Football and the local business community
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The National
Football League (NFL) 2002 season is upon us. And as has long been the case whenever one
of the four major league sports begins play, new sports facilities usually open their
doors as well. This football season has three new stadiums coming on line. The defending
Super Bowl champions, the New England Patriots, have taken up residence in CMGI Field. The
total cost of the new stadium is estimated at $397 million, with the taxpayers coughing up
$72 million. Meanwhile, the Detroit Lions have moved into a new den -- Ford Field. Of the
estimated total cost of $500 million, $125 million came from public coffers.
Finally, the expansion Houston Texans have stampeded into Reliant Stadium, estimated to
cost $449 million. The taxpayers were hit hard for $337 million. Like the politicians who
willingly hand over taxpayer dollars, many business leaders will make grand declarations
about what a new stadium will do for the local economy. And of course, an NFL team
supposedly raises a city to “major league” status. To the contrary, an objective
economic look dictates that the business community should not serve as blockers helping to
get these subsidies across the goal line.
However, all of the independent economic studies show that subsidizing sports teams does
not boost economic growth, income or jobs. Indeed, some studies find such subsidies to be
an economic negative. First, individuals and families only have so many leisure dollars to
spend. If there isn’t a football team to see in a new subsidized stadium, then people
will spend their money doing something else for fun. A new stadium will only shift around
how leisure dollars are spent. That means that government subsidies are guiding consumers
away from some businesses and to others. Second, sports subsidies mean higher taxes for
individuals, families and business. That’s never a plus for the economy.
Third, subsidies mean that politicians are making economic decisions rather than
entrepreneurs and consumers. Politicians work under completely different incentives than
do those in the private sector. The concerns of the political class focus on power,
patronage, fatter budgets, and public relations. Meanwhile, the private sector is
disciplined and guided by prices, profits and losses. The economy does not benefit when
political decision making supplants decisions by consumers and business owners. In the
end, the only clear beneficiaries of stadium subsidies are team owners, who reduce their
capital costs and enhance their revenues, and players, who can extract higher salaries
from owners. It’s easy to get caught up in the excitement of sports. Ask my wife, and
she’ll tell you that I often get a little too passionate as a fan of the Minnesota
Vikings. However, local business leaders have an obligation to take a sober look at the
issue of taxpayer subsidies for multi-millionaire sports team owners and players.
It’s simply bad economics.
Raymond J. Keating is chief economist for the Small Business Survival Committee, and
co-author of U.S. by the Numbers: Figuring What’s Left, Right, and Wrong with America
State by State (Capital Books, 2000). |
