New Stadiums Don't Repay Cities That Subsidize Them

Putting public funds into arenas has some benefit, but not enough to justify millions
By Will McCahill,  Newser Staff
Posted May 4, 2008 7:57 AM CDT
New Stadiums Don't Repay Cities That Subsidize Them
Yankee Stadium, top, will replaced by a new stadium under construction, shown in this aerial photo on Aug. 29, 2007 in the Bronx. The new stadium is scheduled to be ready for the 2009 season.    (AP Photo/Mark Lennihan)

Professional sports stadiums have seen an enormous boom since 1990, often drawing on millions of dollars in public financing. Economics professor Dennis Coates, writing in the American, examines whether the expenditures actually benefit local economies—and  finds the answer a general "no." Stadiums actually reduce per-capita income, drive down wages, and divert spending from other areas. Further, he argues:

  • Those who benefit most from stadium-related spending—athletes—tend to spend income elsewhere, "so the money paid to players does not circulate as widely or abundantly as it would were it paid to people with less wealth and more attachment to the city."
  • Special taxes to finance stadiums are paid by visitors, who in turn might avoid the added cost of conventions and other gatherings in cities that impose them.
  • Though a public-goods benefit of $10 per person is high enough to justify stadium construction, Coates finds a resulting hit of that same amount on per-capita income.
(More stadium stories.)

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