Stadium Subsidies Hitting Taxpayers Harder: Study

Published February 1, 2008

Shelling out several hundred million taxpayer dollars for a shiny new sports stadium is common practice for cities today, but a recent study from the research arm of the 362,000-member National Taxpayers Union (NTU) shows this wasn’t always the case.

“Stadiums and Subsidies: Home Run for Wealthy Team Owners, Strike-out for Taxpayers” illustrates some alarming trends in taxpayer subsidies and climbing construction costs.

“Publicly funded stadiums are, at best, an inefficient investment of taxpayer dollars for the meager benefits produced and, at worst, massive payments to rich team owners and players at the expense of ordinary taxpayers,” wrote study author Andrew Moylan, government affairs manager for the NTU Foundation.

Skyrocketing Costs

Moylan found average major league stadium construction costs jumped nearly 60 percent in inflation-adjusted terms during the study’s 15-year period. The average stadium built from 1990 to 1992 cost $240.6 million in 2006 dollars, compared to $383.64 million for those built from 2002 to 2004.

The study analyzed 53 stadiums built from 1990 to 2004 for use in the three most popular professional sports leagues, Major League Baseball, the National Football League, and the National Basketball Association.

Sticker Shock

Stadium sticker shock isn’t a new phenomenon by any means, but in previous decades hundreds of millions of dollars in taxpayer subsidies were virtually unheard of, according to the study. Louisiana’s Superdome, where the NFL’s New Orleans Saints play, cost more than $500 million (in 2006 dollars) to build more than 30 years ago–and at the time was viewed as an extravagant outlier in a world where stadiums had seldom cost more than $200 million (in 2006 dollars).

In their 1997 book Sports, Jobs, and Taxes: The Economic Impact of Sports Teams and Stadiums, economists Roger Noll and Andrew Zimbalist highlighted the rise in the public’s expectations–and cost–of stadiums since the Superdome was built. “For a long while, this project [the Superdome] stood out as a wild anomaly,” they wrote. “Today, it would fit nicely in the upper range of standard experience.”

Tax Factor

Moylan’s research shows as the taxpayers’ tab increases, so does the total stadium construction cost. Stadiums that were built with 50 percent or more in taxpayer subsidies were $65 million more expensive on average than those built with less than 50 percent in subsidies.

The reason? Not surprisingly, Moylan argues, private financiers demand more fiscal accountability with their own money than government bureaucrats do with other people’s tax dollars.

Not only is the average percentage of stadium costs subsidized by taxpayers growing, but total subsidy amounts are rising too. Between the two periods of 1996-98 and 2002-04, the taxpayer’s subsidy share increased an average of 19 percent. During the same timeframe, total subsidy amounts increased more than 41 percent.

Expensive Expectations

The study also found expensive tastes, not rising building-related costs, are most to blame for the increases.

“Standard fare for the modern-day stadium includes ultra-luxury suites, complete with leather couches and flat-screen televisions galore,” Moylan notes. “Pricey features like this have sent costs way up, and taxpayers are footing a large portion of the bill.”

The study paints a bleak picture of future stadium funding schemes preying upon taxpayers–more extravagant, multibillion-dollar “redevelopment plans” with a stadium project or two tucked among the details of the blueprints.

“Stadium costs are skyrocketing, heavily subsidized stadiums are more expensive than others, and subsidies … are shooting straight up,” Moylan concludes. “The only way for taxpayers to stop this unaffordable spiral is by coming together to say no to wealthy team owners asking for public dollars.

“Unfortunately,” Moylan notes, “our legislators seem to still buy into the ‘voodoo economics’ of stadium funding, while taxpayers get to ‘take one for the team.'”

Natasha Altamirano ([email protected]) is communications manager for the National Taxpayers Union.

For more information …

“Stadiums and Subsidies: Home Run for Wealthy Team Owners, Strike-out for Taxpayers,” NTUF Policy Paper No. 163: