All Commentary
Sunday, May 1, 1994

Playing the Field

City Governments Shouldn't Finance Stadiums

Cities across America are caught in a headlong rush to land a professional sports franchise. Five cities—Memphis, Jacksonville, St. Louis, Baltimore, and Charlotte—recently ended a competition to entice the National Football League into their towns. When it was over, the tab for public financing of playing fields had climbed into the hundreds of millions of dollars. Charles Euchner, a political science professor at Holy Cross, provides insight on why cities do this and why it is a bad deal for local taxpayers.

Euchner has studied several cities’ attempts to woo teams and finds much of the competition centers on which locality can provide the biggest cut of public money to team owners. Owners, in turn, make the most of this situation by actively pitting cities against one another with threats to move the franchise to more lucrative environs.

In 1988, the Chicago White Sox effectively used a threat to move to Florida to win public funding for a new baseball park built literally on top of the existing one. The White Sox’s spurned suitor, St. Petersburg, is stuck with an empty Suncoast Dome for which Euchner estimates local residents pay $7.7 million a year in debt service.

Euchner makes the case that franchise owners have adroitly played upon officials’ political fears of “losing” a franchise to win backing for stadium upgrades. The big payoff for the owners is control of stadium skyboxes—luxury suites which can sell for hundreds of thousands of dollars apiece. The Houston Astrodome originated the sky-box in 1965, but they now number in the hundreds for each new stadium built.

Euchner notes that if building stadiums was such a good business venture, more private entities would be willing to step forward and build them. And in fact, where the facilities are privately owned cities earn money rather than spend it. The hugely successful Dodger Stadium in Los Angeles pays $400,000 a year in property taxes.

The oft-repeated mantra that sports franchises generate economic growth is also disputed by numerous studies collected by Euchner. One local official compared the decision on NFL expansion to “whether or not the railroad was coming to your town in the Old West.” But, as the evidence shows, filling a stadium eight times a year does not have the same economic impact as a many-fold increase in transportation capacity. By definition, dollars spent on sporting events are highly disposable and would likely be spent on other forms of entertainment—movies, plays, participatory sports absent the franchise. The difference is that all the economic activity doesn’t occur on a single day, at a single site.

Euchner also argues that when compared to other forms of social spending, such as job training, government subsidies for sports teams lag behind in generating a return. However, that line of argument is dangerous: it could entice local officials to graft a “job training” element into their stadium building plans rather than eschew the endeavor outright. It also overlooks the cost of taking of resources from the private sector in the first place.

There is every sign the frenzy for sports franchises is intensifying. The state of New York recently authorized funds to help communities keep and attract minor league baseball teams while two Chicago suburbs now spar over a farm team. Officials from every city, town, and hamlet would do well to listen to Euchner’s warnings lest they get sucked into a game they cannot win. []

Jeff Taylor is National Political Reporter for Evans & Novak in Washington, D.C.