Stadium costs mount for state and local governments

Taxpayers shoulder a heavy burden for sports stadium subsidies, the Tax Foundation said this week.

Reams of research shows that using bonds to finance sports stadiums and arenas do not generate enough revenue to justify the costs, the foundation said in a blog post Thursday.

"According to the academic research, the tangible economic benefits job growth, income levels, and sustained increase in sales or property tax revenues from stadium construction are non-existent," said Joseph Johns, a state tax policy analyst for the Tax Foundation and one of three co-authors of the piece. 

Tax Foundation

The Tax Foundation cites an academic survey conducted in 2022 and published by Social Science Research Network showing that public funds have been used to cover 73% of the $33 billion spent in the US and Canada between 1970-2020 to build sports stadiums and arenas.  

The increasingly nomadic nature of professional sport teams and the long maturity of bond financing makes the math challenging. 

"The immediate beneficiaries of the bonds, the sport teams or franchises, are not held liable for relocating or requesting an even newer stadium prior to the maturity date of the initial bonds," said Johns. 

The NFL's Raiders, Chargers, and Rams have all changed cities since 2016. Major League's Baseball's Athletics played their last game in Oakland Sept. 26, as owner John Fisher chases massive taxpayer subsidies from Las Vegas.

Replacing a venue in the same city or renovating one also comes with financial risk. 

"Residents were still liable for over $100 million in bonds when the New York Giants decided to demolish the former Giants Stadium and construct their current MetLife Stadium in 2010," said Johns.  

The cultural benefits of hosting major league franchises are often cited as motivating factors for the cash outlays. 

Per the survey, "Even with added non-pecuniary social benefits from quality-of-life externalities and civic pride, welfare improvements from hosting teams tend to fall well short of covering public outlays."   

Commentary from Brookings in 1997 lays out the often repeated claims of stadium and arena building proponents who offer a heady combination of construction jobs, spending by fans attending the games and tourist dollars from out of towners.  

Despite the discrepancy between the economic promise and the documented costs, counties and cities continue to issue new debt tied to stadiums and arenas.  

Data from the Tax Foundation charts out $13 billion in proposals for public subsidies devoted to building or improving professional sports facilities are currently on the books.

Illinois and Florida lead the pack, with the NFL Chicago Bears and MLB Tampa Bay Rays each chasing $2.4 billion for new playgrounds.   

An $850 million subsidy package in New York to build a new stadium for the Bufalo Bills includes $250 million of bonds from Erie County. The stadium will be owned by a state agency and leased to the team's owner, so billionaire owner Terry Pegula won't have to pay property tax. 

In Frisco, Texas, in the north Dallas suburbs, a Major League Soccer stadium is being renovated and partially financed with $182 million of sales tax revenue bonds. 

Washington, D.C., is trying to get an act of Congress to transfer the dilapidated RFK Stadium site from federal ownership to the city so it can refurbish the property and lure the Washington Commanders football team from its current home in Prince George's County Maryland. 

The district agreed to pay $515 million of subsidies to spruce up Capital One Arena in the downtown Chinatown neighborhood to keep the NBA's Washington Wizard and the National Hockey League's Capitals from defecting to a new arena in Alexandria Virginia.