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End Stadium Subsidies, Virginia Delegate Proposes

February 6, 2018

The Virginia House of Delegates’ Appropriations Committee is considering a bill to ban government financing for professional sports stadiums.

The Virginia House of Delegates’ Appropriations Committee is considering a bill to ban government financing for professional sports stadiums.

H.B. 242, proposed by state Del. Michael Webert (R-Marshall) in January, would prohibit the state and local governments from offering or providing professional sports teams any kind of taxpayer-funded assistance or funding, including infrastructure construction, tax incentives, grants, and loans.

Sticking to ‘Core’ Functions

Webert says his bill is limited to professional stadiums because they are not part of government’s proper sphere of activity.

“H.B. 242 says local and state tax dollars cannot be used to build and subsidize a professional sports stadium,” Webert said. “It excludes high school and college stadiums, because those entities are extensions of the state in general.

“Tax dollars should only be used for core government functions,” Webert said. “Subsidizing professional stadiums is certainly not what we should be doing, especially when each time, there doesn’t seem to be the massive economic benefit that people claim. Those dollars could be used for something else.

Touchdown for Taxpayers

Caleb Taylor, legislative director of the Virginia Institute for Public Policy, says getting rid of sports stadium subsidies would be a home run.

“Eliminating subsidies would benefit taxpayers and consumers alike, many of these being the same people,” Taylor said. “Encouraging market-based solutions is a ‘business-neutral’ proposition, from a political point of view. This translates to eliminating or minimizing restrictive regulations or financial burdens on businesses, including sports teams and the like, as well as forgoing supportive subsidies.”

Dubious Economic Effects

Taylor says people must consider both sides of the sports stadium subsidy equation.

“The economic argument for subsidies is that the financial incentive increases the available supply of a good or service, ,,, thereby decreasing the price of the good and increasing the quantity supplied when approaching market clearing,” Taylor said. “On the demand side of the equation, however, taxation decreases the real income of consumers, thereby decreasing consumption. … 

“This is one of the reasons why we don’t see a considerable increase in economic benefit from sports complexes, and sometimes see the sign of minor localized recession in the area: if a consumer has less real income, they are far less likely to spend on luxury items and more likely to prioritize their daily needs above all else,” Taylor said.

Prompted by Prior Payouts

Webert says past stadium deals inspired him to study the issue.

“There have been numerous things going on within the Commonwealth where we have seen the possibility that taxpayers would be held accountable for professional sports teams, like a minor-league ballpark in Prince William County,” Webert said. “It looked like the taxpayers in the county were going to guarantee the debt for the stadium.”