The sports stadium grift

In the US, wealthy owners of professional sports teams have long practiced the art of extortion on the local citizens of the cities where they play. They demand that taxpayers pay for, or at least partly subsidize, brand new fancy stadiums that give them more revenue and threaten to move the team to another city if their demands are not met. They play on the fact that elected city officials fear facing the wrath of enraged fans if the city loses its team, and thus often are willing to agree to the terms. On the flip side, the cities seeking to attract a team are also willing to make deals that are generous to the owners. These deals rarely benefit the local population, who would have benefited more if the money had been spent on other things.

Unfortunately, the subsidies have not created the local impact that they promised. To understand why, let’s consider the Atlanta Falcons’ new stadium, which cost $2 billion for construction—$700 million of which was paid by local taxpayers. While proponents may talk about a multiplier effect, several theoretical and empirical studies of local economic impact of stadiums have shown that beliefs that stadiums have an impact that matches the amount of money that residents pay are largely unfounded. The average stadium generates $145 million per year, but none of this revenue goes back into the community. As such, the prevalent idea among team owners of “socializing the costs and privatizing the profits” is harmful and unfair to people who are forced to pay for a stadium that will not help them.

Further, a study by Noll and Zimbalist on newly constructed subsidized stadiums shows that they have a very limited and possibly even negative local impact. This is because of the opportunity cost that goes into allocating a significant amount of money into a service like a stadium, rather than infrastructure or other community projects that would benefit locals. Spending $700 million in areas like education or housing could have long-term positive consequences with the potential for long-term increases in the standard of living and economic growth.

Over the last thirty years, building sports stadiums has served as a profitable undertaking for large sports teams, at the expense of the general public. While there are some short-term benefits, the inescapable truth is that the economic impact of these projects on their communities is minimal, while they can be an obstacle to real development in local neighborhoods.

The city of Oakland has had three teams moving away.

Indeed, Oakland is an acute victim of a stadium-financing racket that has existed for decades. But the loss of the city’s teams is not just a sign of how wealthy team owners can play localities against each other. It is also a sporting tragedy because of the momentous history of pro sports in Oakland – something that the city’s departed teams will have a hard time replicating as they charge into their new eras elsewhere.

The The Daily Show had Desus Nice as the guest host recently and he delivered a scathing attack on the rich owners of sports franchises who extort fancy new stadiums at taxpayer expense by lying about the benefits they will bring and threatening to move the team away if they do not get massive subsidies and tax breaks. In this clip, he shows one of these owners who got his stadium after making such a threat. When he was later asked whether he had really planned to do so, he laughed and said that he never had any intention at all of moving his team away.

As long as fans continue to have an irrational love for sports teams whose owners do not love them back and care only about making as much money as they can, they will continue to be victimized.


  1. SailorStar says

    Not only does the taxpayer pay for these sportsballs palaces, but the necessary jobs of keeping the stadium running--the janitorial and food concession workers--are usually underpaid. According to the national news, there’s at least one stadium where the workers are on strike because their pay is below even the atrociously stingy norm (I googled it--it’s the Orioles in Baltimore).

  2. billseymour says

    We’ve had mixed results with that in St. Louis.  The Cardinals (baseball) got a spiffy new stadium several years ago, but there was never any talk about the team moving away.  The St. Louis Blues (ice hockey) have been playing in what was once the Kiel Auditorium for years and years.

    We did have a problem with the St. Louis Rams (American football).  They picked up and moved to Los Angeles just about two or three years after they got a brand new stadium.  Lots of fans were sorry to see the team go, but there was nobody who was sorry to see the owner get out of town.  He was a real jerk.

    We’ve had good results, too.  Our brand new soccer stadium was built almost entirely with private money, the owner spent money to attract really good players, and the St. Louis City Soccer Club, in just their first year of existance, is currently ranked first in the Western Conference.  There are playoffs the next two Saturdays and then the season will be over, and we’ll see how the “City SC” as we call it fares.

    I’m not much of a sports fan myself, although I do like baseball; but I’m anxiously waiting for the MLS outcome.  Shortly after the national cup game is played on the 9th, the schedule for the next season should be announced.  The new stadium is just across the street and one block west of where I’ll be hosting an ISO standards committee in June, and I’d like to mention that to some of our attendees from Europe, who might well be Association football fans, if it turns out that City SC will be in town the week of the meeting.

    SailorStar:  that’s too bad about the Orioles.  I have a minor soft spot for the team that used to be the St. Louis Browns. 😎

  3. Pierce R. Butler says

    In the medium-sized town I live on the outskirts of, the city government has plans to expand a local sports facility (presently just a multipurpose social center with a modest baseball field and a mostly undeveloped open/park space). Various optimistic figures (from “consultants” and “studies”) get tossed around, but I don’t think anyone has much confidence in them (so much depends on the larger economy, for starters).

