Socialized Stadiums; R. Baade and D. C. Bast

Those who cook up stadium proposals fre quently claim that sports contribute signifi cantly to a city's economy. In Chicago, for ex ample, it has been reported that the baseball White Sox contribute $100 million to the city's economy each year. Such estimates, based on the assumption that every dollar spent on sports is a dollar of new leisure spending, are un doubtedly too high. Our leisure "budgets" (the amount of time and money we are able to spend on leisure ac tivities) are limited. It is likely that an after noon we spend at the ballpark is an afternoon not spent at the theater, museum, or similar es tablishment. A dollar we spend on sports is a dollar we probably would have spent on some other leisure activity. In the short term, a subsi dized sports stadium does not increase the total amount of leisure spending that takes place in a city; rather, subsidizing sports merely shifts spending away from other activities.

Sports stadiums are also unlikely to promote long-termeconomicgrowth. Sports tend to en courage low-skilled, low-paid employment in the service sector of a city's economy: food and Mr. Baade is the James D. Vail Associate Professor of Economics at Lake Forest University, Illinois. Diane Carol Bast is publications director of The Heartland Institute, a Chicago-based public policy research organization. souvenir vendors, hotel and restaurant em ployees, and security personnel are representa tive of the jobs created by stadiums. A city that subsidizes such employment at the expense of higher-skilled, higher-paid manufacturing em ployment will find that its economy grows more slowly than the economies of cities that do not subsidize sports. Moreover, while new businesses may start up in the subsidized sta dium's neighborhood, businesses will fail in other parts of the city. A new stadium, there fore, probably will not increase the total number of even low-paid jobs in a city.

The actual experience of cities with sports stadiums confirms that stadiums bring few, if any, economic benefits to the cities that subsi dize them. In a study published by The Heart land Institute, stadiums and sports were found to have no positive effect on three important measures of economic growth: personal in come, retail sales, and manufacturing activity. Stadiums and sports actually had a negative ef fect on the economies of several of the cities that were studied. Why should taxpayers be concerned by false claims of economic benefits? Simply because such claims are being used to make unprofit able stadium projects palatable to taxpayers who would not otherwisesupport them. Even when a team owner claims his new stadium will be financed entirely by private sources, past ex perience and market conditions should leave taxpayers skeptical. Of the total number of sports facilities con structed since 1960, only two have been fi328 THE FREEMAN. SEPTEMBER 1987 Most stadiums built in the past 35 years have been at least partially subsidized.

nanced entirely by the private sector. In fact, 71 per cent of the 94 sports facilities used by professional teams since 1953 are publicly owned. The mismanagement of sports facilities that are publicly owned and operated has been doc umented often, and in gruesome detail. In Louisiana, where the state government turns over to the New Orleans Saints all Superdome revenues except a five per cent rental fee based on gate receipts, taxpayers must finance Super dome deficits of between $3 million and $5 million a year. Taxpayers in Pontiac and across the state of Michigan have paid more than $11 million since 1976 for operating deficits at the Silverdome. Private developers rarely invest in stadiums, and municipal landlords must subsidize the teams they host, because the supply of sports facilities is far greater than the demand for them. There are already more stadiums than teams to fill them, and fully one-third of the 60 largest metropolitan areas in the country have plans for new stadiums. It is almost impossible for private developers to profit in this glutted market; in such a market, city officials must subsidize their teams in order to fend off com petition from cities with empty facilities.

Municipalities will continue to offer sub sidies to keep their stadiums occupied, and they will continue to defend the expenditure by claiming (against all available evidence) that a new stadium will be a catalyst for economic growth. Governors and mayors will throw their support behind one alternative site or another, in the name of "revitalizing" neighborhoods. So-called "private" stadiums will be aided by indirect subsidies offered at taxpayer expense: displaced residents will be relocated, infra structure improvements will be made, land will be provided at below market cost, and current lease obligations at other sites will be forgiven. So let us be wary of government officials and sports team owners offering stadiums on silver platters. If we're not, after all the rhetoric and promises and subterfuges have been exposed, we taxpayers will find we've been served a bad meal indeed. 0 329 A Line-Item Veto by Hans F. Sennholz T he annual battle about the Federal budget provides an astounding spectacle that is both amusing and revealing. De spite countless committee meetings and lengthy hearings, the members of Congress fail to come to an agreement on revenues and expenditures.