North Carolina politicians face many difficult decisions. Whether to subsidize professional sports with tax dollars isn’t one of them. The answer should be no, not a dollar, not a dime.
If you like going to pro football, basketball, hockey, or baseball games, then by all means please enjoy yourself — but not at my expense, for I will not be there. If you like to watch sports on television, please feel free to patronize the advertisers or fork over exorbitant fees — but don’t ask me to chip in. If you’ve always dreamed of owning your own team, don’t try to make me invest your enterprise unless I’m going to get my money back and then some as a co-owner — and even then I’ll probably say no.
Subsidized sports is a racket, pure a simple. Team owners, broadcasters, and assorted lackeys bamboozle their marks with promises of broad economic benefits for the community at large. Big-time sports will “put our community on the map,” they say, thus attracting new employers and creating new jobs. They hire flimflam artists posing as scholars to claim that the team will have a “huge economic impact” without bothering to compare it to the lost economic impact of the tax dollars diverted from their original uses, such as shopping or eating out.
Careful policy analysts have been onto this scam for decades now. While economists continue to debate many challenging issues, not much controversy remains about government subsidies for sports teams. Most studies find that they aren’t worth the cost to taxpayers.
For example, economist Ian Hudson wrote a study for the Journal of Urban Affairs in 1999 that used a regional-growth model to evaluate the employment effects of communities gaining or losing professional sports teams. He didn’t find any. In an earlier issue of the same journal, economist Robert Baade concluded that subsidizing sports was not a wise public investment. “The primary beneficiaries of subsidies are the owners and players, not the taxpaying public,” he wrote.
But what about the other businesses that make money from sports teams, such as vendors and nearby restaurants? Well, sure, they gain a bit — but at the expense of other businesses in the community that lose income. As economists Dennis Coates and Brad Humphreys concluded in their 2003 paper, “consumer spending on professional sports and spending in other sectors are substitutes. This helps to explain the negative total economic impact of sports found in other studies.” One such study was published in the Journal of Sports Economics in 2007. Written by Kaveephong Lertwachara and James J. Cochran, it studied franchises from all four major sports — football, basketball, baseball, and hockey — and found that they had “an adverse impact on local per-capita income for U.S. markets in both the short and long run.” You can find similarly disappointing results for attempts to use sports to attract new manfacturers or other corporate relocations, broadly applied taxes to fund sports stadiums, projects that attempt to marry pro sports and downtown redevelopment, and even for the highest-profile sports event of all: hosting the Olympic Games.
There are a few contrary research findings, particularly for minor-league baseball in remote communities with few competing entertainment outlets. But the preponderance of the evidence suggests that forcing taxpayers to “invest” in professional sports is a foolish policy.
Alas, I fear there are many fools who still have access to my tax dollars.
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Hood is president of the John Locke Foundation and author of Our Best Foot Forward: An Investment Plan for North Carolina’s Economic Recovery (2012).