Evidence for why to JUST SAY NO to ANY public stadium funding in Santa Clara:
Links to the expertise of economists, research & studies, testimony, & other cities' experiences
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These documents provide economic expertise, research, testimony, and other cities' experiences that show new stadiums almost always have adverse or, at best, negligible impacts on the finances, businesses, and jobs in a community. The reality is that a new stadiums typically hurt the services, employment, businesses, and truly needed projects in the communities in which the stadiums are built.

Many documents also discuss the predatory strategies and misleading documents, data , sometimes even dining and entertainment that major sports franchises may use to persuade, intimidate, and seduce city governments and citizens into being the financial pawns and victims of those self-serving corporations.

The central, vital question is do you want hundred's of millions of your and your city's dollars and other resources to go to the important services and projects that serve the community, including more housing and long-term businesses and jobs, and improved infrastructure, or go to a project that mostly lines the pockets of sports franchise billionaires?

"Assessing the Santa Clara Stadium Proposal," Roger Noll, Economics Professor Emeritus, Stanford Institute for Economic Policy Research, SIEPR in the News, Stanford University, April 22, 2007.

NOTE:  The above links to a .pdf (Acrobat) document.

Excerpts: The 49ers’ analysis of a new $950 million stadium in Santa Clara... promises substantial local benefits. The community must think seriously about whether these benefits justify giving the team taxfree land, a property tax exemption, and a cash subsidy of $180 million or more to relocate to the South Bay.

As is normal for consulting studies of sports facilities, the 49ers’ report raises important issues but overstates the stadium’s benefits by conflating gross spending with net economic benefits.
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.... most – perhaps all – of the construction jobs are not likely to represent a net increase in employment among local residents.
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Because local governments must balance their budgets, a stadium subsidy requires some combination of increases in taxes and utility fees and reductions in other expenditures, all of which depress employment. A rough rule of thumb is that $100,000 in higher taxes or reduced expenditures causes the loss of one job. If local government pays $180 million to finance the stadium the community will lose about 1,800 jobs, compared to the estimated 1,350 new jobs to build the stadium.

The report estimates that spending inside the stadium also will increase local income and employment. The estimated increase in jobs (2,230), if accurate, is not much bang per buck. Urban redevelopment projects typically entail a financial cost to local government (direct expenditures and tax breaks) of around $10,000 per job created. Thus, if unemployment were a problem, $180 million in public money should generate 18,000 jobs, not 2,230.
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Even 2,230 new jobs is an overestimate.
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The report claims that the stadium will generate substantial income by bringing in outoftown fans. .... Ask yourself: when attending a 49ers game, do you buy gas and tailgating supplies near Monster Park or near home?
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The downside from greater attendance by locals is that this spending will substitute for other local discretionary expenditures. Because salaries of athletes are so high, shifts of consumer spending from ordinary businesses to a football team typically causes a reduction in total employment. This explains why independent studies of the impact of football stadiums find that the net employment effect is, if anything, negative.
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If the city of Santa Clara foots the bill, the per capita investment will be about $6,000 per household. The annual economic benefits to the city in the impact study amount to roughly $3,000 per household, but for the reasons given the net benefits from economic development are likely to be much smaller, and perhaps negative.

"Are Stadiums Worth the High Price? BENEFITS: Different interests for teams, fans and communities." Roger Noll,, Economics Professor Emeritus, Stanford Institute for Economic Policy Research, San Francisco Chronicele, July 08, 2007, Insight section, pp. E1, E3.

Excerpts: But are these new stadiums really a good fit for the fans, the teams and the cities' taxpayers?

All the proposed facilities involving the 49ers, A's and Earthquakes have fan convenience problems.

For a stadium investment to make sense, the team needs some free money. One potential source is a subsidy, such as a 49ers proposal in which Santa Clara would donate part of the reserves from its municipally owned utility.
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For local governments and their taxpayers, the desirability of a facility depends on two things: the magnitude of the subsidy for the team, and the impact of the stadium on the local economy and local tax revenues.

