Stadium Subsidies Reveal Tensions in Democratic Priorities

(Daniel J. Smith, American Institute for Economic Research)Major cities across the country, overwhelmingly controlled by Democrats, are in an arms race to subsidize the construction of new sports stadiums. While the projections of economic activity expected from these investments are far-fetched, they reveal tensions in the conflicting priorities of local and federal Democrats. In subsidizing stadiums, local Democratic leaders prioritize empty promises of economic growth and job creation over the environment and equality.

The City of Nashville just committed a record-setting $1.26 billion to the Tennessee Titans. Plans for stadium subsidies are emerging in many other cities across the United States, including Buffalo, Tempe, and Charlotte. Even before the Titan’s stadium was approved, Nashville interests were already organizing to push for public funding for a MLB stadium.

Taxpayer-funded support for stadiums is driven by a belief that the stadiums will generate local economic and job growth.

The systematic evidence, however, thoroughly discredits stadium-driven economic and employment growth as a wishful myth. This is because citizens’ entertainment budgets do not simply expand as new entertainment options are introduced; consumers shift spending, and thus tax revenue, from previous activities.

The only way for a stadium to generate new economic benefits would be to continuously host major events, such as the Super Bowl, that draw in tourists that would otherwise not visit the city. But realistic magnitudes for the number of out-of-state tourists brought in by a new stadium fall far short of producing the benefits necessary to cover the costs of stadiums to taxpayers.

Nevertheless, sports teams continue to use these exaggerated projections of out-of-town guests flocking to the city on a regular basis to justify receiving lucrative stadium subsidies. Despite being a well-known mirage, the promises of economic and job growth prove too attractive for local policymakers to resist. This tells us something about their priorities.

While national-level Democrats rank the environment as a top concern, city-level Democrats dispense with this concern when subsidizing stadiums. The public justification for stadium subsidies assumes tens — if not hundreds — of thousands of new tourists annually. If these projections are realized, each stadium constructed will further contribute to increased carbon emissions from construction and increased airplane and car travel.

Just hosting a single event can have a massive environmental footprint. A Taylor Swift event reportedly requires a fleet of ninety trucks plus additional vehicles for all the required support personnel and a private jet for Ms. Swift herself. While President Biden referred to climate change as “literally, not figuratively, a clear and present danger,” Democratic city leaders often do not even consider the environmental costs of subsidizing stadiums in chasing economic and employment growth.  

Similarly, while inequality is a top concern for federal-level Democrats, local Democratic leaders often do not consider how subsidizing millionaire and billionaire owners of sports teams will exacerbate income inequality, nor how the stadium subsidies increase the take for wealthy superstars like Taylor Swift.

This is odd given the alleged priorities of federal Democrats. Representative Alexandria Ocasio-Cortez, after all, wore a dress with “Tax the Rich” imprinted on it to the 2021 Met Gala, not “Subsidize the Rich.”

The subsidies for these wealthy stadium owners come from taxes primarily falling on lower- and middle-income households.