Providence, Rhode Island Taxpayers Fight Stadium Subsidies

Published December 8, 2015

Providence, Rhode Island residents are seeking a referendum to enact an ordinance that would prohibit taxpayer subsidization of sports stadiums. Residents successfully defeated a plan to stick state taxpayers with a bill for stadium construction in April.

Facing public opposition to a plan to divert $120 million in state tax revenues to building a new stadium for the Pawtucket Red Sox, a local minor-league baseball team, the team’s owner Larry Lucchino announced the team would move to another city.

Taxpayer Opposition

Victor Matheson, a professor of sports economics at College of the Holy Cross, says opposition to public funding for privately owned sports teams is more common than many people think.

“It is not unusual for organized opposition to exist,” Matheson said. “Nearly all stadium proposals have some level of opposition. It is just unusual for it to be so successful.”  

Matheson says the boost in attendance and revenue spurred by a new stadium tapers off quickly, leaving owners looking for handouts from the government to cover their expenses. 

“A new stadium, whether located in Pawtucket or Providence, would likely result in a temporary increase in attendance and an increase in ticket prices,” Matheson said. “Past new AAA stadiums raise attendance by 2,200 per game in the first year. By year 10, the attendance bump is down to 250 per game, [or a] 880,000 total bump over 10 years. This is a fraction of the financing costs for building a new stadium, and hence the request for a big public handout.”

Reshuffling Entertainment Spending

J.C. Bradbury, an economist and associate professor at Kennesaw State University, says sports stadium subsidies don’t create new economic activity.

“There is little reason to expect anything more than a reshuffling of entertainment dollars within a community that brings in a minor league team,” Bradbury said. “If a locality wants to fund a team to feel better about itself, that’s fine. Just don’t expect a financial windfall.”

Bradbury says economists generally agree subsidizing privately owned sports stadiums is a poor use of taxpayer dollars.

“In general, most economists believe that minor league baseball is mainly attended by locals, so what goes on is mainly shifting entertainment spending,” Bradbury said. “Obviously, some people come into town even for minor league baseball so there will be some positive impact. … Of course, the same thing could be said about almost every business in town. Unless governments want to get into the business of subsidizing every type of business, minor league sports stadiums don’t seem particularly deserving.”

Michael Bates ([email protected]) writes from Tulsa, Oklahoma.