RALEIGH – The city council of Winston-Salem is scheduled to vote Tuesday night on millions of dollars in proposed subsidies for a minor-league baseball park. The vote will say a lot not only about the future fiscal policy of one of North Carolina’s largest communities but also the future course of one of the state’s enduring debates: what are city governments for?
If policymakers listened to reason and studied the available data, they would not answer that question with “investing in sports teams.” Just in the past decade, cities, counties, and even state governments have put hundreds of millions of dollars into new venues for basketball, baseball, football, hockey, and other sports and recreational offerings. In most cases, it is impossible to detect the purported economic benefits.
Dr. David Swindell, director of the Ph.D. program in Public Policy at UNC-Charlotte, is one of the many scholars who have studied these issues in depth. He observed several years ago that because most of those who attend sporting events at subsidized parks are from the local community, and thus would have spent their dollars on other local entertainment or consumption options, the economic effects are “marginal,” or perhaps even negative (because the subsidies warp decisions by various actors in the market). There is “no evidence to support subsidies for private companies” in such deals, Swindell said.
But what about all those economic-impact statements we see from stadium boosters about sports dollars circulating again and again, with commensurate gains in job creation? Like tales of perpetual-motion machines, these magical stories about Keynesian multipliers and boundless national publicity deserve our disbelief. Indeed, such economic-impact claims rarely stand up to careful scrutiny. All-too-often, consultants deliver what they know their clients want to receive: a scientific screen to obscure the self-interest of team owners glad to pass along their costs to unwilling and unknowing taxpayers, the self-gratification of sports fanatics who don’t want to pay for their own hobbies, and the self-delusion of public officials desperate to set an economic-development conflagration on what is really an ash heap.
The Winston-Salem case illustrates how these debates can so often go awry. Local developer Billy Prim claims that he can’t make a new Warthogs park and related development work without $43 million in subsidies from the city and Forsyth County. Actually, I can think of all sorts of risky endeavors and hare-brained schemes that won’t “work” without getting someone else to pay for them. That’s hardly an argument for saying yes. But local officials are susceptible to the argument that if other communities are doing it, they have to do it, too, or risk being left out. If the topic is subsidizing sports teams, though, the risk is all about being left in, not out.
At its core, the issue is a philosophical one. Are city governments supposed to entertain their citizens? I don’t think so, and you’d be hard-pressed to find evidence that the founders of North Carolina and its local communities intended for tax dollars, taken forcibly from residents, to be used for such a purpose. But even if you think it might be OK, ask this further question: Is entertainment a more important local function than fighting crime or maintaining streets? Winston-Salem has no lack of urgent needs in public safety and transportation. Every dollar risked on a speculative venture in minor-league baseball is a dollar that cannot be invested in alleviating crime and traffic congestion – functions that, as it happens, are likely to boost local economies far more than sports or entertainment facilities ever will. (Don't fall for the argument that the tax dollars wouldn't be available without the existence of the new baseball park — that's only true if the team's revenues came from those who wouldn't otherwise live and shop in Winston-Salem.)
Policymakers in other North Carolina communities have made the wrong decisions on this issue in recent years. Perhaps the folks in Winston-Salem will start a contrary trend.
Hood is president of the John Locke Foundation.