Taxpayer subsidies for pro sports teams make little economic sense

Apr 15

Florida Times Union, Dec 12, 2020

Pro sports provide the ultimate test for meritocracy, but the owners of major league sports teams, particularly in the U.S., make money regardless of success on the field. Despite this reality, many of those owners shamelessly coerce taxpayers to subsidize their enterprise. Ironically, some of the biggest cheerleaders against socialism are happy to accept socialism as long as it lines their pockets or supports their parochial interests.

Over the past two decades, the value of pro sports franchises has increased exponentially while public infrastructures in the same cities that these franchises call home have deteriorated. One example: the city of Oakland. Their championship teams — the Golden State Warriors, Oakland Athletics and at one time the Raiders — have increased respectively in value 12 times, 4 times and 5 times since 2000, while Oakland remains home to some of the worst roads in the country and the school district is struggling with funding. Sound familiar?

This brings us to our lone major league franchise, the Jaguars. The team is seeking various taxpayer subsidies to finance its private enterprise with a not-so-subtle threat that if taxpayers do not pony up, the team could find greener pastures elsewhere. This is just not right.

Team owners argue that professional sports add tangible economic well-being and intangible civic pride for citizens. But the reality suggests otherwise. A recent article in The Atlantic noted, “Imagine a stadium as a giant drain. Money flows from the community into the stadium, where it whirls around for a bit, then funnels down some murky pipes, exiting far, far away. Some leaves with players, some with owners and ownership groups, some with the league itself, the headquarters of which are in New York.” In other words, the very taxpayers who subsidize profits for the owners are the last in line for any benefit from such deals.

A study published by Brookings suggests that any major taxpayer spending on sports facilities or its affiliated developments have negligible impact on economic activity and employment in the region. Given the finite recreational budget for most families, any spending that occurs on game day is a substitute for other local recreational spending, as are any taxes collected on such spending. If a family spends on a football game, they are likely to forego spending on movies. Most studies that are touted to show economic benefits from major league sports are self-promotional and  fail to account for the net economic cannibalization that major league sports has on other entertainment in the city.

As an avid sports fan with a son aspiring to play in the professional leagues one day, I am not the Grinch trying to run our beloved Jaguars out of town. But there is scant data to support large-scale taxpayer subsidies for sports stadiums or any other stadium related projects that must be publicly financed to keep our Jaguars in town. The aforementioned article in The Atlantic summed it up best: “Pro sports teams are bad business deals for cities, and yet, cities continue to fall for them. But municipalities can support local sports without selling out their citizens in the process.” If a deal indeed must be made, it ought to be done with utmost transparency and the consent of taxpayers. That will be meritocratic and democratic.

Parvez Ahmed is professor of finance at University of North Florida.