Tax-exempt bonds used to help finance professional sports stadiums have cost U.S. taxpayers more than $3.7 billion between 2000 and 2014, according to a study published last week by the Brookings Institution.
Atlanta’s funding for construction of the Falcons’ Mercedes-Benz Stadium was not part of the study, despite the use of $207.9 million in tax-exempt bonds, backed by the city’s hotel-motel tax.
Austin Drukker, one of the study’s authors, said the Atlanta bonds weren’t counted because they were issued after the study was underway. But he said the Atlanta bonds cost taxpayers $36 million — an amount that would not have substantially changed the study’s bottom-line findings.
“Early on we set a cut-off date of bonds issued up to 2014, and the Atlanta bonds were issued in 2015,” Drukker said. “It’s hard to keep up with all the new stadiums that pop up.”
SunTrust Park also was not part of the study. The $376 million in bonds issued on behalf of Cobb County for baseball stadium construction are taxable bonds, and therefore receive no federal subsidy.
The study did consider 45 professional football, baseball, basketball and hockey stadiums built or renovated since 2000, and found 36 received federal subsidies worth $3.2 billion.
But the cost to taxpayers was even higher, the study found, because “high-income bond holders receive a windfall gain for holding municipal bonds, (making) the resulting loss in total revenue to the federal government … $3.7 billion.”
Major League Baseball led the way with $1.4 billion in federal stadium subsidies, followed closely by the NFL at $1.1 billion. The NBA (444 million) and NHL ($236 million) had considerably less.
And that is a cost to all U.S. citizens, whether they live in cities with professional sports teams or not. The authors say that is an argument against federal subsidy.
“…There is clearly no economic justification for federal subsidies for sports stadiums.” the study says. “Residents of, say, Wyoming, Maine, or Alaska have nothing to gain from the Washington-area football team’s decision to locate in … Maryland.”
President Obama tried unsuccessfully earlier this year to put an end to the practice, by suggesting a ban on the use of tax-exempt bonds for stadium construction in his budget request. The proposal was rejected by Congress.
The study also looked at decades of other peer-reviewed research that has found little economic benefit from new sports facilities.
“Articles published in peer reviewed economic journals contain almost no evidence that professional sports franchises and facilities have a measurable economic impact on the economy,” the study says. “This finding should not be surprising, given that team revenues typically constitute a small share of a city’s economic output and teams do not employ a substantial number of people.
“In addition, given that most consumers have a relatively inflexible leisure budget, any economic activity generated while attending a game will largely if not entirely be offset by reduced spending on other local leisure activities.”
The bond issuance for the Falcons and Braves stadiums were both challenged by local taxpayers, and upheld as constitutional by the Georgia Supreme Court, although the high court didn’t confirm the wisdom of the investments.