Rhode Island Legislature Considers Sports Stadium Subsidy Deal

Published October 20, 2017

The Rhode Island Legislature heard arguments over whether to give $38 million in state taxpayer money to the owners of the Pawtucket Red Sox (PawSox), a local minor-league baseball team requesting subsidies to finance construction of a new stadium.

On October 3, the Rhode Island Senate Finance Committee held the third of six planned committee hearings about a proposed subsidy deal to give the team’s owners up to $38 million in taxpayer money to finance construction of a new ballpark.

Currently, the PawSox play in government-owned McCoy Stadium.

Since 2015, the team’s owners have regularly threatened to relocate the team to Providence if state lawmakers refuse to subsidize construction of a new stadium.

Political Calculations

Mike Stenhouse, chief executive officer of the Rhode Island Center for Freedom and Prosperity, says the stadium deal has created an unusual political alliance.

“The progressive Left is fighting this as wasteful spending and corporate cronyism,” Stenhouse said. “Republicans see it as an incredible political opportunity, because we have a gubernatorial election next year. They are ready to skewer Democratic leadership and the governor, who is likely running for reelection, if they support this deal. The Left and the far Right are together on this, but for different reasons.”

Sentiment vs. Economic Realities

Stenhouse says he would like the team to stay in Pawtucket.

“As a player and a fan of baseball, having a professional minor league franchise is a badge of honor for our state,” Stenhouse said. “Personally, I’d love to see the team stay. I think it’s good for our state, and I’m not even talking about economic development.”

David Surdam, a University of Northern Iowa economics professor, says sports stadium subsidies don’t generate prosperity.

“The new stadium creates visible economic activity that largely displaced alternative activities,” Surdam said. “It is doubtful that much, if any, economic growth or benefit transpires. In fact, there might be a diminution in the residents’ overall satisfaction, if sufficient people disdain sports.”

Benefitting Few, Costing Many

Building privately owned sports stadiums is not the proper sphere of government, Surdam says.

“My opinion is that the government should not be heavily involved in activities whereby a few get disproportionate gains at the expense of the many,” Surdam said. “In a perfect world, if the stadium was worthwhile, private-sector lending—or creating equity within the franchise itself— should suffice in creating the capital funds to build the stadium.

“If you define corporate welfare as privately owned businesses gaining benefits at the expense of taxpayers, then the stadium subsidies qualify,” Surdam said.