Peter Joneleit/AP Photo
A view of the Tennessee Titans’ Nissan Stadium as fans begin to arrive before an NFL football game against the Jacksonville Jaguars, December 11, 2022, in Nashville, Tennessee
Last month, voters in Tempe, Arizona, rejected a new arena for the Arizona Coyotes, the state’s National Hockey League (NHL) team. The result—56 percent of voters rejected a $2.1 billion entertainment district, which included the new arena—appeared to be a decisive blow against public subsidies for sports stadiums and arenas. The referendum’s defeat offered a spark of optimism for those who see subsidies for stadiums and arenas as handouts to the teams’ ultra-wealthy owners.
Since the Coyotes moved to Arizona from Winnipeg in 1996, the team’s ownership has struggled to keep the team profitable, resulting in a 2009 bankruptcy filing in which the then owner tried unsuccessfully to sell the team. The team was thereafter placed under league control until 2013. Recent years of poor performance on the ice contributed to an anemic fan base. In the 2022-2023 NHL season, the team played in Arizona State University’s arena that seats just 5,000 people.
Some of the opposition to the arena proposal, which would have also included a theater and two hotels, had little to do with fans’ weak support for the team. A major factor was voters’ resistance to the idea that taxpayers should subsidize professional sports teams, particularly when the gains for the community don’t always add up.
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Tempe residents who opposed the arena noted that while the development would be largely privately funded, the city offered massive property tax breaks as part of the deal. An analysis by the Grand Canyon Institute, a Phoenix-based nonpartisan think tank, found that for every $2.70 invested in the new district, Tempe would gain only $1 in revenue. The researchers also questioned whether the venues could attract enough events to compete with existing facilities.
Michael Leeds, a Temple University economics professor, told the Prospect that cities often give hidden handouts like these to owners who on paper are privately funding their own stadiums and arenas. “When you add the cost of maintenance and other associated costs to the stadium, the bill for the stadium can go from zero to a lot—hundreds of millions of dollars—very rapidly,” Leeds says.
Despite these drawbacks, other regions of the country are currently seeing new waves of public funding for privately operated stadiums and arenas. The District of Columbia and its Maryland and Virginia suburbs are vying to build a new stadium for the Washington Commanders National Football League (NFL) team, while Sacramento and New York City are both funding projects that are currently under construction. Even with other pressing local issues (all of these areas are experiencing serious housing affordability crises, for starters), many cities continue to push forward with stadium plans.
Local officials who support subsidies often argue that funding stadiums will spur development and bring money back to the public.
Public subsidies for stadiums and arenas were unheard of until the 1950s when Milwaukee built a facility to try and reel in a Major League Baseball (MLB) team. The Boston Braves later moved to the city. (The team later relocated to Atlanta.) Bidding wars soon persuaded cities to put up taxpayer dollars in the hope of winning teams or preventing them from leaving. Since then, these sweeteners have become the norm. Cities that fail to offer up new monies see teams move on. The San Diego Chargers NFL team moved to Los Angeles in 2017 after the city’s residents voted against funding a new stadium.
Sports teams do offer civic benefits, and fandom can serve as an important component of residents’ local identities. Keeping a team in a particular region, even if it means subsidizing the construction of a stadium, means maintaining that sense of identity. “If there’s a cultural benefit, then there’s still an argument for going ahead with doing it,” says Andrew Zimbalist, a Smith College economics professor. Some local politicians also seek to reward their allies and campaign contributors with stadium and arena projects that can provide temporary construction jobs and financing opportunities.
But although public subsidies have been declining as a percentage of funding sources for stadiums and arenas, according to Roger Noll, a Stanford economics professor emeritus, the ballooning costs of these projects mean that municipalities are still spending the same amount, if not more, for each new stadium or arena.
In April, Nashville’s city council approved a $1.3 billion pact for the NFL’s Tennessee Titans stadium—the largest public subsidy for a stadium in U.S. history. This deal surpassed the record set in March by New York, which offered $850 million in state and county funding for a new stadium for the Buffalo Bills, another NFL team. Amy Adams Strunk, the owner of the Titans, has a net worth of $1.6 billion. Kim and Terry Pegula, the owners of both the Bills and the Buffalo Sabres, the city’s NHL team, have a net worth of $6.7 billion, much of it from the fracking industry.
Local officials who support subsidies often argue that funding stadiums will spur development and bring money back to the public by creating new jobs, encouraging tourism, and revitalizing commercial districts. This idea proliferates in part because in many cases, the cities that fund new stadiums and arenas, whether for local sports teams or for special events like the Olympics or the World Cup, are doing so for the first time, according to Leeds, the Temple economics professor. Moreover, rather than increasing the level of consumer activity, stadiums and arenas simply shift residents’ leisure spending toward sports and away from other businesses, meaning these investments fail to provide meaningful economic growth.
When area residents have their say on these projects, they are no more likely to reject such handouts than legislators are. Between 1990 and 2016, voters weighed in on taxpayer support for 41 potential projects. In that time, 29 passed and 12 were defeated. Of the 12 that were defeated, two were built anyway.
Municipalities that failed to see returns on investments in new facilities are less likely to fund another new project. But other metro areas that have never had a professional sports team desperately seek the cachet of having one. This “eternal beginner” phenomenon helps explain why Las Vegas is currently offering over $350 million in public funding to persuade the owner of the Oakland Athletics to move the MLB team to Nevada. “You only need one bidder that makes a mistake on the high side,” Leeds says.
During the Great Recession, many cash-strapped municipalities paused public funding for stadiums and arenas. This brief reprieve, combined with the rejection in Tempe, shows that there is a way forward for local governments that are willing to prioritize spending tax dollars on projects to benefit residents instead of steering those funds to multimillionaire and billionaire owners.
