Saturday, November 06, 2010
Taxpayer Funding of Stadiums
According to the Wall Street Journal, taxpayers across the US are pushing back at funding new sports stadiums. Surely, that trend is not surprising given the economy and the concerns over excessive government spending and debt. However, perhaps there is more to the story. Perhaps taxpayers are getting more savvy with regard to the costs and benefits of these projects. When these proposals emerge, we always see studies arguing for a huge stimulus effect to the local economy. However, many of these studies have a fatal flaw, namely that they don't consider the fact that much of the new spending by consumers on tickets, parking, and concessions is not really "new.". It's really just a shift in consumers' spending patterns, with these new purchases displacing other forms of entertainment consumption. Thus, the economy isn't really seeing a net positive. Moreover, these estimates always must be taken with a grain of salt, since the consultants performing the studies are often paid by team owners. Finally, cost estimates foe these big projects are notoriously optimistic; costs can easily exceed original estimates, as with many large public projects.