Last November, voters in Pasadena, Sacramento and Seattle rejected proposals for new pro sports facilities by overwhelming margins. As a result, local teams are not likely to receive a huge subsidy to move elsewhere.
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But the question remains: Can cities expect a significant financial benefit that will offset their investment?

The economic benefits of a sports team are the most contentious issue surrounding new stadiums. Economic consultants working for teams typically claim annual benefits to a city of hundreds of millions of dollars, thereby implicitly offsetting even a 100 percent subsidy in a few years. If true, these returns would make sports facilities a terrific investment -- sort of like getting stock options from Google just before its initial public offering.

But these studies vastly overstate the economic returns of sports facilities. Before-and-after studies of new stadiums show no statistically significant effect on local employment, income and retail sales, and more often than not the effect can be slightly negative. These results make sense. Sports teams employ few people in relation to the revenue they generate. To the extent that fans reduce spending on other entertainment and recreation to attend sports events, the effect is to reduce employment. Moreover, many professional athletes do not live where their team plays, so less of their high salaries are spent in the local economy.

For local governments, sports facilities generate only a limited amount of new tax revenue. Typically, stadiums are exempted from property taxes. Facilities do generate sales tax from tickets and concessions, but most of this goes to the state. Local governments are not likely to collect more than a few million dollars per year in new revenue, which is not sufficient to justify an investment of $100 million or more.

"Are stadiums worth the high price? PROBLEMS: Cities need to care for their people, not pro sports owners." Dave Zirin, author of the book, "Welcome to the Terrordome." San Francisco Chronicle, July 08, 2007. Insight section, pp. E1, E3.

Excerpts: Stadiums are sporting shrines to the dogma of trickle-down economics. In the past 10 years, more than $16 billion of the public's money has been spent for stadium construction and upkeep from coast to coast. Though some cities are beginning to resist paying the full tab, any kind of subsidy is a fool's investment, ending up being little more than monuments to corporate greed: $500 million welfare hotels for America's billionaires built with funds that could have been spent more wisely on just about anything else.
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The era of big government may be over, but it has been replaced by the Rise of the Domes. Reports from both the right-wing Cato Institute and the more centrist Brookings Institution dismiss stadium funding as an utter financial flop, yet the domes keep coming.
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As Neil DeMause, co-author of the book "Field of Schemes" said to me, "The history of the stadium game is the story of how, by slowly refining their blackmail skills, sports owners learned how to turn their industry from one based on selling tickets to one based on extracting public subsidies. It's been a bit like watching a 4-year-old learn how to manipulate his parents into buying him the new toy that he saw on TV; the question now is how long it takes our elected officials to learn to say 'no.' "
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... former Major League Baseball All-Star and "Ball Four" author Jim Bouton about the publicly financed "doming of America, and this is what he said:
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"It's such a misapplication of the public's money. ... You've got towns turning out streetlights, they're closing firehouses, they're cutting back on school supplies, they're having classrooms in stairwells, and we've got a nation full of kids who don't have any health insurance. I mean, it's disgraceful. The limited things that our government does for the people with the people's money, to spend even a dime or a penny of it on ballparks is just a crime.
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"It's going to be seen historically as an awful folly, and it's starting to be seen that way now, but historically that will go down as one of the real crimes of American government, national and local, to allow the funneling of people's money directly into the pockets of a handful of very wealthy individuals who could build these stadiums on their own if it made financial sense. If they don't make financial sense, then they shouldn't be building them."
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Bouton went on to say, "If I was a team owner today, asking for public money, I'd be ashamed of myself. Ashamed of myself. But we've gone beyond shame. There's no such thing as shame anymore. People aren't embarrassed to take -- to do these awful things."
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Bouton is absolutely correct. When it comes to fleecing our cities, some of the richest people in this country have shown a complete absence of shame. The question is whether we are going to finally stand up and impose our priorities onto them, instead of continually taking it on the chin.
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Polls show consistent majorities don't want public funds spent on stadiums. That means the silent majority of sports fans oppose the stadium glut as well. We sports fans need to make ourselves heard. We may love baseball. We may love football. We may bleed our team's colors on game day. But that doesn't mean we should have to pay a billionaire millions of dollars for the privilege to watch.

