Public Subsidies for Stadiums

A new sports facility has an extremely small (perhaps even negative) effect on overall economic activity and employment.

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Though net new spending is evident, approximately one-third of the project’s sales appear to derive from crowding out other local economic activity. In total, added tax collections fall well short of covering the public subsidies provided by Cobb. The stadium’s limited economic impact, despite its favorable location and ancillary mixed-use development, further supports past findings that sports venues are poor investments as economic development projects.

They [economists] often stress that estimations of the economic impact of sports stadiums are exaggerated because they fail to recognize opportunity costs. Consumers who spend money on sporting events would likely spend the money on other forms of entertainment, which has a similar economic impact. Rather than subsidizing sports stadiums, governments could finance other projects such as infrastructure or education that have the potential to increase productivity and promote economic growth.

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State and Local Government Finance | Cities, Transit, Infrastructure, Economics, Demographic Change | backofthebudget.com | Opinions are my own.

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