How to Blow Off a Fortune (or Two)

Staff

In its quest to become the sports capital of the world, Las Vegas has spent or earmarked more than $1 billion of the public’s money to build two stadiums.

Lawmakers approved legislation last year to spend $380 million on the New Las Vegas Stadium, for the Oakland Athletics. The government has already spent $750 million on Allegiant Stadium, where the Las Vegas Raiders play, in Paradise. The subsidy came through a bill rushed through Nevada’s legislature in 2016.

Proponents of the stadium argue that the funding for the Athletics stadium does not directly increase taxes. It consists of $180 million in state tax credits that can be transferred, $120 million in bonds, mostly issued by Clark County, and $25 million in state credits. But proponents miss the point: What else could we have spent the money on? If it is on schools, then the true cost to the public of building the stadium is the loss of education.

Will the A’s Stadium Be Too Big?

The city may be tempted to make a stadium too large rather than too small since the publicity will make the mayor look like a modern Robert Moses, the famous developer of New York City.

Allegiant Stadium normally seats up to 65,000 and can expand to 72,000. But it has never come close to extended capacity. The most attended event was the Super Bowl in February between the Kansas City Chiefs and the San Francisco 49ers, drawing 61,600 fans, or 86 percent of extended capacity.

Runners-up were a 2023 Raiders game against the Pittsburgh Steelers, which drew nearly 59,000 fans; a 2022 game between Notre Dame and Brigham Young University with 56,000 spectators; and a BTS concert that same year with 52,000 fans.

Is Attendance Growing for Sporting Events?

Over time, cities are building bigger and bigger stadiums. This trend will only pay off for the cities if stadium attendance grows over time. Does it? We can find out by looking at the most popular stadium event – the Super Bowl, going back to the first one, in 1967, when the Green Bay Packers walloped the Kansas City Chiefs, 35-10.

Over the years, attendance has gradually fallen by an annual average of 313. Over the 50-year life of a typical stadium, this implies a decline in attendance of more than 15,000, or more than one-fifth of Allegiant’s extended capacity.

Of course, since most games at Allegiant are smaller than the Super Bowl, the actual decline would be less than this. But the point is that if a stadium cannot play to capacity today, it is even less likely to do so in the future. Indeed, the excess seating will drive down ticket prices. Forecasts of ticket revenues based on today’s prices will be too high.

Is the government financing bigger and bigger stadiums that will never actually sell out?

Ticket forecasts are questionable for other reasons as well. Time trends – such as the growing popularity of streaming games – explain less than a fifth of the changes in stadium attendance over time. In other words, more than four-fifths of the pattern in attendance is hard to predict. Forecasts of the decades to come are therefore, very iffy.

The Super Bowl illustrates the problem. The years of highest and lowest attendance, 2011 and 2021, differ sharply from the rest of the 58-year period, and for unpredictable reasons.

In 2021, the shutdowns caused by the COVID-19 pandemic cut attendance to 25,000 – a third of average attendance over the entire period. In 2011, attendance soared to 104,000 at AT&T Stadium in Arlington, Texas. That game featured unusually strong teams: The Packers had won the most NFL championships, and the Pittsburgh Steelers had won the most Super Bowls.

Should Stadiums Be Publicly Funded?

What can public funding of stadiums accomplish that private funding can’t? The sports market works: If you value a Raiders game enough to cover the cost of providing it to a typical fan, you can usually find a ticket.

A good example of the potential of private funding in sports venues is the 20,000-seat T-Mobile Arena, home to National Hockey League champions, the Vegas Golden Knights. It didn’t spend a penny of the taxpayer’s money. Indeed, Anschutz Entertainment Group put up money because the stadium avoided the “risks and challenges that have doomed prior projects relying on public funding,” said an AEG official.

The city built the $375 million arena in less than a year and has been operating since 2016.

Building the A’s Stadium By Robbing Our Kids’ Education

Here’s the point: The actual cost to Las Vegas of building stadiums is not the number of dollars spent on construction but the potential for education and public safety that could have been bolstered instead.

A 2021 study for the Nevada Commission for School Funding found that $800 million would enable the state to lower its pupil-teacher ratio to the national average of 15:1. It put the average cost of a teacher at $82,000 to $87,000. The public funds dedicated to the Raiders and Athletics stadiums would have covered that investment, with enough left over to hire 1,600 more teachers.

For nearly 70 years, stemming from Robert Solow’s Nobel-winning statistical studies, economists have found that the key to economic growth is human capital, that is, knowledge, not retractable stadium roofs.

Take Action

Your voice matters. Through your active engagement with elected officials and participation in the democratic process, you can help shape policies that benefit the well-being of all Nevadans.

Here’s your chance to be a part of that process. Write a letter to your legislator demanding them to not have taxpayers funding another professional sports stadium.