As state policymakers across the country consider legislation to provide billions of dollars for professional sports stadiums, taxpayers should be made aware of the impact of these expenditures. New York, Tennessee, and Virginia have provided or are deliberating whether to provide billions of dollars in subsidies for the construction of three new NFL stadiums, and Oakland, California, and Las Vegas, Nevada, are discussing major investments that would either keep the Oakland Athletics in the Bay Area or move them to the Silver State. In each case, stadium discussions have centered on the use of tax-exempt municipal bonds as a primary funding source.

These bonds reduce the cost for municipalities to raise money for public projects such as parks, libraries, and similar facilities by exempting them from paying federal taxes on the bond revenue. Following a boom in the construction of professional stadiums with these bonds beginning in the 1950s, Congress tried to put an end to the practice through the Tax Reform Act of 1986. However, provisions designed to block public spending on stadiums have instead built in a loophole for municipalities to provide funding at the expense of taxpayers.