A swing… and a miss

Oscar’s arguments for tax-financed sports facilities strike out

By Doug French
  • Sunday, April 3, 2005

One of Mayor Oscar Goodman’s pet projects is to bring a major league baseball team to Las Vegas. At a recent breakfast presentation, the mayor promised that he would be throwing out the first pitch by the 2008 season.

In Goodman’s mind Las Vegas will never be a major league city until it has a major league team. “I’ve made it clear that we want baseball in Las Vegas and I’m ready to wheel and deal,” Goodman told the Miami Herald.

Goodman may want baseball, but there is no citizen outcry for such a team. And when Goodman says “wheel and deal,” he’s not talking about his money; he is talking about taxpayers’ money.

Reportedly, Goodman has worked on a financing plan, but nobody knows the details. The Mayor only says the plan would “make everyone happy.”

But, Major League Baseball owners go where the (taxpayer) money is. Government officials regularly pitch the line that city economic development benefits when local and state governments spend millions in taxpayer dollars to build stadiums and lure teams—so that government can then rent the facility to ultra-rich franchise owners for next to nothing.

Time and again this economic development argument has proven to be a swing and a miss. “Careful analysis of past economic experience in cities that built new stadiums and attracted teams does not bear out” economic development claims, write Dennis Coates and Brad R. Humphreys in a briefing paper for the Cato Institute. Its title: “Caught Stealing: Debunking the Economic Case for D.C. Baseball.”

Those who agitate for building stadiums and attracting teams regularly commission glowing economic-impact studies. But these impact studies, point out Coates and Humphreys, use multipliers to estimate how sports spending will impact a local economy—implying the dollars spent will ripple throughout the economy. Yet, because the studies fail to distinguish between net and gross spending, they regularly overstate the impact.

Of course, what are key are net benefits. “As sport- and stadium-related activities increase,” the authors point out, “other spending declines because people substitute spending on sports for other spending.” Fan money spent at ball games would likely have gone to other entertainment if baseball wasn’t available. Thus, net benefits are zero.

If a major league team attracts visitors to a particular city from other places, net benefits may accrue. However, Las Vegas does not have a problem attracting visitors. As casino mogul Steve Wynn recently told the Las Vegas Sun, “This is a city that is very unique in the sense that it is entertainment overload and this entertainment is paid for by all the same people who pay the taxes….”

After analyzing 37 metropolitan area economies boasting professional sports franchises, Coates and Humphreys came to the following conclusions:

  • No positive impact was seen to the growth rate of real per capita incomes. But pro teams had a statistically significant negative impact on levels of real per capita income.
  • Retail and service sectors were negatively impacted, with the average net job loss in those sectors being 1,924 jobs.
  • Hotel wages tended to increase $10 yearly with the presence of pro sports, but restaurant and bar wages went down by $162 per year.

It’s possible that even were the Mayor to agree that a major league baseball team would burden the local economy, he’ll argue that, to be a “world class city,” Las Vegas needs such a team. Perhaps he believes it’s somehow in the public interest if all Las Vegas residents have a home team to cheer for. But beside the Mayor, just who will be able to afford to attend these games? The average cost for a family of four to attend a single baseball game in 2004 was $155.52.

So it is primarily the wealthy who would enjoy the ball games—games played by millionaires who are employed by billionaires. Must it happen in stadiums financed by working class citizens who may or may not care about sports?

One more thing: Like all other big public works projects, stadium projects have a history of being boondoggles with massive costs overruns. Camden Yards in Baltimore was 40 percent over budget. When Yankee Stadium was renovated in the 1970s, almost four times more New York City taxpayer money was spent than owner George Steinbrenner originally promised.

No taxpayer money was needed to construct the Las Vegas Motor Speedway or the arenas at various casinos. Funding for the construction of a baseball stadium should be no different.

Doug French is executive vice president of a Southern Nevada bank and a policy fellow of the Nevada Policy Research Institute.

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