Point/Counterpoint: Should Governments Subsidize the Construction of New Professional Sports Stadiums?

Source: Journal of Policy Analysis and Management, Volume 38 Issue 1, Winter 2019
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Articles include:
Should the Construction of New Professional Sports Facilities Be Subsidized?
Source: Brad R. Humphreys, Journal of Policy Analysis and Management, Volume 38 Issue 1, Winter 2019Is There a Case for Subsidizing Sports Stadiums?
Source: Victor Matheson, Journal of Policy Analysis and Management, Volume 38 Issue 1, Winter 2019
(subscription required)

The case in favor of subsidizing large sports facilities is much harder to make than the one against. The peer-reviewed literature typically finds little or no evidence that the construction of new professional sports facilities results in significant increases in any type of measurable economic activity including personal income, wages, employment, tax revenues, or tourist spending (Coates & Humphreys, 2008). In addition, the privately funded consulting reports that frequently accompany stadium proposals, and which invariably tout large economic benefits from subsidized stadiums and arenas, have been shown to suffer from significant theoretical flaws that make their conclusions suspect at best, and simply false at worst (Crompton, 1995). In fact, some academic economists suggest, only partially in jest, that if one wants to know what the true economic impact of a stadium project will be, simply take whatever number the consultants project and then move the decimal point one place to the left.

However, in specific circumstances, it may be possible to justify some level of public subsidies for the construction of sports venues. This should not be interpreted to mean that the optimal level of public spending is the roughly two-thirds of average stadium construction costs that taxpayers paid for during the period from 1990 through 2008 or cwn the roughly one-third of stadium construction costs that taxpayers paid for on average since the Great Recession in 2008. Rather, the only claim being made here is that the optimal level of funding may be higher than zero percent…..