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National News

More taxpayer money benefits pro sports owners amid ‘stadium construction wave’

A preliminary rendering shows the proposed stadium presented by the Oakland Athletics during the 2023 Nevada legislative session. The state approved spending some $380 million in public funds to bring the team to Las Vegas. (Credit: Nevada Current)

Kevin Hardy, Stateline
February 20, 2024

As sports stadiums built in the 1990s show their age, many professional sports teams are looking for new facilities — and public money to pay for them.

“We are just in the heating up phase of the next stadium construction wave,” said J.C. Bradbury, a Kennesaw State University economics professor who has researched the issue. “That’s part of the reason why you’re seeing a lot more stadiums happen.”

Across the country, pro sports teams are gearing up to improve or build new stadiums and arenas. In Chicago, both the NFL’s Bears and the MLB’s White Sox are exploring moves. Baseball’s Cleveland Guardians, Milwaukee Brewers, Oakland Athletics and Kansas City Royals are all working toward new or improved stadiums. So are the NBA’s Philadelphia 76ers, Oklahoma City Thunder and Los Angeles Clippers.

Elected leaders continue to shower tax revenues on stadium and arena projects with the aim of recruiting or keeping teams and boosting local economies. But public debate is growing, as decades of research shows that taxpayers don’t see a positive return on their investment.

“This is without exception,” Bradbury said. “It’s really across the board that these are really poor public investments.”

That hasn’t stopped the deals from getting larger. Adjusted for inflation, stadium subsidies have risen to a median of about $500 million from a 2010 median of $350 million, Bradbury said.

In 2022, New York officials approved a record $850 million subsidy to finance a new stadium for the NFL’s Buffalo Bills.

Then, last April, the Tennessee Titans landed more than $1.2 billion in state and local funding for a new professional football stadium in Nashville.

The momentum is only growing, with governments benefiting from pandemic aid and strong economies, said Neil deMause, a journalist who has written extensively about stadium subsidies.

“Stadium deals tend to beget other stadium deals,” he said. “When the Bills got their money from New York, that made it easier for the Titans to get their money from Tennessee.”

Super Bowl and schools

Las Vegas just hosted Nevada’s first Super Bowl at Allegiant Stadium, which was supported by a $750 million public subsidy in 2016 to lure the Raiders from Oakland, California. Now, Oakland’s baseball team, commonly called the A’s, is seeking its own stadium on the Las Vegas Strip.

But Nevada teachers are challenging a 2023 law authorizing up to $380 million of public funds to relocate the A’s to Las Vegas.

A political action committee backed by the Nevada State Education Association filed a lawsuit earlier this month challenging the law’s constitutionality. The group also is pushing for a ballot initiative that would allow voters to veto a portion of the public funding.

“These are billionaires, right? They could do it themselves if they wanted to,” said Alexander Marks, director of strategy for the teachers union.

“There’s a lot of folks who at the end of the day want to see their government dollars going towards responsible things like public education, roads and hospitals,” he said. “And any dollar we take away from that and put into a stadium is a misguided use of that dollar.”

Nevada ranked 48th in per-pupil education funding, according to the National Education Association’s 2022 rankings. The same report ranks the state’s student-to-teacher ratio as the largest in the nation.

“Where are our state’s priorities? The stadium is great but the school lunch bill has to get vetoed? We don’t quite understand that.” – Alexander Marks, director of strategy, Nevada State Education Association

Marks said state leaders frequently tell educators there isn’t enough funding available to tackle issues such as classroom sizes. He pointed out that Republican Gov. Joe Lombardo vetoed legislation last year that would have continued funding a universal free lunch program in schools.

“Where are our state’s priorities?” Marks said. “The stadium is great but the school lunch bill has to get vetoed? We don’t quite understand that.”

Jeremy Aguero, a Nevada consultant hired by the Raiders and the A’s to work on the football and baseball stadium projects, said the NFL stadium already is a mathematical winner. A 2023 audit of the Las Vegas Stadium Authority showed a dedicated hotel tax was collecting more money than was needed for debt payments on Allegiant Stadium.

And he said bringing in major sports events has boosted state revenues.

Aguero noted that Nevada’s legislature last year passed a record budget for K-12 education for fiscal year 2025, increasing per-pupil funding by more than 25%.

“So from that standpoint, our schools have more money because of Allegiant Stadium,” Aguero said. “Our police and firefighters have more money because of Allegiant Stadium. Our state and local governments — for everything from social service to higher education — have more because of major events that are taking place in major event centers.”

A matter of economics, identity

While public subsidy amounts are growing larger in terms of dollars, they are actually growing smaller as a share of overall stadium and arena costs, said Judith Grant Long, an associate professor of sports management and urban planning at the University of Michigan who has studied the issue.

Team owners and developers are increasingly pitching stadiums and arenas as wider developments that include entertainment, apartments and hotels. And elected officials are increasingly dedicating public funding toward expenses such as infrastructure and transportation, which theoretically can deliver a larger community benefit than just a venue.

