By Ken Reed
Washington DC mayor Vincent Gray is the latest politician to push sports welfare on local taxpayers. Gray has reached a tentative agreement with the private owners of DC United, a Major League Soccer franchise, calling for taxpayers to split the cost of a new soccer sports palace with DC United’s owners.
The deal “involves a complicated set of land swaps, tax abatements, leveraged developments, and legal stratagems.”
It’s a bad deal. The DC Council must do what the Seattle city council did when asked about using public funds for a new arena in Seattle, in an effort to lure an NBA franchise: Say No!
Washington DC is already home to one of the worst stadium deals in U.S. history, Nationals Park, home to the Major League Baseball’s Washington Nationals.
Neil deMause, author of Field of Schemes: How the Great Stadium Swindle Turns Public Money Into Private Profit, did a nice job summarizing the Nationals fleecing of local taxpayers:
“After a years-long search for a new home, the [Montreal] Expos would be transplanted to Washington in exchange for a promise of a $440 million stadium — a number that later swelled to $530 million, then $614 million, and ultimately $667 million, almost all of it footed by taxpayers.
“It was a huge ransom — at the time, it was both the priciest U.S. baseball stadium to date and the most heavily subsidized. Innumerable economists had studied the level of economic impact that sports stadiums have on their host cities, and come to the overwhelming consensus: not much. Sales-tax receipts? They don’t budge. Per-capita income? No effect. On the brink of [Mayor Anthony] Williams’ deal with MLB, 90 economists signed a public letter warning that ‘the vast body of economic research on the impact of baseball stadiums’ suggests that one ‘will not generate notable economic or fiscal benefits for the city.'”
Perhaps the most well-known sports economist is Stanford’s Roger Noll. Noll strongly believes the estimated jobs effect of a subsidized sports facility is actually negative because spending at the subsidized stadium substitutes for spending elsewhere for which a greater number of people are employed per dollar spent. Noll emphatically states that publicly-financed stadiums are not a net local economic benefit.
Due to greater public scrutiny, politicians are getting craftier in how they go about making handouts to wealthy franchise owners. It’s not just direct payments for building the stadium facility, cities are forgoing real estate taxes, spending money on land and infrastructure improvements, and absorbing interest costs on public bonds, among other methods. The complex costs involved in the land swap and land improvement aspects of the DC United agreement should raise a giant red flag.
As was the case with Nationals Park, the cost to taxpayers of a proposed DC United stadium undoubtedly will be much higher than is currently promoted.
Opposition groups will have plenty of ammunition to use in the DC United stadium case. Here’s wishing them the best of luck.
— Ken Reed, Sports Policy Director, League of Fans
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