By Karen Bunso
At $3.2 billion federal taxpayer dollars, the Brookings Institution report9 on “Tax-Exempt Municipal Bonds and the Financing of Professional Sports Stadiums” just put an expensive price tag on all the federal tax-payer subsidies that have been going to the big four professional sports leagues and teams since 2000 for stadium remodeling and construction.
In their article, “Why the federal government should stop spending billions on private sports stadiums” the Brookings Institution released a formal economic report on “Tax-Exempt Municipal Bonds and the Financing of Professional Sports Stadiums” authored by Ted Gayer, Austin Drukker and Alexander Gold which analyzed how much federal subsidies were used to finance the construction or remodeling of professional sports stadiums.
Utilizing data collected from local news articles and websites as well as original bond data, the September 8, 2016 report (accompanied with complete with dataset), examined the stadium financing of Major League Baseball (MLB), the National Football League (NFL), the National Basketball Association (NBA), and the National Hockey League (NHL).
The Brookings researchers found that 36 of 45 stadiums that fit their parameter were partially funded as infrastructure projects with “federal tax expenditures in the form of tax-exempt municipal bonds” and that since 2000, $3.2 billion federal taxpayer dollars have gone construction or remodeling.
According to Brookings, federal subsidies received by the MLB was $1.41 billion, the NFL $1.11 billion, the NBA $444 million, and the NHL received $236 million. The Brookings report lists the total cost of all 45 stadium construction and remodeling projects as approximately $28 billion, with the total cost spent on just those 36 stadiums that utilized tax-exempt bonds being $13 billion.
The report dispelled the economic justification of supposed local economic growth that a stadium brings as the authors explain that the assertion is unsupported by academic studies which have consistently proven the opposite. Moreover, it makes the point of just how useless a federal subsidy for a sports stadium in Wyoming is for a federal taxpayer that lives in Maryland.
An informative historical background on federal subsidies and reforms for sports stadiums are also presented in the Brookings report. Up until 1953, professional facilities were constructed with private funds, but the MLB team the Boston Braves were lured by a new county stadium in Wisconsin, wherein they became the Milwaukee Braves, setting a precedent for teams moving for new stadiums.
Stadium financing maneuverings10 have been going on for some time now, with the most recent case involving the St. Louis Rams. In April 2015, the Regional Convention and Sports Complex Authority (RSA) that owns Edward Jones Dome where the then St. Louis Rams’ played, filed suit against the City of St. Louis, seeking to avoid a public vote on the use of taxpayer funding of a new football stadium. RSA sought city “financial assistance” to finance a new football stadium in hopes of keeping the NFL Rams in St. Louis, despite NFL commissioner Roger Goodell fast-tracking the team’s inevitable move to Los Angeles, California. The crux of the suit was a St. Louis city ordinance enacted in 2002 when the city was determining how to pay for the existing Busch Stadium. The ordinance sought to limit city financial assistance and required a public vote on funding but was otherwise vague. RSA was challenging the validity of the ordinance, asserting that the state of Missouri expressly authorized “financial assistance” without a vote.
In August 2015, Judge Thomas J. Frawley ruled11 in favor of the plaintiff RSA stating that the city ordinance was invalid (No. 1522-CC00782, Division No. 22) in part because a state law preempts a local law that is in direct conflict or inconsistent with the state law.
Karen Bunso is a PhD student in Sport Management at Florida State University.
9. Ted Gayer, Austin J. Drukker, and Alexander K. Gold, Why the federal government should stop spending billions on private sports stadiums, September 8, 2016, The Brookings Institution.
10. Hunn, D., Suit filed to avoid public vote on new stadium, April 10, St. Louis Post-Dispatch.
11. Lippmann, R., Judge rejects city law requiring vote on funding for stadium, Aug 3, 2015, St. Louis Public Radio, http://news.stlpublicradio.org.
