The first time I ever voted, I voted badly: I voted for a plan to use government money to build a soccer stadium and hockey arena in Columbus, Ohio, where I grew up. A few months later, I moved to Tuscaloosa to start college. Along the way, I stopped in Birmingham for a few days and stayed with my Dad: he had taken a job in Birmingham and had been living there for a few months. The rest of the family would follow around Christmas. One day, I read about a proposal to build a domed football stadium in Birmingham.
That Fall, I started taking economics classes at Alabama and, over the course of my studies at the University, I came to see the error of my ways and the error of government financing for stadiums and arenas. Support for government stadium financing comes from a failure to apply what Henry Hazlitt called “The Art of Economics” in his classic Economics in One Lesson. It’s a lesson that originated with Frederic Bastiat in his essay “What is Seen, and What is Not Seen.” It comes from a failure I describe in my Learn Liberty video on “the broken window fallacy.”
The money that a government uses to pay for a stadium comes from taxpayers. Every dollar a government takes from taxpayers to fund a stadium is money that isn’t saved and lent to a business, a consumer, or a home buyer or money that isn’t spent on other goods and services. Government financing might solve a collective action problem, but building a stadium with taxpayer money doesn’t create new economic activity.
This is also true of new spending around a stadium. It’s easy to see spending at restaurants and bars near a stadium, but it’s harder to see that these entertainment dollars are being reallocated from other parts of the metro area. Maybe people go to more football games, but they see fewer movies. Maybe they would spend money in the downtown entertainment district surrounding a new stadium in Birmingham, but they would spend less in Avondale or Five Points or Pepper Place or at the Galleria. If a stadium or convention center is an “economic engine,” it runs by siphoning the gas out of other “economic engines” in the area.
In a 2008 search for a consensus view among economists on stadium and sports subsidies, the economists Dennis Coates and Brad Humphreys reported that there is a strong consensus among economists that sports subsidies don’t generate promised economic growth. It goes beyond sports: in an important 2014 book, Heywood Sanders of the University of Texas-San Antonio describes and details what he calls Convention Center Follies. He shows that the real winners in municipal stadium-and-convention-center debates are politicians who are able to win votes and support from special interests, the special interests who get contracts to build and operate the stadiums and convention centers, and the consulting companies that prepare unrealistic “economic impact” projections.
Remember that the next time a starry-eyed politician or civic booster or team owner tries to persuade you that the taxpayers should foot the bill for a new stadium, arena, or convention center. We shouldn’t stop people who want to build stadiums and convention centers, but we should stop them from picking the taxpayers’ pockets to do it.