"Testimony of Brad R. Humphreys, Associate Professor, University of Illinois at Urbana-Champaign, on "Public Financing for Construction and Operation of Sports Stadiums and Economic Revitalization and Development in Urban America" before the One Hundred Tenth Congress of the United States House of Representatives, Committee on Oversight and Government Reform Subcommittee on Domestic Policy , Thursday, March 29th 2007

From the Testimony: "It is often said that economists cannot reach a consensus on matters of economic policy. While this might be accurate in areas like tax policy or international trade policy, it is clearly not the case when assessing the economic impact of professional sports facilities. There currently exists a large body of evidence published in peer-reviewed academic journals concluding that professional sports facilities and franchises have no positive tangible economic impact on income, earnings, employment, and tax revenues in American cities. This literature has examined regular season and postseason sporting events in all of the major North American professional sports leagues, as well as special events like All-star games and the Super Bowl."

"Evaluating Subsidies for Professional Sports in the United States and Europe: A Public-Sector Primer," Robert A. Baade, Oxford Review of Economic Policy, 19:4, pp. 585-597

NOTE: This is an abstract (summary) of the article.

Quote from abstract: "Cities have placated the public through the imposition of taxes that are either too small per capita to justify strong resistance or through deflecting the tax burden stadiums impose to non-residents. Since cities taken together are adopting the same strategies, the reality is that stadiums collectively are being paid for by local taxpayers. The public will continue to pay for stadiums until cities recognize their shared interests and take a collective stand against the professional sports monopolies."

"Professional Sports Facilities, Franchises and Urban Economic Development." (pdf file), Dennis Coates and Brad R. Humphreys, UMBC Economics Department Working Paper 03-103

Excerpt: "Every time the owner of a professional sports franchise wants a new facility built using public financing, an 'economic impact study' is commissioned to justify the spending of hundreds of millions of dollars of public money on the projects. These impact studies are always prospective in nature – they forecast the future economic impact flowing from a new publicly financed sports facility – and always conclude that there will be large positive economic benefits to the local economy; these positive benefits typically include hundreds of millions of dollars of additional tax revenues and income, and hundreds or, in some cases, thousands of new jobs created. Impact studies commonly rely on the use of spending multipliers to arrive at these large positive economic benefits. Economic impact studies are commonly performed by consultants or large consulting firms. Referring to these studies, Crompton (1995) says, 'Too often, the motives of those commissioning an economic impact analysis appear to lead to adoption of procedures and underlying assumptions that bias the resultant analysis so the numbers support their advocacy position.' He continues by critiquing the typical assumptions and procedures that produce the biased results, including frequent references to specific studies that made the unfounded assumptions."

"Government-Funded Stadiums Not Worth Price of Admission," Doug Bandow, senior fellow at the Cato Institute, Cato Institute, September 25, 2004.

Excerpts: "Games and circuses once were provided by government. How better to satiate the desire of the Roman masses than to entertain them in the Arena? "Today, governments build stadiums to attract sports franchises for the same purpose. But the American masses seem to be tiring of transferring billions of dollars to billionaire team owners.
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"Stadium advocates have been amazingly successful in taking from the poor and giving to the rich. Some wealthy sports moguls, such as Managing General Partner Al Davis of the NFL Oakland Raiders, have turned mulcting taxpayers into an art form.
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"Yet such facilities once were and continue to be built privately. The only reason more franchise owners decline to construct their own stadiums is because taxpayers so often relieve them of the need to do so."

"But there's no reason to sacrifice the interest of taxpayers to that of sports fans. Stadiums are not a good financial investment. Public finance experts Roger Noll and Andrew Zimbalist concluded: "no recent facility appears to have earned anything approaching a reasonable return on investment and no recent facility has been self-financing in terms of its impact on net tax revenues."

