First, the snark.
- One word: jack booted thugs.
- Rep. Ryan would say, roughly: "I'm against these tax and spend policies."
- “'I defy anyone to come here and tell us that this stadium has not generated significant economic development, and I guarantee you there is more to come,' she said." hahahahahahahahahahahahahahahaha
From the inbox:
Use of Taxpayer Money for Pro-Sports Arenas Draws Fresh Scrutiny
by: Eliot Brown
Mar 09, 2015
Click here to view the full article on WSJ.comTOPICS: Public Funding, Sports Economics
SUMMARY: Critics of using taxpayer money for new arenas and stadiums have fresh momentum as the Obama administration takes aim at the subsidies. "For decades, cities and states have wooed sports teams through hefty subsidies for new arenas and stadiums, sums that have grown along with the facilities' price tags-despite the howls of economists who deem them a poor use of public money."
CLASSROOM APPLICATION: Instructors can introduce students to the evidence that the construction of sports stadiums using public funds does not pass a cost-benefit test. "Research on the issue has piled up during the past two decades. The general conclusion: A city's economy doesn't get a bump from bringing in a new sports team or building a stadium-and scarce economic-development dollars could be put to better use with other investments."
QUESTIONS:
1. (Introductory) "Funding pro facilities with tax-exempt bonds merely has 'shifted more of the costs and risks from the private owners to local residents and taxpayers in general,' the Treasury Department said in its budget proposal." What are the risks to the financers, whether they are private ones or taxpayers, of building professional sports stadiums?
2. (Advanced) "Research on the issue has piled up during the past two decades. The general conclusion: A city's economy doesn't get a bump from bringing in a new sports team or building a stadium-and scarce economic-development dollars could be put to better use with other investments." What is the evidence alluded to in the article that cities to not receive economic benefits from professional sports teams? Part of this evidence is about a substitution effect in consumption. What is this substitution effect?
3. (Advanced) Critics content that taxpayers in financing new stadiums are getting far less for their money than in the past. What is the change that has prompted this contention?
4. (Introductory) Should taxpayers finance the construction of professional sports stadiums? Are there factors not cited in the article that are important in evaluating the answer to this question?Reviewed By: James Dearden, Lehigh University
President Obama's budget proposal includes removing the tax-exempt status from local government bonds. From the article (this link might be ungated):
Cities and states typically repay tax-exempt bonds over several decades with revenues from levies such as a sales or hotel tax. Investors who buy these bonds don’t have to pay taxes on their income, making the interest rates cheaper than for taxable bonds—and lowering the cost of projects.
But funding pro facilities with tax-exempt bonds merely has “shifted more of the costs and risks from the private owners to local residents and taxpayers in general,” the Treasury Department said in its budget proposal. Barring municipalities from issuing the bonds would save the federal government $542 million over 10 years, Treasury said.
And this:
Whatever the result in Washington, the move adds a new element to a long-running public policy debate. Despite a near-unified view from economists and other academics that pro sports subsidies aren’t worth their costs, teams and elected officials have been remarkably effective in securing public investments in new facilities, which they typically say will drive economic development.
Research on the issue has piled up during the past two decades. The general conclusion: A city’s economy doesn’t get a bump from bringing in a new sports team or building a stadium—and scarce economic-development dollars could be put to better use with other investments.
“You’re not going to get income growth; you’re not going to get tax growth; you’re not going to get employment growth,” said Dennis Coates, an economist at the University of Maryland, Baltimore County who studies the economic effects of professional sports teams and facilities.
A 2007 study in the Journal of Sports Economics examined cities that gained professional teams. It found adding a team did “not have a positive economic impact on the local community” and didn’t raise regional incomes.
What’s more, some teams want to move after only two or three decades in a facility. The Miami Arena, a onetime home to the Miami Heat, was open just 20 years before being demolished.
Mr. Coates, who has published work with similar findings, said even in cities that lure teams from outside, the new facilities generally attract entertainment dollars that would be spent elsewhere locally.
My answer to question 4 above? No. And the follow-up? Civic pride benefits but:
The contingent valuation method has been used to estimate those civic pride benefits. But in most cases the civic pride benefits don't outweigh the costs (the exception is the Vikings study).
