Monday, March 31, 2008

Circuses for the Masses

After Utah’s ‘conservative’ governor and legislature saw their way clear to chuck $53 million in taxpayer money into a sports arena for a privately owned soccer club during the 2007 legislative session, I was surprised to see who lined up to defend this misuse of public funds.

Yes, I know all of the arguments put forward by proponents. For example, it is claimed that these taxes will largely come from out-of-staters coming to the soccer matches. Even if that were true, I’m not sure that this is a very good argument. If soccer fans are going to be the main taxpayers, why not just have them pay the additional cost in the price of the tickets instead of punishing everyone that stays in a hotel or rents a car? There are plenty of other fairy tales used as justification.

Now authors Neil deMause and Joanna Cagan are about to release a book called Field of Schemes: How the Great Stadium Swindle Turns Public Money into Private Profit. After a dozen years of research, the authors show how in the U.S. over $2 billion per year transfers from public treasuries to private profit via sports stadiums. The taxpayers put the money out as an ‘investment,’ but the revenues generated go to private business. Some of this translates to businesses paying more taxes, but often the biggest beneficiaries are substantially exempted from doing so.

In the book, deMause and Cagan document how nationwide, annual public subsidies of sports arenas for private sports clubs exceed all revenues generated by the Big Four sports leagues. Taxpayers are effectively totally subsidizing all professional and semi-professional football, baseball, basketball, and hockey, as well as all smaller sports leagues, including soccer and women’s basketball. Without public subsidies, these clubs (as presently constituted) would completely fail.

Of course, the same is true of many arts, such as symphony orchestras, ballet companies, art galleries, and museums. The propriety of public funding of these arts is certainly a debatable proposition. But they are mostly straightforward non-profit organizations, whereas, most sports clubs are held out to be for profit (and some individuals involved profit quite handsomely indeed).

The authors of Field of Schemes have a blog where they discuss public funding of sports arenas for private clubs. You can hear an audio interview with Neil deMause here.

Should taxpayers be heavily subsidizing private sports clubs? It baffles me when some that label themselves conservatives wholeheartedly answer yes to this question.


Chris said...

I'm astonished at how easy it is for people to justify the use of tax dollars for private business. It's so easy for people to turn a blind eye because it's not their money - or so they think! Too often we're duped into thinking that all these government programs and subsidies are somehow funded by somebody else. The downward spiral continues in our march towards socialism.

Cameron said...

As much as I enjoy sports, and love watching games in person, I just don't think publicly funded stadiums are a good idea. There is so much money in sport, and so much profit being made, that it doesn't seem reasonable that franchise owners should have their stadiums subsidized. I'm sure that even without the subsidies they'd figure out a way to get it done.

As I type this, I wonder what correlation there might be between these stadium subsidies, and the oil company tax breaks that are sure to monopolize the news for the next little while.

Bradley Ross said...

The public psychology of these stadiums is interesting to me. Communities are competing to get these stadiums. If one town wants a sports team (because they recognize the quality of life benefits in having local entertainment options) but they aren't willing to subsidize the venue with tax money, they are left to hope their neighboring communities will demonstrate the same virtue of careful public spending.

Of course, you can bet that at least one nearby community is going to want that stadium enough to dig into taxpayer pockets to get it. The virtuous city will always lose out on getting the benefits of a local sports team. It is too bad that we don't have a better way to make the incentives work.