Economists reject stadium construction for economic development

THROUGH: MARTY SCHLADEN

Most major American cities have probably experienced some version of this: a sports team promises to come or threatens to leave and the key is the construction of a new stadium. And while the owners of the teams are usually millionaires or even billionaires, they demand big subsidies from the taxpayers to carry out the project.

When skeptics ask what public interest is served by pumping public money into these cavernous edifices, the answer is almost always that it will be good for the local economy.

That’s not true, overwhelmingly replied a panel of Ohio economists when asked about the issue last week. In fact, only two of 23 respondents said the economic benefits of publicly funded stadium projects outweighed the costs, according to the survey conducted by Scioto Analysis.

“Sport is a business,” Kay E. Strong, an economist at Baldwin Wallace University, wrote in the comments section accompanying the survey. “The stadiums are the ‘factory’. Businesses operated for profit should be self-sustaining.

Ohio is no stranger to this debate.

Paul Brown Stadium, home of the Cincinnati Bengals, opened in 2000. In 2011, as the US economy emerged from the Great Recession, local governments across the country considered cuts such as layoffs, as tax revenues remained low and federal stimulus funds were functioning. outside.

Hamilton County was facing a $30 million shortfall and stadium costs were eating up 16.4% of the budget. The Wall Street Journal called it “one of the worst professional sports deals ever made by a local government.”

Columbus also saw controversy in the stadiums. Under threat that Major League Soccer team the Columbus Crew would decamp to Austin, Texas, the city government offered to help build a new stadium downtown.

Reporting by The Columbus Dispatch showed that the city was significantly underrepresenting the cost to taxpayers of work related to the football stadium, and that government officials had little oversight of how the funds were spent.

Either way, the $300 million project will sit idle for far more than it’s used.

According to their 2021 schedule, the Crew have only played 17 home games this season. With the Columbus Clippers slated to play 72 home games next season and the Blue Jackets slated for just 28 in the current season, it’s easy to see why the Arena District so often feels empty.

In terms of money, state-funded stadiums are not profitable, said economist Robert Gitter of Ohio Wesleyan University.

“Generally they are a losing proposition for the city in economic terms,” he wrote. “Whether it’s money well spent on something citizens want is another story, but there’s no net benefit in dollars and cents.”

But University of Cincinnati economist David Brasington said stadiums can bring less tangible benefits.

“It’s a national advertisement for a city and it promotes social cohesion,” he commented.

But Kevin Egan of the University of Toledo pointed out that if a city’s residents weren’t spending their entertainment dollars at sports stadiums, they’d be spending them somewhere else nearby – and he said there are more useful ways. economically to spend taxpayers’ money.

“The local economic impact is minimal because if there is no stadium/team, citizens spend elsewhere,” he wrote in his comments. “Most importantly, there is MUCH better use of taxpayer dollars to subsidize education, walking trails, expanded public parks, better transportation infrastructure; all the local things that really boost local productivity.

This article was republished with permission from the Ohio Capital Journal. To learn more about new Ohio policies, visit www.ohiocapitaljournal.com.

Bonny J. Streater