Is Stadium Subsidy Fair Game?

Pages: 7 (2020 words) Published: November 9, 2013
ECONOMIC EFFECTS OF STADIUM SUBSIDIES

Is Stadium Subsidy a Fair Game?
Phillip M. Johnson
Embry Riddle Aeronautical University
ECON 211

Abstract

The late 1990s brought forth a boom of new sports stadium development. Most of these stadiums were built partly or wholly with government money in the form of stadium subsidies. Naturally many social groups were outraged that government money was being diverted from social programs and the pockets of local residents and placed into the hands of million dollar players and billion dollar owners. Politicians have argued that stadiums bring tourism dollars into the city and the economic benefits far outweigh the cost of the stadium subsidy. This paper will research the government funded building of stadiums and the effect it has on local economies. Focusing on the rash of new sports stadiums developed in the 1990s, discussion will include the government’s decision to fund the construction of stadiums. It will also include the arguments between social groups and politicians of which discuss the benefit of the existence of stadiums. Negatively thinking, social groups believe that the money is diverted from social programs to multi-million dollar players and owners. On the other hand, it will compare the political argument that these stadiums bring tourism dollars into much needed cities and positively affect a local economy.

Is Stadium Subsidy a Fair Game?

Between 1990 and 1998, forty-six major league stadiums were built or renovated for the use of professional U.S. sports teams. Before the year 2000, an additional 49 professional sports facilities were either under construction or in the planning stages of uprising. Alone, the National Basketball Association (NBA), the National Football League (NFL), and Major League Baseball (MLB) combined for a total of 115 teams in the U.S. league associations. For several teams, their location required them to share the same facility, such as the Staples Arena in Los Angeles, which hosts the Lakers, the Clippers, and the Kings games. Wanting more, owners and teams sought out bigger and better atmosphere for their passion. This quickly led to the rash of new stadiums throughout cities in the United States. Several of economists find new stadiums to be a major contributor to local economies in decaying cities. In the optimistic eyes, economists believe that building a sports stadium can increase aggregate demand of the economy, create new jobs, which in return would increase employment. Looking at benefits based on the multiplier effect, this could lead to an major economic growth for cities who have been in a financial slump. In the long run, these economist also see the possibility of developmental opportunities such as new surrounding businesses. The stadium would attract visitor, which would require new business, to include hotels, food services, stores, attractions and even transportation service. Not only does it allow entry into a variety of markets, but the competition increases and in turn improves economic development. With all this being noted, there would be an increase in investment, which also helps increase the total income of the city and the surrounding metropolitan area. In 2007, economic research associates provided a written proposal to provide estimated overall benefits for a new Major League Baseball stadium in the District of Columbia. Their numbers estimated that the construction and operation of a Major League Baseball park in Washington D.C. will create 2,300 jobs during the construction process and 1,035 upon opening the facility. This new employment will generate $82 million in earnings while the ballpark is built and $109 million for every year the ballpark is in operation. Spending on building materials, payroll costs, and employee expenditures will generate $5 million in fiscal benefits for the District. During operation of the ballpark, spending...

References: DCWatch. Summary of the Fiscal and Economic Benefits of a MLB Team and New Stadium to the District of Columbia. District of Columbia, May 7, 2003.
Garofalo, Pat, and Travis Waldron. "If You Build It, They Might Not Come." The Atlantic, September 7, 2012.
International Institute for Sustainable Development. Global Subsidies Initiative. 2013. http://www.iisd.org/gsi/effects-subsidies (accessed September 14, 2013).
Moylan, Andrew. National Taxpayers Union Foundation. October 30, 2007. http://www.ntu.org/ntuf/stadiums-and-subsidies-strike-out-for-taxpayers.html (accessed October 10, 2013).
Smothers, Ronald. "Baseball Returns to Newark Amid Doubt." Journal of Economics Perspectives-Volume 14, 1999: 95-114.
Wikipedia . Stadium Subsidy. February 15, 2013. http://en.wikipedia.org/wiki/Stadium_subsidy (accessed September 15, 2013).
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