The dog days of summer are upon us for professional sports in America. Baseball is at its midway point, basketball free agency is winding down, and football hasn’t started training camp. Therefore, it’s good to use this summer month to reflect on the not-so discussed portion of professional sports in the United States – who is paying for it. Moreover, as much as we all cherish our local sports teams and our favorite athletes, the MLB, NFL, and NBA don’t all offer society a constant stream of positive externalities.
During a time when Washington D.C. is debating whether to reform health insurance for millions of Americans, sports teams values are ever escalating, like the Warriors, who were bought for $450 million in 2010 and are now worth $2.6 billion1, it is a great time to re-examine the public subsidy and attendant return on investment cities, states, and the federal government receive for lavishing taxpayer funds on billionaires to build stadiums in their localities.
So, my college mentor, Justin Gomer, a Professor of American Studies at California State University Long Beach, and I embarked on a study to document what was the severity of the public tradeoff being made since the Great Recession in 2008, when the era of public austerity was ushered in for almost every state in the country, in terms of the public funding of professional sports stadiums versus schools. What we found was that ten states – Texas, Nevada, Minnesota, Indiana, Wisconsin, Michigan, Florida, Georgia, Pennsylvania, and New York – had decided, even after the Great Recession, that they would still use hundreds of millions of taxpayer funds to invest in stadiums while continuing to gut the education spending in their states.
The real story we found behind this policymaking is the opportunity cost of these ten states deciding to invest their futures in the literal fortunes of billionaire sports team owners instead of investing in the future of the children in their states. Furthermore, as documented in our study, every group of economists who has looked at the public financing of sports stadiums, whether it’s the Brookings Institution2 or the Federal Reserve Bank of St. Louis3, discovers that there is basically no public economic benefit as a result of stadium subsidies; then, when you contrast those studies with almost every major economic study detailing the public economic benefits of a more educated citizenry – higher median earnings, lower unemployment, increased socio-economic mobility just to name a few4 – you realize that public subsidies to sports teams are not just typical examples of political graft, but they are paramount examples of deleterious public investment, which will harm those states for years and decades to come.
Lastly, I really wanted to conduct this study and share it with the public because as a fairly recent college grad (2014 from the University of California, Berkeley) who was very fortunate to receive a scholarship to attend school and then find work at a great startup, FormSwift, after graduating, it pains and angers me when I have friends and family who are mired in college debt from public institutions of higher education.
This is why we concluded our study, which can be found below, with a calculation of how much less tuition could be at public universities in those ten previously noted states. So next time you meet a Nevadan and they are talking about welcoming the Raiders to town in 2020, ask if she would rather pay $11,206 less for her kid’s college tuition, or have a Raiders jersey with Las Vegas on the front.
See more below via FormSwift
1 https://www.forbes.com/teams/golden-state-warriors/. It also important to note here that the Golden State Warriors owners have not sought any public subsidies for the team’s new arena in San Francisco.