"Even an attractive project such as Baltimore's Camden Yards, the home of the baseball Orioles, requires upkeep subsidies. Observed F.W. Walz, a Cleveland city councilman, who in 1928 opposed the nation's first subsidized sports facility: 'Of course, they say the stadium will pay for itself, but we've heard that story before.'

"Moreover, new sports projects usually rearrange rather than increase local economic activity and tax collections. For instance, University of Maryland economists Dennis Coates and Brad Humphreys estimated that sports-oriented tax revenues and personal earnings from sports were well under a percent of total revenues and earnings for Baltimore and Maryland.
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"In fact, sports spending is primarily substitutional. Stanford University economist Roger Noll figured that only 5 percent to 10 percent of those attending games live elsewhere. Local fans divert their outlays from other leisure activities and other areas within the region.

"Thus, government stadium "investments" have consistently generated meager results. Robert Baade and Allen Sanderson looked at a dozen metropolitan areas for The Heartland Institute and found no net employment hike. Separately Baade reviewed 36 cities and found no net statistical increase in economic growth.

"There's a more important philosophical point. Taxpayers do not owe their lives to franchise holders, restaurateurs, or property owners. Any increased profits for the latter are a private, not public, benefit."

"An Event Study of the Economic Impact of Professional Sport Franchises on Local U.S. Economies, " Kaveephong Lertwachara, Thammasat University, and James J. Cochran, Louisiana Tech University. Journal of Sports Economics, Vol. 8, No. 3, 244-254 (2007).

NOTE: The above title links to an abstract. The full text can be accessed from the Sage Journals Online database via computers at the San Jose King Library.

Abstract: It is common for a city to use expensive incentives such as a state-of-the-art stadium or tax exemptions to induce a major professional sport team to relocate to or remain in its area. A city does so because it expects a professional sport team to enhance the local economy. In this article, the authors use an event study approach to evaluate the advisability of this strategy. Their results suggest that major league sports franchises from the four major U.S. team sports (baseball, football, basketball, and hockey) have an adverse impact on local per capita income for U.S. markets in both the short and long run.

"Public Funding of Sports Stadiums: Ballpark Boondoggle," Paul Gessing, NTUF Policy Paper 133 Feb 28, 2001.

Excerpt: "Those who favor stadium subsidies cite a variety of economic and emotional arguments to influence taxpayers. Many of these are disingenuous or are based on inadequate data and the misinterpretation of economic principles. It is safe to say that regardless of what stadium backers claim, taxpayers are not getting the most for their money."

"Cities in Denial: The False Promise of Subsidized Tourist and Entertainment Complexes," Ronald D. Utt, Ph.D., Heritage Foundation, Backgrounder #1223, October 2, 1998

Excerpt: "Targeted by promoters, many cash-strapped cities are induced to finance, in whole or in part, monumental entertainment-oriented infrastructure projects. A substantial body of evidence exists to show just how successful these urban revitalization schemes that depend on costly entertainment-oriented infrastructure projects have been. Much of that evidence suggests that publicly funded mega-entertainment centers make a rather unimpressive contribution to a community's economic vitality and employment opportunities."

"The Stadium Gambit and Local Economic Development," (pdf file), Dennis Coates and Brad Humphreys, Regulation magazine, Summer 2000, 23:2

Excerpt: "The evidence suggests that attracting a professional sports franchise to a city and building that franchise a new stadium or arena will have no effect on the growth rate of real per capita income and may reduce the level of real per capita income in that city. Yet government decisionmakers and politicians continue to try to attract professional sports franchises to cities, or use public funds to construct elaborate new facilities in order to keep existing franchises from moving."

"Sports Teams Often Call the Plays in Stadium Funding Game," Gregory Roberts, Seattle Post-Intelligencer, February 4, 2006.

Excerpt: "Unlike the Dallas Cowboys, the Seattle Seahawks have never been known as America's Team.

