility subsidies, says sports arenas do not stimulate economic growth or generate new public revenues.

Sanderson says entertainment dollars are fungible for individuals, meaning money spent on ballgames is money not spent at theaters, department stores, or other places.

“There is simply a substitution of spending on one alternative for another, with little in the way of new dollars added,” Sanderson said.

International Speedway Corp. (ISC) officials, who have joined the Seattle Supersonics professional basketball team in asking Washington state lawmakers for taxpayer subsidies for new facilities, claim this argument does not hold for a NASCAR track, because the majority of fans come from out of state. The company has agreed to put up $180 million of its own money in addition to paying for any cost overruns on the $368 million facility.

ISC officials point out their offer is a great deal more than what Sonics owners are willing to pay for their proposed new arena–only $100 million of a $500 million project.

Can’t Spend Everywhere

But Sanderson says sports subsidies represent an inefficient use of public dollars.

“The monies allocated to these sports facilities by and large come from public coffers that would otherwise have been used for education, police and fire protection, road and sewer maintenance, and other competing uses. Thus, revenues designated for construction and operations invariably come at the expense of other public projects,” Sanderson said.

Amber Gunn