Happy 30th birthday, Mall of America!
Thirty years ago today, the Mall of America opened its doors to the public. Built on the site of the Metropolitan Stadium, it was the largest shopping mall in total area…
Last night I tuned in for the game between the Packers and the Bears. How would the Packers’ injury ravaged offence line up? How might the Bears dreadful defense sort itself out? Pertinent questions pre kick off. Instead, much of the build up centered on whether players would kneel or stand for the national anthem, whether they would link arms, or whether the fans would join them.
One of the things that has struck me most since moving to the US in May is how political life is here. Without commenting on the rights or wrongs of players kneeling or President Trump’s contribution to the row, I can’t tell you how weird this all seems. Sport should be an escape from the trials of day to day life, not another arena for them.
Back home, I’ve followed my football (soccer) team for 29 years. I have no idea what the ownership’s view is on Brexit, public spending, foreign policy…and I’ve no interest. Like the rest of the crowd, I’m there for the football. Some of my footballing friends back home are a way to left of Bernie Sanders politically. Others would make Joseph McCarthy look like the pinko of his own nightmares. But on a match day we all come together and pull in the same direction. That is one of the beauties of sport.
There’s no separation of sport and state
But one factor complicates this separation of sport and state where the NFL is concerned. Cash. Namely, your cash.
Since 2000, 36 professional sports stadiums have been constructed or revamped under financing provided by federal tax-exempt municipal bonds, costing taxpayers over $3.2 billion. Watchdog.org puts the figure at $7 billion. The Indianapolis Colts got $619 million of taxpayer’s money. The Pittsburgh Steelers got $171.6 million. The The New England Patriots got $72 million. They were short changed.
When the Raiders (whose lowest paid player earns a base salary of $465,000) move to Las Vegas, they will leave Oakland’s taxpayers (who have an average per capita income of $33,505) with $83 million of debt on two-decade-old renovations to the Alameda County Coliseum that they are abandoning. The US Bank Stadium, home of our own Vikings, was part paid for by $348 million of state (taxpayers) money and $150 million to be raised by a hospitality tax in Minneapolis. Over the 30-year life of the deal, the city of Minneapolis must pay a total of $678 million, including interest, operations, and construction costs.
What economic benefits?
This corporatism is often justified on economic grounds. Cities are supposed to benefit from having these stadiums so it makes sense to pay for them. That is not the case.
As economist Dennis Coates wrote in 2015,
I co-authored a study in 1999 with Brad Humphreys. It examined the sports environment in every city with at least one NBA, NFL or Major League Baseball franchise at some time from 1969-96. Our findings were clear: Professional sports had no positive impact on an area’s economy, and actually harmed residents’ per capita incomes.
I recently updated the data, added the NHL and Major League Soccer, and examined the full set of U.S. cities, rather than only those with a team. The analysis also benefits from the stadiums and arena-building boom of the ’90s.
The lesson for cities, unfortunately, is the same. The sports environment still has little effect on the financial resources of most people. For example, across all seasons and cities, sports contributes about 0.2 percent to the wage earnings of the typical worker, about $50 per year to someone earning $17,000 a year.
Now, as then, the data disprove the claim that a city can use stadium and arena construction, or the attraction or retention of a professional sports franchise, to enhance the income of its citizens.
Economist Scott A. Wolla recently wrote that
In a 2017 poll, 83 percent of the economists surveyed agreed that ‘Providing state and local subsidies to build stadiums for professional sports teams is likely to cost the relevant taxpayers more than any local economic benefits that are generated.’
So a new bill, sponsored by Sen. Cory Booker (D-NJ) and Sen. James Lankford (R-OK), which would strip any taxpayer funding for professional sports teams, is to be welcomed. As Brooker says,
Professional sports teams generate billions of dollars in revenue…There’s no reason why we should give these multimillion-dollar businesses a federal tax break to build new stadiums. It’s not fair to finance these expensive projects on the backs of taxpayers, especially when wealthy teams end up reaping most of the benefits.
The federal government is responsible for a lot of important functions, but financing sports stadiums for multi-million — sometimes billion — dollar franchises is definitely not one of them. Using billions of federal taxpayer dollars for the subsidization of private stadiums when we have real infrastructure needs in our country is not a good way to prioritize a limited amount of funds.
They are both right.
All government handouts corrupt and huge handouts corrupt absolutely
He who pays the piper names the tune, as they say. When President Trump says teams should fire kneeling players, the teams respond by saying that they are private enterprises. Well, if they want to be treated like private enterprises they should act like them. A first step would be to stop asking taxpayers for handouts.
John Phelan is an economist at Center of the American Experiment.