NFL Player Joins Private Investors’ Stadium Financing Proposal

Published December 22, 2016

A player on a Seattle, Washington professional sports team is partnering with a group of private investors to finance construction of a new sports stadium in the city.

In November 2016, NFL Seattle Seahawks quarterback Russell Wilson announced he was joining a team of investors, led by stock-market investment company president Chris Hansen, that aims to finance construction of a sports stadium to house a National Basketball Association (NBA) team. Seattle does not have an NBA team at present.

Hansen’s proposal, announced in October 2016, would finance the stadium’s construction without any direct taxpayer subsidies if lawmakers reduce the city’s business taxes on revenue generated outside the city and waive the stadium owners’ requirement to remit the city’s entertainment tax.

Hansen is also requesting the city government transfer ownership of a 0.12-mile stretch of road to the stadium owners, upon which the arena is planned to be built.  

City lawmakers and representatives of The Port of Seattle, a government authority managing trade and travel in the county, have voiced concerns about the potential effects of vacating rights to the road, saying it would harm accessibility to the taxpayer-owned port.

Ignoring the Evidence

Marc Poitras, a professor of economics at University of Dayton, says lawmakers ignore the evidence when expecting sports stadium subsidies to pay off.

“Most studies show that sports arenas do not deliver the promised economic benefits,” Poitras said. “The idea is that the sports facility will attract commerce and revitalize the downtown area of the city, but studies show it does not work very well. People commute in from the suburbs to see the game, then go back out. … Maybe they spend a little money at a nearby bar or restaurant, but it doesn’t amount to much.”

Robbing Suburbs to Pay Downtown

Instead of generating new economic activity, sports stadiums cause people to shift spending from other locations and diversions, Poitras says.

“Even to the extent that the policy might work, economists aren’t too impressed with it, because it is a ‘beggar-thy-neighbor’ effect,” Poitras said. “That is to say, the additional commerce that occurs downtown comes at the expense of the suburbs. People eat more meals downtown, supporting a few more downtown restaurants, but they eat correspondingly fewer meals at suburban restaurants, causing the suburban market to contract. The result is merely a shift in economic activity from one geographic area to another, but there is not more economic activity overall.”

‘Contentious’ Fight Over Road Access

Paul Guppy, vice president for research at Washington Policy Center, says the government road is the proposal’s main item of contention. The Port of Seattle, a government agency responsible for operating harbor facilities and the Seattle-Tacoma International Airport, opposes transferring the road, because it might change traffic flow in the city.

“There is one issue that is really contentious: vacating a public street and giving it to the stadium,” Guppy said. “That’s the interesting dynamic about this case. It’s less about the subsidy. The owner came out and said he could do without the public subsidy, which might be unprecedented in the world of sports.”

‘Could Be a Win-Win’

Guppy says Hansen’s proposal could benefit government interests, consumers, and taxpayers, in addition to the private investors.

“It could be a win-win,” Guppy said. “That’s what they’re trying to get towards, something that would allay the concerns of the nearby Port of Seattle. It’s another government agency. You’re giving a public asset, a street, to private interests.”