New San Diego Stadium Would Sack Taxpayers with Big Bill

Published April 14, 2015

Local taxpayers, not private investors, may be on the hook for most of the costs of building a new stadium for the National Football League’s (NFL) San Diego Chargers.

Team officials have been threatening to relocate the team to Los Angeles if a replacement for their current publicly owned venue, Qualcomm Stadium, is not built soon.

City officials estimate building a new stadium will cost at least $1 billion, $400 million of which would be financed by the team and the NFL’s “G-4” loan program. The remaining $600 million, or about $442 per San Diego resident, would be taxpayer-funded. 

Perverse Incentives

Independent Institute Research Fellow Craig Eyermann says owners of sports teams are incentivized to use public money for stadium construction and renovation.

“Even if it doesn’t run over budget, the team’s owners will seek to refresh or update the new stadium and its amenities every several years to stay competitive with its peers, just like Wal-Mart does with its stores,” he said. “That means that the public will also have to pay for their desired upgrades as they try to keep up with the team’s peers, which in this case, would be other teams with publicly-financed stadiums.”

Eyermann says this incentive encourages sports organizations to make taxpayers feel guilty for not supporting higher taxes.

“Unlike Wal-Mart however, if the public balks, the teams would still threaten to move elsewhere to a place that will appreciate them more, while the public would be left with the obligation to pay the debt it took on to build the new stadium in the first place, if they do.”

‘Sucker Cities’

Steve Ellis, vice president of Taxpayers for Common Sense, says sports teams will ask for and receive public funding as long as elected officials anywhere agree to give it.

“Sadly, teams find it all too easy to exploit the economic bribery that they will leave, because there are enough sucker cities out there to make it seem plausible,” Ellis said.

Ellis says the promised benefits of public sports financing often fail to materialize, making it a bad deal for taxpayers.

“Study after study demonstrates that public subsidies for stadiums and sports teams are economic losers,” said Ellis. “There isn’t enough economic activity and permanent jobs associated with the cost to justify the expense of subsidizing construction.”

Jeffery Reynolds ([email protected]) writes from Portland, Oregon.

Internet Info:

John J. Siegfried and Andrew Zimbalist, “The Economics of Sports Facilities and Their Communities: