Should Taxpayers ever fund large stadia/arenas?

[sting in the rafters]

So the Sixers announced today they’re privately funding a move from the sports complex up to Center City. This is particularly noteworthy as most Big 4 North American sports teams (e.g. NFL, MLB, NBA, NHL) coax taxpayer funding from either the municipality/state.

Most common arguments for:
1. Positive economic externalities of anchoring a commercial district on gamedays
2. Publicly financing a stadium gives more leverage in stopping relocations; for example, not only does the Buffalo Bills’ agreement for a new stadium keep them in Buffalo, but since Erie County/the state of NY are on the owner’s title they’re locked into their lease for 30 years. Whereas vertical integration means teams obviously have control over leaving.

Most common against:
1. In general, shouldering a considerable portion of the owners’ costs, by every sports’ league’s bylaws a sole proprietor billionaire (with the exception of the Green Bay Packers and Philadelphia Flyers), to enrich themselves at the expense of the taxpayer, creates a lot of moral hazards. Just look at how dirty Kroenke did St. Louis when they balked at renovating the Ed Jones Dome.
2. Creation of chokepoints on public infrastructure that wasn’t designed to handle capacity in these areas.
3. Resulting economic activity and gentrification ends up screwing over the renters due to higher property values. This is true regardless of funding source, but I’d like to think taxpayer money adds insult to injury.
4. Anecdotally from working in construction the allure of public funding leads to overages in the budget because they want to show they’ll need the money again down the road. If you’ve ever seen the movie Contact you know what I’m talking about.

Thoughts? Would you feel fine with your tax dollars going towards this?

[beaver2.0]

I'm not going to say never but I'm generally against it for Big Four teams that get massive amounts of funding and then tax breaks.  It's absurd to get public funding for a massive stadium surrounded by acres of parking lots that will be used a dozen times a year.  Arenas/urban stadiums are a different story and I don't mind cities helping out as long as they aren't providing a significant amount of funding and the venue can be used by other groups so it doesn't sit there empty for most of a year.

I don't fully trust the argument that building new stadiums is an economic benefit.  From experience, the the DC region's largest stadium, Fedex field, doesn't exactly strike me as a place that has benefitted significantly from stadium construction.

[Damocles]

They're billionaires. They can foot the bill themselves.

But if we really want sports to be part and parcel of cities' economies and cultures, we need sports and league structures that enable participation by communities large and small.

In Europe, the traditional association football league structure involves 20 teams, with each team facing off against every other team exactly twice - once at home and once away - for a total of 38 league games per year. League games are typically held on a weekend day.

In parallel with the league, there is a cup system, which allows teams from different leagues to compete against each other, in a knockout style tournament. Qualification for the cup varies depending on country and cup structure, but typically, cup games are held midweek.

And then there's a supercup, which typically involves the winner of the first league facing off against the winner of the cup. This typically acts as a "curtain-raiser" for the start of the season, and gives the league time to find flaws and fix issues before the main seasons start.

The thing about all of this is that promotion and relegation is involved. Good performing teams promote to the next highest league, while poorly performing teams get relegated to the next lowest league. The league structure typically involves a lot of teams in a lot of regional leagues, which gradually coalesces into the first league, forming a pyramid.

Not every stadium is going to be particularly extravagant, particularly if the local team is in the third or fourth league, for example. But that's not necessarily a bad thing! There's always a reason for the team's fanbase to show up - who wouldn't want their hometown team to rise to the very top and maybe one day win it all after a couple years?

[dead0man]

no

and it's always a lie when the politicos and stupid rich team owners say "sure it's going to cost the tax payers x, but they'll get x*3 back in magic tourist money".  Cities and states that regular do this deserve the drop in local and state services and higher taxes that these always bring.  You dumbasses voted for these assholes, you deserve your reward.  Especially when you keep voting them back in.

[FEMA Camp Administrator]

As I recall, I get a +2 happiness per stadium in Civ V, so seems like a good move.

[dead0man]

As I recall, I get a +2 happiness per stadium in Civ V, so seems like a good move.

even if that transferred to real life, it still wouldn't be worth it (and it wouldn't be worth it in game if it only gives you a couple of happiness....though I suppose I haven't played Civ 5 much in years and don't really remember how hard it was to keep people happy....wait...didn't that one have that weird civ wide happiness deal and not per city like all the other Civ games? ugggg, bad game  Civ 4 with mods is still the best Civ experience)

[FEMA Camp Administrator]

As I recall, I get a +2 happiness per stadium in Civ V, so seems like a good move.

even if that transferred to real life, it still wouldn't be worth it (and it wouldn't be worth it in game if it only gives you a couple of happiness....though I suppose I haven't played Civ 5 much in years and don't really remember how hard it was to keep people happy....wait...didn't that one have that weird civ wide happiness deal and not per city like all the other Civ games? ugggg, bad game  Civ 4 with mods is still the best Civ experience)

Yup, Civ V has civilization-wide happiness. It's what I've played most, so I don't really know any other system. But point being, if happiness gets too low, rebels pop up and productivity stalls, so, yes, happiness is important. Re Civ IV: Might have to pick it up at some point.

[Since I'm the mad scientist proclaimed by myself]

As I recall, I get a +2 happiness per stadium in Civ V, so seems like a good move.

even if that transferred to real life, it still wouldn't be worth it (and it wouldn't be worth it in game if it only gives you a couple of happiness....though I suppose I haven't played Civ 5 much in years and don't really remember how hard it was to keep people happy....wait...didn't that one have that weird civ wide happiness deal and not per city like all the other Civ games? ugggg, bad game  Civ 4 with mods is still the best Civ experience)

Yup, Civ V has civilization-wide happiness. It's what I've played most, so I don't really know any other system. But point being, if happiness gets too low, rebels pop up and productivity stalls, so, yes, happiness is important. Re Civ IV: Might have to pick it up at some point.

Civ 4 is great, its simultaneously much deeper and more fast paced than V.

[The Ex-Factor]

Thought I was the only weirdo who stubbornly kept playing Civ IV for years after Civ V and VI came out.

[Sol]

In theory I'd be in favor of it, as part of total nationalization of sports leagues--i.e. the government should control the NFL, NBA, etc. In practice though I'm against it since that doesn't seem too likely.

It was also be good because it would allow the government to more easily impose regulations to reduce CTE--i.e. shifting football to touch rather than tackle football, banning headers in soccer, etc.

[Santander]

Indirectly, perhaps. Say, the local government handing over a dilapidated former industrial area for development into an entertainment district. But funding the actual stadium? Hell no. A city that is held together by a sports stadium (e.g. Charlotte) is not a real city.

(this excludes funding a Wembley/Stade de France-style national stadium, which is also kinda questionable, but that is never going to happen in the US)

[The Right Honourable Martin Brian Mulroney PC CC GOQ]

I lean towards no. One of the things that made me less trusting of centre-left politics (not that the right is free of this guilt, especially giving tax breaks for rather limited corporate investment, but I find that in Canada this criticism applies more to the Liberal Party in particular) is justifying massive public spending on niche infrastructure on the premise of jobs/revenue down the line.

If a company finds it profitable to build a stadium or arena, they will do so. A profitable stadium/arena will naturally generate jobs, tourism, and tax revenue. A stadium/arena that is unprofitable in the market will not do the same, unless they are given advantages by the government of the day. At that point, it's not the corporation creating that economic activity, it's the taxpayers funding it while allowing a large portion of our money to go to the corporation in question.

More broadly, creating jobs is not a valid reason for public expenditure into infrastructure (except in periods of extreme economic turmoil). Government should build infrastructure when it is necessary, to serve the purposes that said infrastructure naturally serves. Roads exist to get people from point A to point B, for example, not to employ construction workers. In the same way, a sports venue will bring in revenue and benefit the surrounding community if the venue is able to raise revenues by the virtue of its attendance and licensing rights. Bringing benefits to the surrounding community at the expense of the surrounding community is circular logic, and ultimately only leads to our tax money being funneled to some private shareholders.

There are two political problems that lead politicians to ignore what I think are my pretty straightforward and non-partisan economic arguments:

1. Sometimes, taxpayers want to spend on sports venues, because they just think it would be cool. There are many NFL fans in Toronto, a city which already has a bunch of American sports teams like the Raptors and the Jays. Say an NFL franchise wanted to come into Toronto, and asked the City for funding or tax breaks. If there are enough NFL fans who want a team and don't care what it costs the taxpayers, or if the majority of voters are indifferent to what the NFL is asking, then it would only be democratic for the City of Toronto to foot that bill - I still think it would be wholly unjust, but it is what it is.

2. The franchise system of sports in North America makes it so that teams can threaten to move somewhere else. With European soccer teams for example (and yes that's what I call it, suck it Euros ) you would never have a situation where FC Barcelona threatens to move to Madrid, or Bayern Munich threatens to move to Berlin. The teams are too attached to the local identity and culture to use that leverage. The new franchise-style teams that have come up, like the Red Bull soccer empire (most infamously RB Leipzig) are hated by fans and a major exception. But in North America, things don't work that way. Franchises can and often do change cities, and there's a decent benefit-cost argument to be made that, for example, the State of New York was better off spending $1.4 Billion on the new Bills stadium and keeping Bills revenue in Buffalo, instead of refusing to contribute and having the Bills move to, say, San Antonio, and take all their revenue with them.

But I think this is all still unjustified. To point 1, I think the recent boondoggles with FIFA and the Olympics has prompted people to be more skeptical about footing the bill for sports venues, and I hope this extends downstream into major league sports too. A race to the bottom with taxpayers' money or specialized tax breaks can only logically conclude to a situation where those "investments" have a smaller return than the original investment.

Point 2 is harder to address in the context of North American teams, because it's just how the sports industry here is set up. If all state and local governments work together on combatting this kind of extortion, then it wouldn't be a problem anymore, but it only takes a few bad apples to spoil the bunch.

[dead0man]

Field of Dreams horror story

Reynolds' $12.5 million allocation comes from Destination Iowa, a $100 million grant program for projects that are supposed to raise the state's profile and encourage tourism. The governor created the program using funds from the American Rescue Plan Act, a March 2021 congressional coronavirus relief bill that channeled billions in funding to state and local governments, including $4.5 billion for Iowa.

Reynolds previously allocated $11 million from the fund to build water and sewer lines to the Field of Dreams stadium site. The U.S. Economic Development Administration awarded another $1.5 million for the same purpose in September.

Locally, Dubuque County has agreed to give $5 million to the stadium project. The city of Dubuque awarded $1 million. Travel Dubuque, a nonprofit largely funded with hotel-motel taxes, gave the stadium $500,000.

In Dyersville, the City Council contributed $1 million. Between two tax breaks for private developers — one already awarded and another in negotiation — the city is poised to contribute another $13 million to the project, Michel said.

but those pesky "experts" are skeptical.

Nathan Jensen, a University of Texas at Austin professor who researches government economic development strategies, said the stadium is too dependent on Major League Baseball. The feasibility study projects about two-thirds of the stadium's economic impact will come from an annual Field of Dreams game.

However, the league has not guaranteed a game beyond Thursday, when the Cincinnati Reds and Chicago Cubs will play. Even if the game continues after this year, Jensen said, allocating the money for public education, houses or roads would have a longer-term impact on the local economy.

"You act like it’s free money," he said. "But what could we have done with $44 million that would have had high impact?”

but don't worry, it's not about economics!

Dubuque Mayor Brad Cavanagh, who supports the investment, said the stadium's benefits will be more than economic, becoming a source of pride for the state. Last year's Field of Dreams game, which he described as "an informercial for Iowa," drew more viewers than any regular-season MLB matchup since 2005.

[FEMA Camp Administrator]

@dead0, I pity whoever had to land the portfolio for tourism in Iowa.