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Why the federal government should stop spending billions on private sports stadiums

Why the federal government should stop spending billions on private sports stadiums
Alexander K. Gold, Austin J. Drukker, and Ted Gayer
Thursday, September 8, 2016

When the New York Yankees completed the new Yankee Stadium in 2009, the final construction bill was an estimated $2.5 billion. Of that, nearly $1.7 billion was financed by tax-exempt municipal bonds issued by the city of New York.

Because the interest earned on the municipal bonds is exempt from federal taxes, a large amount of tax revenue that would have been collected—had the bonds been issued as taxable—went toward the construction of the stadium. In other words, the Yankees received a federal subsidy to build their stadium.

How much? About $431 million. That’s a lot of money, but it gets worse.

The loss in federal tax revenues was even higher than the subsidy to the stadium. High-income taxpayers holding the bonds receive a windfall tax break, resulting in an even greater loss of revenue to the federal government. In the case of Yankee Stadium, the additional loss was $61 million. That is, the federal government subsidized the construction of Yankee Stadium to the tune of $431 million federal taxpayer dollars, and high-income bond holders received an additional $61 million.†

The Yankees, of course, aren’t the only team to finance their stadium using tax-exempt municipal bonds. Since 2000, 35 other professional sports stadiums have also been financed with tax-exempt bonds.

In “Tax-exempt municipal bonds and the financing of professional sports stadiums,” Brookings Senior Fellow Ted Gayer, Austin J. Drukker, and Alexander K. Gold quantify the federal subsidies given to finance professional sports stadiums built or majorly renovated since 2000, and the total loss in federal tax revenue.

All together, the federal government has subsidized newly constructed or majorly renovated professional sports stadiums to the tune of $3.2 billion federal taxpayer dollars since 2000. But because high-income bond holders receive a windfall gain for holding municipal bonds, the resulting loss in total revenue to the federal government is even larger at $3.7 billion.

Use the interactive menu below to see how much of a federal subsidy each stadium built or majorly renovated since 2000 received, plus the total tax revenue lost.
Federal financing of stadiums, by team

See the federal subsidy to and total revenue loss from each stadium built or majorly renovated since 2000*
Revenue Loss
Federal Subsidy
$3.7B

Total Revenue Lost

MLB 1.59B

New York Yankees

NFL 1.29B

Indianapolis Colts

NBA 504M

Brooklyn Nets**

NHL 300M

New York Islanders**

League
Team Million
Team Million
MLB

New York Yankees $492
New York Mets $214
Cincinnati Reds $142
Miami Marlins $132
Milwaukee Brewers $117
Washington Nationals $107
Minnesota Twins $91

Houston Astros $78
Philadelphia Phillies $68
San Diego Padres $68
Pittsburgh Pirates $44
Detroit Tigers $41
San Francisco Giants $0
St. Louis Cardinals $0

NFL

Indianapolis Colts $214
Chicago Bears $205
Cincinnati Bengals $182
Houston Texans $147
Seattle Seahawks $101
Arizona Cardinals $94
Dallas Cowboys $88
Philadelphia Eagles $68
Minnesota Vikings $65

Denver Broncos $54
Pittsburgh Steelers $44
Green Bay Packers $35
Detroit Lions $7
New England Patriots $0
New York Giants** $0
New York Jets** $0
San Francisco 49ers $0

NBA

Brooklyn Nets** $161
Houston Rockets $112
Orlando Magic $93
Memphis Grizzlies $87
Charlotte Hornets $65

Dallas Mavericks** $44
San Antonio Spurs $44
Miami Heat $0
Oklahoma City Thunder $0

NHL

New York Islanders** $161
Pittsburgh Penguins $65
New Jersey Devils $60
Detroit Red Wings $50

Dallas Stars** $44
Arizona Coyotes $23
Columbus Blue Jackets $0
Minnesota Wild $0

*
Estimates calculated using a 3% discount rate. See full paper for estimates using different discount rates.

**
Indicates a team that plays in stadium used by multiple leagues. The Brooklyn Nets and the New York Islanders both play at Barclays Center. The Dallas Mavericks and the Dallas Stars both play at American Airlines Center. In the table above, the full subsidy for each stadium is listed next to both teams that use the stadium. For the purposes of the graphic dividing the total subsidy ($3.2B) by league, the subsidy/revenue loss value for each stadium was divided in half, with half attributed to the NBA and half to the NHL. The New York Jets and the New York Giants both play at MetLife Stadium, though MetLife Stadium received no federal subsidies. See full paper for more on shared stadiums.

Do stadiums benefit taxpayers and local economies?

With so much money at stake, it’s worth asking: Should the federal government be spending money on these stadiums? Federal subsidies are justified for infrastructure projects that provide a public good across states, but local sports stadiums clearly do not meet this criterion.

Indeed, there is little evidence that stadiums provide even local economic benefits. Decades of academic studies consistently find no discernible positive relationship between sports facilities and local economic development, income growth, or job creation. And local benefits aside, there is clearly no economic justification for federal subsidies for sports stadiums. Residents of, say, Wyoming, Maine, or Alaska have nothing to gain from the Washington-area football team’s decision to locate in Virginia, Maryland, or the District of Columbia.

So why is the federal government still subsidizing their construction?


Latest Activity: Oct 01, 2017 at 2:20 PM


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timeontarget commented on Sunday, Oct 01, 2017 at 16:09 PM

GOP Rep Gaetz on Eliminating NFL Tax Breaks: They Ought to Protest ‘On Their Own Time and On Their Own Dime’
by Jeff Poor1 Oct 2017349

Sunday on MSNBC, Rep. Matt Gaetz (R-FL) made a case for H.R. 296, the Pro Sports Act, which is legislation that he recently became the lead sponsor and ends the tax-exempt status of professional sports leagues.

Gaetz told host Alex Witt that he had no objection to players exercising the First Amendment, but argued professional leagues that bring in billions of dollars in some cases should not be receiving a tax break as these protests are taking place.

“NFL players are certainly able to protest under the First Amendment,” Gaetz said. “I just think they ought to do it on their own time and on their own dime. Right now, one of the special interest loopholes in our tax code allows the league offices of professional sports leagues to avoid paying taxes. That’s crazy. That’s a special interest giveaway that the small businesses in my district certainly don’t have access to. And so, I have introduced legislation to abolish the special tax exemption that the NFL enjoys and that all other professional sports leagues enjoy. I think that’s fairer for folks on Main Street and folks in the middle class.”

The bill Gaetz is championing was originally the brainchild of former Rep. Jason Chaffetz (R-UT), who resigned from the U.S. House of Representatives earlier this year. The Florida congressman dismissed the notion it singled out those protesting racism given it eliminates the tax break for all professional sports leagues.

“This doesn’t single out anyone,” he added. “This legislation that I’ve taken over from Congressman Chaffetz would apply equally to all professional sports leagues. But certainly when you see a sports league like the NFL embrace what I perceive to be very unpatriotic activity, it leads to the question, why would we give folks that are engaged in this anti-Americanism some special break? It makes no sense. We sometimes use the tax code to try to achieve some social objective. Frankly, that’s not been something we have been successful at as a country. But why would we give them a special break? So that’s why I propose eliminating the break for everyone.”

Follow Jeff Poor on Twitter @jeff_poor

wayne44 commented on Monday, Oct 09, 2017 at 17:33 PM

Good luck getting that through Congress with all the campaign donations that come from the owners.


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