That dynamic, though, can put wealthy team owners in the powerful position of holding some of the most valuable real estate in their markets.

Long said professional sports remain a small sliver of the overall economy. And mounds of peer-reviewed academic research shows that stadium and arena investments cost more than their economic benefits.

“The prevailing economic wisdom is that, generally speaking, the economic impact, measured in jobs and taxes, does not cover the average public investment,” Long said.

But these decisions aren’t always about pure arithmetic.

Maintaining a major sports franchise is a point of civic pride for many leaders, particularly in smaller markets.

Oklahoma City Republican Mayor David Holt said the city’s economy and identity has transformed since the NBA’s Seattle SuperSonics relocated there in 2008 and changed the team name to the Thunder.

“Oklahoma City was nowhere on anybody’s radar until we got the Thunder,” Holt said. “Our identity as a big-league city has become so intrinsic to how we see ourselves and so much a part of our momentum these last few decades.”

Oklahoma City is among only a few cities outside of the nation’s top 40 media markets with an NBA, MLB or NFL team, Holt said.

That’s why he strongly supported an initiative last year to extend a one-cent sales tax to fund a new publicly owned, $900 million arena for the Thunder. The arena will cost taxpayers about $1 billion once interest costs are factored in, the mayor said. The team has committed $50 million to the project, about 5% of the public commitment.

The NBA franchise is worth more than $3 billion, according to Forbes. Its seven-member ownership group is led by Clay Bennett, a wealthy venture capitalist.

In December, more than 70% of voters approved the tax extension, ensuring the team’s presence in Oklahoma City until 2050.

Holt said not building the new arena — and potentially having the Thunder leave the city — would have been a gut punch not seen in the area since the oil bust of the 1980s.

Wisconsin state Rep. Rob Brooks, a Republican, acknowledged the difficulty in assessing the true value of a pro sports team.

Last year, as lawmakers considered legislation to fund upgrades at the Milwaukee Brewers’ American Family Field, he focused on the tangibles, particularly how much the team and visiting teams contribute to state income taxes.

“I really just tied it to the tangible stuff … because everything else is hard to measure,” he said.

Legislation sponsored by Brooks made about $500 million in state funds available to the stadium project, which aims to keep the team put until 2050. But that cost will be funded specifically by the team’s income tax collections, Brooks said.

Democratic Gov. Tony Evers signed the legislation in December.

“It just made sense that as long as we have a facility that has more than half of its useful life left, let’s maximize our investment that we’ve already made,” Brooks said. “Had we been making an entirely new investment, that would have been a whole different argument.”

A flurry of stadium deals

Justin Wilson, the Democratic mayor of Alexandria, Virginia, is well aware of the studies criticizing stadium and arena deals.

But he thinks local taxpayers are well protected in the proposed legislative deal to move the NBA’s Wizards and the NHL’s Capitals to his city from downtown Washington, D.C.

A plan championed by Virginia Republican Gov. Glenn Youngkin calls for Monumental Sports & Entertainment, which owns both teams, to invest $400 million upfront and pay ongoing lease payments to a new stadium authority. Wilson noted that the public portion of the funding will come from user fees and taxes collected within the new arena development — not from taxpayers across the city or state.

“That was one of the things that we focused on from the beginning, really learning from the litany of bad sports arena and sports stadium deals that are all around the country,” Wilson said.

But the plan faces political opposition — from leaders in D.C. and some lawmakers in Richmond. While legislation backed by Youngkin made it through the state House last week, it faced a setback in the state Senate, where a key committee leader said the bill was “not ready for prime time,” The Associated Press reported.

The effort also faces organized opposition in Northern Virginia, where residents worry about the subsidy and local complications such as traffic and mass transit.

Indiana Democratic state Rep. Earl Harris Jr. wants to lure the NFL’s Chicago Bears, who are aiming to leave longtime home Soldier Field, to northwest Indiana. Harris filed a bill that would create a new taxpayer-funded sports development commission charged with attracting a pro sports team to the area.

“Maybe we can draw them over,” Harris said. “And if we can’t draw them over, maybe we can bring some attention to the area and attract another team.”

The Bears, a team valued at over $6 billion, purchased and demolished hundreds of acres of property in the Illinois suburb of Arlington Heights last year. But recently the team has shifted its focus to lakefront property in Chicago.

“The timeline has to be in 2024,” Bears President and CEO Kevin Warren told WGN-TV last week. “In a perfect world, I would like to have clarity in this legislative session that is coming up.”

In Indiana, the legislation sponsored by Harris didn’t make it out of committee. But he said there’s still interest from state and local leaders in luring a professional team to northwest Indiana.

“I’m actually still having people reach out to me,” he said. “They want to help and support this initiative. So I will bring this back next year.”

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This article is republished from Stateline under a Creative Commons license. Read the original article.