Most NFL, NBA, and MLB stadiums and arenas have received generous corporate welfare from state, county, and city governments. On average, taxpayers cover about 75% of the cost of building new stadiums.
Politicians justify these subsidies by calling them investments.
“My state gets $6.5 million a year … every year the NBA plays basketball in the state of Wisconsin,” former Wisconsin Sen. Scott Walker said at a 2015 GOP donor gathering to argue that the state would recoup his $80 million subsidy of a new arena for the Milwaukee Bucks. “If they leave, I lose that. For a fraction of that, I get to keep that team in the state.”
New York Gov. Kathy Hochul is subsidizing the Buffalo Bills, claiming, “The economic and tax impacts generated from the team will support more than 100 percent of the public share of the new stadium cost.”
This is an economic argument, not a cultural one. A governor or mayor could try to justify subsidizing the local billionaire owners by saying, “Yes, this will cost us hundreds of millions of dollars, but isn’t it worth it to keep our team in town?” That would require a values debate.
Politicians, however, prefer the economic argument for some reason. And on that score, they are basically always wrong. Stadium and arena subsidies do not pay for themselves. Studies have shown this for years, and now, the most comprehensive review of the research on it has come out, confirming the finding.
Economists John C. Bradbury, Dennis Coates, and Brad Humphreys went through 130 studies over 30 years and concluded: “The large subsidies commonly devoted to constructing professional sports venues are not justified as worthwhile public investments.”
A city or county does not see net economic growth from subsidizing stadiums. This is one of the most consistent findings in economics.
If you look in a neighborhood around a ballpark, you may think, “This stadium obviously drives economic growth.” But as Bradbury and his colleagues explain, “Consumer spending on sports represents a transfer from other local consumer spending, not net-new spending.”
What about the non-economic benefits? Maybe they are worth the price? Bradbury, Coates, and Humphreys cover that, too.
Researchers have, on multiple occasions, polled residents of cities to ask how much they would pay simply to keep a team and a stadium in town. Consistently, residents value the team’s presence lower than the subsidy amount.
The thing about sports arenas is that they all have fare gates, which are an excellent way of monetizing the product they offer. They are the last thing governments should subsidize.
Here’s a video I made in 2019 about the various victims of sports subsidies.
