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A Creative Plan to End Stadium Subsidies Falls Short
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Taxpayers beware: the Washington Redskins want a new stadium. Normally, when a team starts shopping for a new stadium, it means that they want a newer (larger) subsidy from local taxpayers. This time, it appeared that legislators from Maryland, Virginia, and the District of Columbia had had enough, agreeing that none of the three would offer the Redskins subsidies in return for their services. Unfortunately, with the failure of the bill that would seal this agreement in the Virginia legislature, it appears that a historic opportunity for a line in the sand on stadium subsidies will go to waste.

The Redskins once played inside D.C. proper, but are currently located in Landover, Maryland. Virginia’s former governor, Terry McAuliffe, made an aggressive effort to woo the Redskins to Virginia, repeatedly showing a willingness to offer subsidies to bring the Redskins to the Old Dominion. Current Virginia Governor Ralph Northam, on the other hand, has stated that he opposes stadium subsidies.

A legislator in each state and the District introduced legislation that would have set up an interstate compact preventing public funds from any of the three jurisdictions making their way to a new Redskins stadium. A quirk of the stadium subsidy debate is that it tends to transcend traditional partisan battle lines — in this case, the three legislators in question are a Republican, a Democrat, and an Independent. However, Virginia State Delegate Michael Webert’s (R-Fauquier) bill was unanimously rejected in committee, putting the effort in doubt.

This tri-governmental effort to curb stadium subsidies would have established a model for states cooperating to avoid getting played against each other for higher subsidies. Sports businesses have an incentive to make money, and can’t be expected to turn down incentives when they are proffered. Yet legislators have a responsibility to their constituent taxpayers not to be wasteful with their money. Unfortunately, state legislators often fail to live up to this responsibility.

Legislators are often irresponsibly loyal to major sports teams out of fear of being blamed for “losing” a regional fixture to relocation. Take the case of Minnesota in 2012. The Minnesota Vikings wanted a new stadium, and so grumbled about moving if they didn’t get help building it. Despite a $1.1 billion debt, the Minnesota state legislature still managed to provide the Vikings with more than $500 million in subsidies.

Some may point out that there are also examples of sports teams leaving when they don’t get their stadium projects subsidized. This is true: in recent years, both the Rams and the Raiders have left their respective cities for new homes after failing to receive the payouts they sought. However, in both cases teams left because the economic cases for them to remain did not exist without massive subsidies. Sales, fan bases, and media market values had declined. But should cities with populations in the range of 300,000-400,000 people hand teams a blank check just for sticking around? Absolutely not, it turns out.

It is the exception, rather than the rule, when taxpayers make their money back from stadium subsidies. A 2017 poll of economists found that 83 percent agreed that stadium subsidies cost taxpayers substantially more than they give back in economic benefits to the community. One analysis by Dennis Coates of the Mercatus Center looked at the economic impact of sports stadiums on local economies. Coates found that sports stadiums were generally harmful to local taxpayers; where they were not harmful, they had an insignificant effect. Another economist found that baseball stadiums have around the same economic impact on a community as a midsize department store.

This failure to provide significant economic benefits highlights another cost of stadium subsidies. Even when they do not directly harm taxpayers, they are still wasteful. Any amount of money going to stadium subsidies is money that could have been better spent improving local infrastructure and services, or returned to taxpayers in the form of lower taxes. Stadium subsidies that fail to recoup their cost to taxpayers in economic benefits don’t just waste the cost of the subsidies — they waste the opportunity to do something more productive with the money as well.

The three legislators seeking to avoid bidding against each other to bring the Redskins to their states were taking an admirable stand, putting the interests of their constituents above those of a business that makes hundreds of millions of dollars a year. Though the effort to band together to prevent taxpayer dollars going towards stadium subsidies appears to have failed, it should still provide a model to state and local governments across the country. Taxpayers deserve to have their money spent more wisely than this.

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