"But they are the taxpayers' team. So, for that matter, are the Pittsburgh Steelers, the Seahawks' opponent Sunday in Super Bowl XL.

"And so are most of America's professional sports teams, as an industry of billionaire owners and millionaire performers follows a well-worn script for shaking loose public money for hugely expensive stadiums: Threaten to abandon the team's longtime home, or entertain offers from other cities eager to build the team a new one -- or do both."

"Sports, Jobs and Taxes," (No link), Roger G. Noll and Andrew Zimbalist; Brookings Review, Vol. 15, Summer 1997

NOTE: Available on the WilsonWeb Journal and other databases via computers at the King Library.

Excerpt: "Sports facilities attract neither tourists nor new industry. Probably the most successful export facility is Oriole Park, where about a third of the crowd at every game comes from outside the Baltimore area. (Baltimore's baseball exports are enhanced because it is 40 miles from the nation's capital, which has no major league baseball team.) Even so, the net gain to Baltimore's economy in terms of new jobs and incremental tax revenues is only about $3 million a year--not much of a return on a $200 million investment."

"8 Reasons to reject publicly financed stadiums for professional sports teams," - Taxpayers League of Minnesota

NOTES:

Each of these reasons is accompanied by a paragraph of discussion, most including footnoted referrals to additional documentation.

The Taxpayers League's description of itself, "The Taxpayers League of Minnesota is a nonpartisan, nonprofit grassroots taxpayer advocacy organization which fights for lower taxes, limited government and full empowerment of taxpaying citizens in accordance with Constitutional principles."

1. Public Money for Private Gain.
2. Negligible Economic Benefits.
3. Costs Outweigh the Benefits.
4. Destroys jobs and drives down wages.
5. Stadiums can be built with private money.
   1. In their analysis of professional sports stadiums built between 1989 and 2001, University of Dayton economics professors Marc Poitras and Larry Hadley conclude that public subsidies to build stadiums are unnecessary – new stadiums could recover all of their construction costs if they were built with private money.4 The Atlanta Braves’ Turner Field was built in 1997 with 100% private funding; San Francisco Giants’ SBC Park was built in 2001 with over 96% private funding.
6. Doesn’t Improve Team Performance.
7. Doesn’t improve team attendance.
8. Diverts resources from funding priorities.

Footnotes:

1. Craig Depken, “The Economics of Sports Arenas: A Property Rights Approach” (Summer 2003): www.uta.edu/depken/ugrad/sports/stadiums2003.ppt

2. John Rappaport & Chad Wilkerson, “What Are the Benefits of Hosting a Major League Sports Franchise?,” Kansas City Federal Reserve Bank Economic Review (First Quarter 2001): www.kc.frb.org/publicat/econrev/PDF/1q01rapp.pdf

3. Dennis Coates & Brad Humphreys, “The Effects of Professional Sports on the Earnings of Individuals: Evidence from Microeconomic Data,” University of Maryland-Baltimore County Economics Department Working Paper 03-104: www.umbc.edu/economics/wpapers/wp_03_104.pdf

4. Marc Poitras & Larry Hadley, “Do New Major League Ballparks Pay for Themselves?,” University of Dayton, School of Business Administration, Working Paper 03-6E: www.sba.udayton.edu/research/working_papers/wp6.pdf

"Stadium Subsidies Scalp The Public," Ralph Nader, Boston Globe, March 27, 2000

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In Boston and around the nation, the professional sports cartel has sought to increase its wealth by translating the popularity of sports into support for government handouts.

Proponents of taxpayer handouts for the stadium argue that public money spent on a new stadium is a good investment. They could not be further from the truth. Studies done by independent economists, not those paid for by stadium proponents or the professional sports cartel, show that there is no real economic benefit from public subsidies of sports stadiums. A study done by Robert Baade of Lake Forest College studied 30 cities over 30 years and found that 27 experienced no significant impact from new stadiums while three cities experienced a negative economic impact.
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However, stadium subsidies have benefited one segment of society. Team owners enjoy windfall profits when they turn around and sell.

