Sunday, October 25, 2009

Stadium Swindle

The rumblings have been increasing for a few years now. Another boondoggle is about to be thrust upon the Milwaukee metropolitan area taxpayers: public subsidization of a new basketball arena for the Milwaukee Bucks. (The Bucks just received $5 million, over two years, for renovations from the State in the latest budget.)

The usual story-line is being presented. Many of the same characters and boosters of the Miller Park swindle are involved in securing public money to build a new private basketball stadium. Many of the same mantras and "benefits" are blathered about and claimed whether the project is a stadium, a convention center, an industrial park, a research park, and a host of other supposed economic "game changers" and "engines."

We need to do this. If we don't, the Bucks may leave. The team can't compete with such an outdated stadium. We have to keep the team to remain a "major league" city. [Whatever would we do with our leisure time and money if we didn't have a professional basketball team?] If you build it, many jobs will be created, it will attract tourists, and it will drive other business creation nearby the stadium and throughout the region.

In a few cases, this is true. In the majority of cities, these claims are demonstrably false. The modern-day, largely publicly-financed stadium is a white elephant representing regressive urban tax and economic policy. The primary beneficiaries of new stadium construction are the team owners and players.

The Bradley Center is Non-Union

Facilities built with public money should employ unionized workers earning a living wage, with health care benefits, a stable retirement plan, and the ability to collectively bargain. Public dollars should not be used to subsidize low-wage, seasonal employment.

Job Creation and Spillover

Economists whom have gathered the employment numbers of census tracts, cities, metro areas, and zip codes near newly built stadiums have found no meaningful improvement due to the construction of a new stadium. My own research uncovered declines in employment in the sectors most linked to stadium commerce (retail, restaurant, etc.) in the years up to construction and following completion.

These jobs are primarily seasonal, lacking benefits, and do not pay a living wage. Actively subsidizing such employment attracts less-skilled workers and does nothing to improve the future prospects for a highly-skilled, high value workforce.

New Business Creation

Likewise, the sectors most linked to stadium commerce also show no significant increase in new businesses. Again, many cities actually have experienced a decline. Most new stadium developments are self-contained islands with shopping, food, parking, and numerous other retail activities. People come to the games, park on expansive (and environmentally insensitive) parking lots, spend money within the stadium, and then drive home. Many newer stadiums are located off exit ramps; there is no pedestrian-friendly element that ties the stadium to the adjacent neighborhood. More often, the stadium becomes a competitive drain on other local taverns, restaurants, and retail stores nearby.

Intangible "Major League" Status

It sounds cool to say, "We're in the big leagues!" But what does it really mean? And how is it measured so that we may understand, quantitatively, how it is benefiting us. Policy and investment decisions should be based on rigorous analysis and visible rewards, not wishful thinking and snappy sloganeering.

Tourism Delusions, Realignment and Substitution

The majority of those attending games come from within the metropolitan area. For a city, or a region, to actually experience growth, to achieve some sort of gain from hosting games, people need to come from outside the region. Otherwise attendees are merely realigning their spending within the area; no growth is taking place. And, even if someone from Chicago does attend a game in Milwaukee, if the money they spend is money they would have otherwise spent in Chicago, there is no net gain for the region as a whole. Unless attending the game is money they otherwise would not have spent, growth is not occurring. A zero sum game.

"Fantasy City" Investment Strategy

Every city can not be a sports mecca, a convention behemoth, nor a tourism magnet. The more every city keeps trying to emulate each other with the same, largely unsubstantiated, development strategies, more will be losers. Development needs to build on comparative advantages, sectoral strengths, and labor force skills. Trying to mold a city's future to meet the successes of another with a completely different set of historical circumstances and skill-sets is lunacy. Largely, throwing money down the drain.

Opportunity Cost

Millions spent on stadiums can not be spent on other, more pressing, needs. Money given to the Bradley Center and Miller Park is money we can't use on replacing the Hoan Bridge, redeveloping the Pabst Brewery, cleaning up the Kinnickinnic River, building a high-speed rail network, cleaning up the Great Lakes, along with a litany of more important investment choices.


It's time private entities, especially those as extracurricular as sports, paid their own expenses. This is yet another sector of the economy where we've allowed a 'too big to fail' model hamstring our development options and leave us open to bribery and threats of leaving. Federal legislation is needed to end this war among the cities and to break up the cartel that is major league sports.

For Further Reading:
A Public Plan
Drowning in Delusions
Loot, Loot, Loot For The Home Team
Nudging Away Nonsense
Professional Sports Subsidies
Should Cities Pay For Sports Facilities
Stadium Subsidies
Subsidy Resources
Welcome to Walmart

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