Taxpayer subsidies for pro sports fail economic tests - Albuquerque Journal

Taxpayer subsidies for pro sports fail economic tests

Albuquerque voters will soon decide whether to use taxpayer funds to build a stadium for the New Mexico United minor league soccer team. Before making up their minds, they should know that, from an economic perspective, publicly funded stadiums – especially those that could cost as much as $99 million, not including land acquisition – don’t pay off.

First, researchers consistently find that the costs of stadium subsidies outweigh the benefits. It’s an issue on which most economists agree. Professional sports can be wonderful for communities … , but there’s no evidence they bolster local economies. After evaluating 43 years of data, sports economist Dennis Coates found that stadium construction and new sports franchises have – at best – a negligible effect on local workers’ incomes. In some cases, the effect was negative. This is likely because so many teams are lavishly funded by taxes, which take an economic toll.

Second, there’s no justification for a new stadium. Typically, team owners arm-twist politicians and the public into providing subsidies by threatening to leave for other cities, or by making convincing arguments that a facility is dilapidated. Neither is true here.

Professional soccer is expanding rapidly. The team plays in the United Soccer League (USL), which is planning new teams in 35 cities. Meanwhile, Major League Soccer (MLS) plans to launch a new 20-team minor league. The United aren’t likely to find another community willing to build them a better stadium.

And it is a good stadium. Isotopes Park is consistently voted as one of America’s best minor league baseball stadiums, and attendance at the United games there is more than double that of most other teams in the league. It’s hard to argue the facility isn’t sufficient.

Third, spending public money on private sports is risky. Minor league soccer, in particular, is in a constant state of churn. The USL’s Championship division alone has lost 28 teams in the past decade – it currently has 31. And more disruption is coming. Sixteen teams from the USL’s top two divisions will soon join the MLS development league.

Remember that, less than a year ago, Minor League Baseball was … killed off as an independent entity – and 40 cities lost teams – when Major League Baseball took control of player development operations. Total public spending on just 18 of those abandoned stadiums amounted to over $249 million – not adjusted for inflation.

Taxpayers don’t have to kowtow to team owners’ demands for … opulent facilities. In fact, legislators in 15 states introduced … legislation this year to mutually agree to forgo all economic development subsidies, which collectively cost about $95 billion annually.

It’s better to compete by creating the best environments in which to live, work and innovate than by coughing up taxpayer dollars. And because city officials can forge similar agreements, there’s no reason for Albuquerque to wait for the Roundhouse to act. Perhaps one of the mayoral candidates will wisely join with other cities to end a destructive subsidy arms race.

Given these facts, is there a pressing need to foot the bill for their new stadium? Projects like this are a coup for team owners and politicians. The community must decide whether it also serves them.

Michael D. Farren is a research fellow with the Mercatus Center at George Mason University. Albuquerque native Matthew D. Mitchell is director of Mercatus’ Equal Liberty Initiative and is also a Mercatus senior research fellow.

 


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