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Research & Commentary: Tampa Ballpark Not Worth Its Potential $400 Million Taxpayer Price Tag

July 25, 2018

In this Research & Commentary, Matthew Glans examines the new stadium proposal being considered in Tampa and how taxpayers may be on the hook for a multimillion dollar bill.

In July, the Tampa Bay Rays Major League Baseball team released its long-anticipated first artist renderings for a planned $809 million stadium in the Ybor City neighborhood of Tampa, Florida. Although the images show a unique, intimate, and architecturally stunning stadium, the team has yet to address the biggest problem with the project: how to fund its construction. Initial estimates, which some critics claim are too conservative, place an $892 million price tag on the stadium. This total includes $83 million in what the team calls “necessary infrastructure” improvements in and around the stadium.

Although team executives have not requested taxpayer funding yet, recent history shows taxpayers are often left holding the bill for stadium funding. More than ever, professional sports owners, many of whom are billionaires, are relying less on private funding and more on taxpayer subsidies to build and renovate billion-dollar stadiums that only a small percentage of the public attends.

According to the Tampa Bay Times, the owners of the Rays have stated that they would contribute $150 million to $400 million for the new stadium. However, this amount depends on whether the team can secure lucrative naming rights for the ballpark. The team and city hope private financing and local businesses generate most of the ballpark’s costs. Yet even if the team were to spend up to $400 million, that would still leave about $400 million in additional required funds. Unfortunately, much of this shortfall will be borne by Hillsborough County taxpayers, and the timing is less-than-ideal, to say the least. The Tampa Bay Times reports the county has already slashed its budget in 2019 and faces education spending cuts as high as $31 million for the coming year.

The Rays should expect little to no help from the state – and for good reason. After the Marlins fleeced Miami residents with a $1 billion bill, which will be paid over the next 30 years, the legislature soured on stadium funding deals. One bill, which passed the state’s House but failed in the Senate in 2017, would have banned sports franchises from constructing, reconstructing, renovating, or improving facilities on leased public land. In addition, the bill would require any leases or sales of facilities on public land to be sold or leased at fair market value.

Another option for Florida lawmakers is a new interstate compact now being considered in several states that explicitly prohibits the “use of taxpayer dollars for private professional sports stadiums and facilities.” A good example of a compact bill was introduced in Arizona: under Arizona’s proposed compact, if similar legislation is passed and ratified by 24 other states, the appropriation of government money for “the construction, maintenance, promotion or operation of a professional sports stadium” would be prohibited. The bill specifically includes bans on “direct funding, tax credit, tax exemption, government bond, loan, loan guarantee or any other funding mechanism that comes from state or local government.”

Supporters of using public funds to build new stadiums say such projects help improve local economies, but the majority of research on the economic effects of stadium construction has found no link between new facilities and job or income growth, as Samuel Staley and Leonard Gilroy note in a Reason Public Policy Institute report. Stanford University economist Roger Noll is even more direct, telling The Economist he has yet to find an example of when construction of a football stadium has had a significant positive impact on a local economy.

Stadium subsidies are a poor use of taxpayer money. They rarely realize the benefits their supporters claim, and they often shift tax revenue away from more-pressing needs. Cities and states seeking to improve their economic competitiveness shouldn’t rely on professional sports teams. Instead, they should reduce taxes and invest in more cost-effective improvements, such as new and improved infrastructure.

The following documents provide further information on the economic impact of publicly funded stadiums.
 

The Economic Impact and Civic Pride of Sports Teams and Mega-Events: Do the Public and Professionals Agree?
https://www.heartland.org/publications-resources/publications/the-economic-impact-and-civic-pride-of-sports-teams-and-mega-events-do-the-public-and-professionals-agree
Peter A. Groothuis and Kurt W. Rotthoff survey residents and economists about the alleged benefits—both to a city’s economy and to civic pride—of mega-events and sports teams. The authors’ results find like “economists, the public is skeptical that public funding of mega events is a good idea.”

