October 24, 2013

The seen and the unseen in taxpayer-funded stadiums

By The seen and the unseen in taxpayer-funded stadiums

City of Industry, a city of only 219 residents in Los Angeles County, recently announced plans to spend $172 million to develop infrastructure for a stadium to host a team that doesn’t exist. The city will spend the funds even if a stadium is never built.Sadly, such taxpayer funded sports stadiums have become all-too-common in America today.

In Arizona, for example, Glendale depleted its landfill fund, sanitation fund, and water and sewer fund, and now plans to sell its city hall in order to pay for past obligations to an unpopular hockey team. Meanwhile, in Florida, Miami-Dade County spent $347 million in taxpayer money to build a stadium for baseball’s second least popular team. Elsewhere, Atlanta will spend up to $500 million to destroy one publicly funded stadium to build another with vibrating seats. Even the city of Detroit, in the midst of bankruptcy, lengthy police delays, decaying infrastructure, and a planned art liquidation, promised $400 million in taxpayer funds for a new hockey arena. Although these are some of the more egregious examples, cities throughout the world have been using taxpayer funds to splurge on fancy sports stadiums.

Over 150 years ago, Frederic Bastiat criticized the use of public funds for art, theater and music. He questioned why one person should be deprived of hard-earned money to pay for another’s entertainment. Bastiat recognized that public expenditures take funds from individuals and businesses and merely redistribute those funds to the entertainers. Similarly, Henry Hazlitt, writing in the mid-20th century, noted how easy it is for people to observe a shining public work – i.e. “the seen” – and miss the fact that the subsidy took funds from other businesses – i.e. “the unseen”. Government spending on public works does not improve the economy- it merely redirects where that money is spent.

Stadium subsidies have matched these theories. During the last 20 years, governments have spent an estimated $24 billion on stadium subsidies. Stadium advocates regularly produce studies that claim that if public dollars are spent on stadium construction the economy will grow. However, the reality is that stadiums do not cause growth. Because consumers substitute stadium spending for dining or other entertainment options, there is no demonstrable net growth in the region. Therefore stadium spending redistributes wealth from some businesses and individuals to those connected with the stadium. Meanwhile in order to afford the subsidies, cities have raised taxes and cut services.

As a fan of three teams bound to receive new subsidies I am sure I will enjoy these new venues. However, as a taxpayer I am outraged, and when I enjoy games at those new stadiums, I won’t forget the unseen businesses that were forced to subsidize my entertainment.

H/t Field of Schemes

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