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It's All About Freedom!

Here's a Sports Stadium Double Play

Here we are heading into another legislative session, with talk of deficits, spending cuts and tax increases swirling about and what should reappear? Another push for a new taxpayer subsidized stadium. Only this time its not just one stadium but two!

A stadium task force appointed last year by Governor Ventura and the State legislature voted 13 to 4 with one abstention to recommend that two new stadiums be built, one for the Twins and another to be shared by the Vikings and the Gopher football team.

Once again stadium supporters are trying to convince us that there will be little or no public subsidy. Instead they claim the stadiums will be financed by a combination of private money, “user fees” and government loans that would be repaid by the teams. To call these claims misleading is charitable.

A very simple rule can be used to determine if there is a taxpayer subsidy of any stadium plan. If it requires the government to be involved, there is a taxpayer subsidy. A privately financed stadium would not have any government involvement beyond the routine regulatory functions such as building permits.

But how are “User Fees” and government loans a taxpayer subsidy? While they vary depending on which plan is looked at, included in the so-called user fees are such items as additional taxes on restaurant meals, hotel rooms and rental cars. In addition, income taxes paid by the professional athletes would go to pay for the stadiums.

The taxes on meals, rooms and cars are not user fees because they are paid by everyone who uses these services whether they use the stadium or not. Income taxes paid by professional athletes currently go into the state general revenue fund and are used to support various activities of the state. The use of these tax revenues to pay for stadiums would mean that either some state services would need to be cut or other taxes would need to be raised.

Stadium supporters will argue that if we don’t build the stadiums that we will lose the athletes’ income tax payments. These stadium advocates are using an age-old economic fallacy used to support taxpayer subsidies of anything and everything.

These advocates ignore the fact that if pro sports leave, the dollars spent at the stadium will not go away, they will be spent elsewhere in the local economy. The spending and investments in other areas of the local economy will in turn create jobs that will generate tax revenue.

Governmental loans are a taxpayer subsidy in two ways. First they will likely be repaid in part using the so called “user fees” mentioned above. Secondly, government loans are being proposed because of the lower interest rate paid on government debt. The interest rate is lower because the investors in these bonds do not pay income taxes on the interest received.

If private financing was used, the interest rate would be higher and the investor would pay taxes on the interest received. So income tax revenue is lost by the use of government bonding.

Anyone who thinks a new stadium will solve the Twins problems should ask themselves why the City of New York is planning to build heavily subsidized stadiums for the Yankees and the Mets.

The problems of professional sports today are not the result of too little revenue from supposedly outdated stadiums. They are a result of a salary structure that cannot be supported by the customer of the product: the fan.

By subsidizing stadiums for wealthy team owners, governments are merely shifting the burden of stadium cost from the owners to the taxpayers. The dollars not spent by the owners on stadium costs will be used to bid up the salaries of the players even more.

Professional sports have created their own problems and they need to take responsibility for putting their house in order and quit looking for government handouts. This is the time and the place to stop this corporate welfare.