Do Publicly Subsidized Stadiums Improve Local Economies?

The city of Las Vegas recently made another decision regarding the construction of a new sports arena in the downtown vicinity. The proposed project is to be located near the intersection of Bonneville Avenue and Grand Central Parkway. The results of the vote yesterday allowed for a four month extension of financing negotiations between the developer Cordish, the city, and taxpayers (mainly downtown businesses) that are to help finance the project.

One of the selling points for taxpayers helping subsidize such a project is the positive effect a stadium or arena can have on downtown businesses. But just how much have similar stadium projects helped local economies in other cities?

Since 1990, taxpayers have spent nearly 20 billion dollars subsidizing stadiums and arenas in the United States.

Stadiums and arenas are financed with long-term bonds, meaning cities and states will be stuck with the debt for long periods of time (often 30 years). Despite many professional sport teams bringing in annual revenues that exceed $100 million, these bonds take away from capital that the city could use for other purposes.

There are other instances in which stadiums that are built with the idea of integration into the surrounding community do wonders for the local economy. Sports bars/restaurants adjacent to stadiums report as much as 1,700 percent in revenues on game days.

The economic benefits of sports arenas are sometimes muted by the way newer stadiums are designed. For instance U.S. Cellular Field out of Chicago, is the classic case of the sports stadium as a “walled fortress” that internalizes all economic activity in order to maximize revenues for the franchise at the expense of local economic development. Unless there is full integration of the stadium with local business and the surrounding area, As University of Chicago economist Allen Sanderson memorably put it, “If you want to inject money into the local economy, it would be better to drop it from a helicopter than invest it in a new ballpark.”

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