Disconnect
Karl Popper once wrote: “The growth of knowledge depends entirely upon disagreement”; which may explain why academics love to disagree. So when the rare phenomenon of scientific agreement occurs, we would expect our politicians to adhere to such evidence and act accordingly. Yet, as it often does, reality does not follow the logic that we imagine in our heads.
Over the past 50 years, state and local governments have devoted $35 billion of taxpayer money to subsidize North American sports venues, with economic development being the main substantiation. This completely ignores the near-universal consensus among economists that such venues offer little to no positive economic impact.
With an estimated $20 billion of additional taxpayer money on the way by 2030, this phenomenon begs the question: why do American elected officials keep pouring money into sports venues? This article will present several contributing factors.
The middlemen
Sports franchises often try to garner taxpayer money through threatening to leave the city where they are based. Essentially holding the city government hostage until they give in, yet it is then surprising that economists, John Bradbury, Dennis Coates and Brad Humphreys, write that sports franchises often do not spearhead the lobbying effort for receiving public funds. Rather the chief architects of such advocacy movements are what are called ‘local growth coalitions’.
Local growth coalitions are already existing institutional alliances between community leaders and local governments. These coalitions are largely made up by local business leaders, but also exist of other influential members of the community. Local growth coalitions have substantial influence on the overall local development policy, an influence they use to steer policy to serve their own interests. In the case of sports stadiums, a local business leader can use major league sports and the opulence of modern stadiums as an asset to attract clients and talent, and to expand business networks, without considering that such subsidies are a poor economic investment for the wider community.
Local growth coalitions are very distinct from traditional lobbying paradigms since they are detached from the sports franchises receiving the subsidies. Thus a coalition’s advocacy is seen as neutral and in the interest of the overall community. This neutral image breaks the usual lobbying matrix, since it is common to have pro- and counter groups competing for the policy-makers attention. Yet these coalitions enjoy the privilege of having elected officials inherently value their approval, and fear the loss of their support if they go against them. Which is why researchers have observed that it has become the default policy that elected officials defer to the wishes of the local growth coalition rather than evaluate the policy through an objective cost-benefit analysis. These conditions put critics in a disadvantaged position in cases where there is not a referendum. This is because critics must convince policy-makers to stray from their default path.
“See I did something”
Looking at internal motivations of elected officials, Bradbury, Coates and Humphreys also wrote that politicians tend to endorse economic development plans which are supposed to draw businesses and produce visible results, despite the evidence that these policies are ineffective. Such tangible activity is seen in a positive light by most voters, regardless of their voting patterns.
As a result politicians can not only take credit for such visible activity, but also go to their voters and say: “see I did something”. This works, since voters are mostly ignorant to the complicated finances behind such projects, and the evidence that these policies do not work economically. On top of that, American voters often back politicians who try to draw in businesses, even if those efforts don’t achieve their original goals. Thus, while politicians themselves could be aware of the ineffectiveness of such policies, if they are re-election-maximizing they would have incentive to exploit the lack of information that voters have.
Thus it is electorally favourable for politicians to attract a sports franchise to come or stay in their city by offering public subsidies. This is due to sports venues being a visible and large economic project which can garner credibility for politicians.
Asleep at The Wheel
Members of the media can also be part of the aforementioned local growth coalition, and pursue their own interests. Bradbury, Coates and Humphreys posit that media outlets may see a sports team as a way of generating more profit, due to residents buying more newspapers and watching more local TV to follow their local team. Regardless of the media’s intention, the media is faulty in its approach when addressing public subsidies and sport stadiums. Which is of importance, since whether the media is critical or not influences the outcome in cases regarding subsidies and sportstadiums, especially in cities which have weak growth coalitions. A worrying prospect considering that sociologists Kevin Delaney and Rick Eckstein wrote the following in their 2003 book: “in every city we studied, the main local newspaper editorially favored using public dollars for private stadiums”.
An uncritical attitude can be especially seen in the media’s presentation of economic reports commissioned by proponents of a public subsidy. Regardless of the economic consensus, these reports still forecast large returns which will ensure that the subsidy will pay for itself through an increased tax base arising from more jobs and spending. Yet, what these reports fail to mention is that this spending is not new spending, rather just a transfer of consumer-spending towards areas closer to the stadium, at the expense of other parts of the community. Which is only one of the many errors which these reports tend to commit that conveniently oversell the benefits of these stadiums. When the media does not critically present these reports it can then become part of the promotion of such deceits to an audience which does not know any better.
An uncritical media presents its {n} reporting as just presenting statements or (observational) ‘facts’ regarding the construction without providing commentary on whether said statements hold any merit. Which leads to the echoing talking points from pro-stadium politicians and these commissioned reports. This can stem from the replacement of stadiums being a rarity, happening every 30 years or so. Thus local outlets often do not have journalists on hand with specific knowledge regarding the economics of stadiums.
Another bias stems from the media treating coverage of the pro- and anti-stadium as equal points of view, without acknowledging the economic consensus. This problem of ‘neutral & balanced’ coverage reaches beyond the topic of subsidies for stadiums, yet Bradbury, Coates and Humphreys claim that fact-checking and skepticism regarding coverage of stadiums is particularly lacking. This approach to coverage incorrectly frames commissioned reports and the consensus among economists as having equal weight.
Being part of local growth coalitions, media outlets may personally benefit from a stadium, which may lead to an incentive for local media to side with pro-stadium sentiment. Kevin Delaney and Rick Eckstein, observed that members of the media have created a habit of uncritically publishing pro-stadium press releases and covering ground-breaking ceremonies which helped induce a pro-stadium sentiment within a community. Kevin Delaney and Rick Eckstein often saw in their case studies (from their 2003 book) that the media went beyond uncritical reporting and ‘balanced reporting’ and became editorial proponents of subsidies.
A Possible Remedy
As previously mentioned in the introduction, by 2030 it is estimated that an additional $20 billion dollars will go to the subsidy of sports stadiums. This large amount is an irregularity occurring due to there being a 30 year cycle of replacement for sportstadiums and the last boom occurring during the 1990s and 2000s. So what should a random city in North America do when their favorite team threatens to leave if they don’t get a subsidy, take an example from Boston of course!
It’s 1981, disco was officially dying and so were the hopes and dreams of many Bostonians when the owners of their local hockey team, the Bruins, had plans to move to town on the New Hampshire side of the New Hampshire-Massachusetts border. Anybody familiar with America would ask themselves: “Why would a sports franchise want to move from one of the country’s biggest cities to a state known for the opposite of urban life?’ The answer, as always, lies in money, specifically $5 million dollars in annual tax breaks.
As a reaction to the plans of the Bruins’ owners, a coalition was formed, not a local growth coalition, but one to fight the relocation. With political leaders on the local, state and federal level connected to Massachusetts coming together and willing to start a massive economic and political fight against the state of New Hampshire and the owners of the Bruins if they were to take away their precious hockey team. In the end the pressure campaign worked. The Bruins stayed in Boston without receiving a cent of taxpayer money.
The lesson from Boston being that everybody needs to work together in the pressure campaign. In other cases region-based factions (suburban vs. metropolitan) compete instead of work together; as the suburban community in Massachusetts could have held a different tone, fragmenting and tanking the coalition.
Photo by Pexels via https://pixabay.com/photos/athletes-stadium-crowd-audience-1846039/
