BOSTON A little-noticed provision in President Obama's current budget proposal would protect state and local government officials from themselves by ending the practice of allowing tax-exempt bonds to be used to finance sports stadiums.
Tax-exempt bonds were designed to help governments build infrastructure by reducing borrowing costs, but political leaders routinely use them to benefit privately owned sports franchises. A 2012 Bloomberg analysis found that 22 National Football League teams were playing in stadiums that were financed with tax-exempt debt. Sixty-four baseball, basketball and hockey teams played in facilities that were built using the bonds.
Right now, the NFL's St. Louis Rams and Oakland Raiders, the National Basketball Association's Milwaukee Bucks and Golden State Warriors, and Major League Baseball's Oakland Athletics are all threatening to move if they don't get public subsidies to help build new facilities. Missouri Gov. Jay Nixon has said that losing the Rams would cost the state $10 million in annual tax revenue.
Long and Smith College economist Andrew Zimbalist estimated that the public shouldered about 60 percent of stadium capital and operating costs between 2000 and 2006. Long's book indicates that number has since risen to about two-thirds.
And it appears that taxpayers get little in return for their massive investments. One reason is simply that the subsidies are so large that stadiums can't produce enough in local or regional economic benefits to match them over the period they are in use.
Sporting-event attendees are overwhelmingly local; if they didn't attend a football game, they would likely go to a movie or to a restaurant, so the region sees little in the way of money that wouldn't otherwise have been spent there. And much of the subsidy money flows to owners and athletes who often don't live in the area and spend the bulk of the money outside the host city.
State and local taxpayers may conclude that non-economic benefits such as local pride or entertainment value make stadiums worth the investment. But ask just about anyone in Boston, where record snow and cold paralyzed the public-transit system this winter, and I suspect that most would agree that stadium subsidies shouldn't crowd out needed infrastructure investments.
President Obama has his own reasons for trying to put an end to using tax-exempt debt for sports stadiums: Tax exemptions on interest paid by muni bonds that were issued for sports structures costs the federal government $146 million annually. There would be a number of beneficiaries of doing away with the practice, but taxpayers would be the biggest winners of all.
Charles Chieppo (Charlie_Chieppo@hks.harvard.edu) is a fellow of the Ash Institute at Harvard's Kennedy School. This piece originated on the Web site of Governing magazine (governing.com). 5 comments Livefyre Sign in or Post as Guest6 people listeningCristoferHorbeltsportsmenKayoCharles LaVinetoddinde
+ Follow Share Post comment as... Newest | Oldest | Top Comments toddinde toddinde 8 days ago I am not so sure about this. I understand the argument that the benefit of sports teams to a regional economy is overstated, but in a world where young professionals are the most valuable commodity a community can have for its economy, the presence of professional sports teams, and the venue for those teams, may be critical. The 1997 work of Zumbalist and Noll may be dated in the context of the millennial generation and our high tech economy. I am coming to the conclusion that public transit, activities like parks, culture, sports and entertainment, education and pleasant, walkable neighborhoods are all critical to the future of urban areas. Young professionals want it all. They want to take a bike ride to a farmers market in the morning, go to a game in the afternoon, and see a band at a club at night. And they want to be able to do it all without having to drive. Professional sports are a significant part of that mix.
FlagShareLikeReply Charles LaVine Charles LaVine Mar 31, 2015 Ever read“Sports, Jobs, and Taxes The Economic Impact of Sports Teams and Stadiums” by
Andrew Zimbalist and Roger G. Noll, Brookings Institution Press 1997?
It empirically debunks the myth of the economic benifits to states and regions of building stadiums for billionaires. That's right, only the billionaire really benifits, the actual comminty of location only marginally.
But we keep on doing it. We are the stupid ones, not the billionaires. FlagShareLikeReply Kayo Kayo Mar 31, 2015 @Charles LaVine Yes some time ago. But that is history in todays context. That is why I am attempting to tie a new mobility system into a $Billion + rather than put additional lanes and on-off ramps to serve a chaotic parking lot culture. This can be accomplished with a new "off shelf" transportation technologies. All it needs is for cities/counties to JV by calling for proposals! Is this a risky business to alleviate getting further into citizens wallets?
FlagShareLikeReply sportsmen sportsmen Mar 26, 2015 Good public policy should eliminate tax free status for all sports organizations, teams and leagues, with annual revenues of more than a couple million dollars a year. All taxing bodies should be prohibited from financing or incurring expense on behalf of such sports organizations. The extortion that these teams and leagues engage in by having new stadiums (places of doing business) financed directly or indirectly by taxing bodies should not be permitted. Los Angeles has not had an NFL team for decades and it is still a "major league city".
FlagShareLikeReply CristoferHorbelt CristoferHorbelt Mar 25, 2015 Did Barry really come up with this? $146 Million annually out of a budget of over three TRILLION dollars. While it's a good idea, Barry is stepping over dollars to pick up dimes......
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Charles Chieppo Charles Chieppo is a research fellow at the Ash Center of the Harvard Kennedy School. Part of Better Faster Cheaper with Steve Goldsmith
Harvard Kennedy School