    Does anybody have any comprehensive studies of the smaller efforts at this sort of thing, without the problem of parasitic “owners”?

    FTR: this is on the east side of town, which almost everybody in the US (except perhaps on the Atlantic coast) will recognize means the poor neighborhoods (with the predictable demographics), with a few exceptions; and the county recently shut down its nearby fairgrounds and moved them to a new, fancier facility on the more prosperous west side. Hard to gauge the economic impacts of that, particularly since the county and city at the same time set up a large homeless shelter nearby, which accounts for the surge of spare-changers and street-sleepers; crime stats are curiously unavailable and wouldn’t be reliable anyway.

  4. says

    I have some bad news for Bill: City SC lost in the first full round of the playoffs way back on Nov 5 to sort of state rival Kansas City (who actually play on the Kansas side of the border…and, since St. Louis has been in the league for just one year, it’s a very fresh rivalry).
    But, otherwise, to Bill’s point, I believe soccer stadiums here in the US tend to be privately funded since soccer is not that popular of a sport here and, thus, cities are generally unwilling to invest. Though, it is probably also worth noting that soccer stadiums are certainly cheaper to build as many have capacities under 20,000 as opposed to American football stadiums that tend to seat over 60,000. I would imagine the cost of such stadiums is going to be more than triple the cost. Surely building the upper decks necessary to seat so many people is more costly than the lower decks. (The article I link below regarding a soccer stadium near Chicago suggests it cost around $100 million to build in the mid aughts. Your linked article claims the Atlanta stadium cost $2 billion. So probably a bit less than 20 times the cost if these numbers were adjusted for inflation. That’s a pretty big difference. The Atlanta stadium seats close to 5 times as many people as I know its capacity is near 70,000.)
    There are exceptions to the private funding, such as near Chicago. There’s a large soccer loving Hispanic community in Chicagoland and the village of Bridgeview’s leadership thought it would be a brilliant idea to fund a stadium there. It was a financial disaster for their village. (But, as that linked article notes, there were conflicts of interest that had the politicians approving the project making money off of it.) Which, frankly, they should have seen coming even without knowing that stadiums don’t really boost the economy! Their stadium is 5 miles off of the end of the Orange Line and so that essentially forces people to drive to the stadium. Given that the Hispanic community tends to be disproportionately poor, having a stadium not accessible via public transportation was dumb!!! (But, again, if the decision was truly made by grifter politicians, maybe it wasn’t so dumb after all!) Unsurprisingly, the Chicago Fire, the team they built the stadium for, moved out after only being there for like 13 or 14 seasons.
    That all said, I do wonder if it is good for cities to have at least something for people to go to. If there are no sports venues at all, then there are probably going to be many people who will not want to live in a community. That, in turn, is going to lower property value, etc. But what these big cities probably miss is that the sports attractions may not have to be these flashy top professional teams. I live in Iowa and junior league hockey is fairly popular around here. So is college football…which is it’s own can of worms, as you are aware. But also women’s college basketball has become a big deal around here with the talents and fame of Caitlin Clark. All of the home games here sold out quickly and it would appear so did a number of away games. Nebraska of all places recently set a world record for attendance at a volleyball game. At least since these are public college venues, the money earned from ticket sales should be staying largely in the communities as opposed to going to private owners. (Though, back to that can of worms, too much goes to overpaid college football and basketball coaches.)
    So, much like Pierce, I would be curious if anyone has looked much into how sports venues for lower division sports or college sports impact communities. Articles like the one you linked at the beginning as well as the Daily Show video tend to speak about top level professional sports, though the former does mention the University of Alabama. But it didn’t really say much about economic impacts from that college example. So what are those impacts? E.g, has it been worth it for my city or other cities to invest in a venue for a junior hockey league team?

  5. Karl Random says

    seattle lost when they called the bluff on that dude who owned the sonics. or was it a loss, to be out one parasitic sportball team? same freak owned the storm and left them in town. probably realized they needed a larger population of out lesbians to keep that franchise in season tickets than he’d find in oklahoma.

  6. says

    Some skilled researcher might want to look for clips of sports team owners who:
    1. Claim they hate ‘socialism’ and
    2. Nevertheless have been happy to accept public funds for their privately-owned stadium.

  7. markp8703 says

    It’s not just sports; didn’t AIG’s Creation Museum in Kentucky screw the locals for funding that would “benefit” the area?

  8. John Morales says

    [I did wait]

    Think of them as cultural buildings.
    The ‘circus’ part of ‘panem et circenses.

    They satisfy people’s appetite for divertment, much as theatres do.
    About as functional as they are, only bigger.

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