The federal government has taken a financial hit by helping to subsidize professional sports stadiums, a report released Thursday found. Since 2000, the government has subsidized some $3.2 billion in building or renovation costs through tax-exempt municipal bonds, researchers at the Brookings Institution found.
The New York Yankees' new stadium for instance, a $2.5 billion behemoth completed in 2009, was constructed, in part, using $1.7 billion in tax-exempt municipal bonds issued by the city. That was, in effect, a subsidy that cost the federal government some $431 million in tax dollars, according to the study. That means no matter where one might live in the U.S., he or she helped chip in to buy a new cathedral for baseball's richest team. Brookings also estimated that when you add in tax breaks afforded to high-income taxpayers holding the bonds, the total cost to the federal government was $492 million.
In fact, while the researchers estimated that the government has subsidized $3.2 billion worth of stadium construction since 2000 the real cost is even higher. That's "because high-income bond holders receive a windfall gain for holding municipal bonds, the resulting loss in total revenue to the federal government is even larger at $3.7 billion," the study noted.
Brookings also posted a helpful graphic breaking down just how much each new stadium has cost the federal government, which you can check out here.
Tax exempt municipal bonds were "designed to help finance public infrastructure projects like roads and sewer systems" wrote the Sacramento Bee in a 2015 editorial criticizing the practice of using the bonds "to help front the cost of new arenas and stadiums, even when those buildings are going to be owned or controlled by private interests."
"The idea that residents of Sacramento should have to pay to help build a new basketball arena in, say, Seattle, boggles the mind," the newspaper noted.
League officials, owners and supporters of the practice often suggest that the cost is offset by creating a stadium that is both a public good and a spark for economic development. Economists who study stadium finance, however, largely agree that the mega-projects — as well as mega-events like the Olympics —provide no real economic boon. Sports economists Robert Baade and Victor Matheson wrote in a 2011 paper that the best argument for sports projects has nothing to do with money but rather quality of life.
"Evidence of significant direct economic benefits from sporting events, franchises, and stadiums is lacking, however," Baade and Matheson wrote. "While public-private partnerships can be justified on quality of life grounds, voters and public officials should not be deluded by overoptimistic predictions of a financial windfall. Sports may make a city happy, but they are unlikely to make a city rich."
Meanwhile, local taxpayers already foot a good portion of stadium bills in many cities. The NFL's Atlanta Falcons, for instance, are nearing completion on a $1.5 billion stadium, $200 million of which will be funded by taxpayers.
But for that price tag, fans do get a pretty impressive place to watch a football game — which, as For The Win reported Thursday, will now include the largest statue of a bird in the world.