"State and local elected officials and team owners are in near unanimous agreement that taxpayers should pay for new ballparks."
"In baseball, as is the case with all professional sports today, socialism and corporate welfare have run amok," declares Raymond Keating of the Small Business Survival Foundation. "Taxpayer subsidies for multimillionaire owners and players anger even the most ardent baseball fans," he observes, "not to mention millions of other taxpayers who care little about the national pastime. The only individuals undeterred by this unsavory arrangement are politicians and team owners."
In the current issue of Policy Review, Keating reports that "state and local officials across the nation are frantically spending billions of dollars on new facilities for baseball, football, basketball, and hockey teams. Team owners pit city against city, and state against state, in the scramble for new sports venues with revenue-generating seat licenses and luxury suites." The question is, How on earth do they get taxpayers to agree to foot the bill for facilities that should be self-sustaining?
"Politicians usually appeal to voters' civic pride to make the case for subsidies," Keating observes. "Yet they are willing to use any tactic to attract and keep a big-league sports franchise, including disingenuous and discredited arguments about the economic benefits of taxpayer-funded stadium construction. Proponents peddle reports, based on the old Keynesian multiplier, showing that new sports facilities built with tax dollars spur massive economic benefits," Keating confides. "That is, the money spent by the builders of the facility and by the spectators attending each game is multiplied by some estimated number to calculate the total amount of economic activity supposedly generated by such venues."
Such arguments, Keating claims, disregard "the substitution effect. Consumers have a limited amount of dollars to spend on entertainment," he explains. "If they do not spend money on a baseball game, they spend it playing golf, going to a museum, watching a movie, attending a concert, et cetera. Hence, baseball games don't leverage economic activity any more than any other pastime."
Keating argues that private enterprise is fully capable of building stadiums without taxpayer subsidies, and will do so when the return on such an investment is enticing enough. He points out that, "prior to the 1960s, privately built and owned facilities were the rule. In 1950, just one major-league baseball park was government-owned. Today," he notes by contrast, "only seven ballparks are privately owned, and even some of those received government subsidies."
The positive impact of subsidized stadiums may be illusory, but the negative impact is real. Keating contends that "taxes levied to pay for stadiums raise private-sector costs, diminish incentives for working, investing, and risk-taking, and slow economic growth." He notes that the annual debt service costs associated with stadium financing "can run into the millions of dollars." If the taxpayers are the clear losers in the stadium subsidy scam, who are the winners? "Only team owners and players clearly benefit from these taxpayer subsidies," Keating concludes, "because they are relieved of the costs of stadium financing."
