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.