Sports Stadium Madness: Is Fan Ownership the Answer?
https://www.heartland.org/publications-resources/publications/sports-stadium-madness-is-fan-ownership-the-answer
This Policy Brief from The Heartland Institute questions government subsidies to sports stadiums since the mid-1980s. The author proposes fan ownership of teams as a solution to “sports stadium madness.”

Sports Stadium Madness: Why It Started, How to Stop It
https://www.heartland.org/publications-resources/publications/no-85-sports-stadium-madness-why-it-started-how-to-stop-it-summary
Taxpayer subsidies to professional sports teams amount to some $500 million a year. The decision to subsidize a team is driven by competition among cities for a limited number of teams, league policies that reward relocation, and lobbying by special-interest groups. The solution is for fans and taxpayers to campaign for nonprofit ownership of teams, a model pioneered by the NFL’s Green Bay Packers in 1923.

Is There an Economic Rationale for Subsidizing Sports Stadiums?
https://www.heartland.org/publications-resources/publications/is-there-an-economic-rationale-for-subsidizing-sports-stadiums
Robert A. Baade discusses whether subsidizing sports facilities makes economic sense for municipalities.

Government-Funded Stadiums Not Worth Price of Admission
http://www.cato.org/publications/commentary/governmentfunded-stadiums-not-worth-price-admission
Cato Institute Senior Fellow Doug Bandow examines stadium subsidies and their supposed benefits and concludes city officials across the nation should welcome major league sports teams only if they are willing to pay their own way.

Why Stadium Subsidies Always Win
http://reason.com/archives/2013/12/21/why-stadium-subsidies-always-w
Nick Gillespie of Reason interviews J.C. Bradbury, the author of several books on baseball and economics, about the economics of publicly subsidized sports stadiums. A video of this interview is available here.

Take Me Out of the Ball Game: the Efficacy of Public Subsidies in the Success of Professional Sports Stadiums
https://www.heartland.org/publications-resources/publications/take-me-out-of-the-ball-game-the-efficacy-of-public-subsidies-in-the-success-of-professional-sports-stadiums
This paper weighs the relative advantages of multiple factors that lead to the success of professional sports stadiums in major markets, discussing the arguments for and against public subsidies. The analysis demonstrates public subsidies for stadiums don’t generate sufficient economic returns, and that successful stadiums can be built without using taxpayer funds.

Sports and the City: How to Curb Professional Sports Teams' Demands for Free Public Stadiums
https://www.heartland.org/publications-resources/publications/sports-and-the-city-how-to-curb-professional-sports-teams-demands-for-free-public-stadiums-1
Writing in the Rutgers Journal of Law and Public Policy, Marc Edelman argues for a national law that would protect local communities from sports leagues' demands for publicly funded stadiums, by requiring pro-rata revenue sharing according to the share of construction costs paid.

The Stadium Gambit and Local Economic Development
https://www.heartland.org/publications-resources/publications/the-stadium-gambit-and-local-economic-development   
Sports franchises frequently use their monopoly power to extract rents from state and local governments. Local officials and their hired consultants tout economic benefits of publicly subsidized stadia, but the consensus of academic economists is that such policies do not raise local incomes. This article describes even more pessimistic results, indicating sports facility subsidies may actually reduce the incomes of the alleged beneficiaries.

 

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit the Budget & Tax News website at https://www.heartland.org/publications-resources/newsletters/budget-tax-news and The Heartland Institute’s website at http://www.heartland.org.

Whether sending an expert to your state to testify or brief your caucus, hosting an event in your state, or simply sending you further information on the topic, Heartland can assist you. If you have any questions or comments, contact Heartland Institute Director of Government Relations John Nothd

Author
Matthew Glans joined the staff of The Heartland Institute in November 2007 as legislative specialist for insurance and finance. In 2012, Glans was named senior policy analyst.
mglans@heartland.org @HeartlandGR