"Battling another stadium subsidy: Man who led fight against Qwest Field, Safeco aims at Sonics," Angela Galloway, reporter. Seattle Post-Intelligencer, July 03, 2006.

Chris Van Dyk, leader of Citizens for More Important Things, campaigns at Pike Place Market against the Sonics' bid for a ... $220 million tax-subsidized KeyArena overhaul.
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Van Dyk says his group, Citizens for More Important Things, is more than halfway to its goal of collecting 25,000 petition signatures for an initiative that would ask Seattle voters this fall to block taxpayer financing of a KeyArena renovation.
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A recent poll showed an overwhelming majority of Seattle residents would be inclined to let the team move rather than allow tax money to be used.

This year may be different. For the first time, Van Dyk's group has a real sponsor: an aggressive, politically savvy union representing low-paid home health care workers called Service Employees International Union Local 775.

With financial backing from SEIU, the group is collecting signatures for a city measure called Initiative 91.

The proposal would bar Seattle from helping any professional sports team pay for its venue unless the city turns a profit at least on par with 30-year Treasury bonds. The current return on such notes is about 5 percent, or $11 million a year for the $220 million the Sonics seek.

NOTE: The Initiative 91 was pass, rejecting taxpayer subsidies, November 07, 2007.

"An Open Letter to Mayor Anthony Williams and the DC City Council from 90 Economists* on the Likely Impact of a Taxpayer-Financed Baseball Stadium in the District of Columbia," October 21, 2004, on the DC Watch site of the DC Fiscal Policy Institute.

NOTE: The following are just the 11 California economists who signed the letter. Check this link to see the list of all 90 economists who just say NO.

Charles W. Baird, CSU - Hayward	David J. Berri, CSU Bakersfield
Frank Falero, CSU Bakersfield	Micah Frankel, CSU Hayward
Peter Gordon, University of Southern California	Dennis Halcoussis, CSU Northridge
David R. Henderson, Hoover Institute	Michael L. Marlow, California Polytechnic State University - San Luis Obispo
Roger Noll, Stanford University	Stephen Shmanske, CSU- Hayward
Kate Zhou, University of Hawaii

Excerpt: Dear Mayor Williams and DC Council Members:

A vast body of economic research on the impact of baseball stadiums suggests that the proposed $440 million baseball stadium in the District of Columbia will not generate notable economic or fiscal benefits for the city. Most studies find that new sports stadiums do not increase employment or incomes and sometimes have a modest negative effect on local economies. The reason appears to be that sports stadiums do not increase overall entertainment spending but merely shift it from other entertainment venues to the stadium.

"Private Financing and Sports Franchise Values: The Case of Major League Baseball," Phillip Miller, Associate Professor of Economics, Minnesota State University, Mankato. International Association of Sports Economists: Working Paper Series, Paper No. 06-26, November 2006.

NOTES:

1. This document focuses on baseball stadiums, but I think the information is fully transferable to any major sports franchise stadium effort.
2. This document is in PDF (Acrobat) format.

Excerpt from Abstract:

I argue that a new stadium will increase the franchise values of teams regardless of how construction was financed. A team playing in a stadium that it owns will be able to capitalize the value of the stadium in the team’s franchise value and will thus have a higher franchise value. Using panel data for Major League Baseball teams from 1990-2002, I find that, after controlling for team quality and metro area differences, regardless of the financing mechanism, a team playing in a brand new stadium realizes an increase in its franchise value. I also find that a team playing in its own stadium has a higher franchise value than a team playing in a public stadium. However, the difference in franchise values between playing in a team-owned stadium and playing in a public stadium does not offset the average cost of constructing the stadium. The paper thus provides a deeper understanding the determinants of franchise values and of the motives of sports team owners in their lobbying efforts for public subsidies.

"Political Scorecard of Professional Sports Facility Referendums in the United States, 1984-2000" - Clyde Brown and David M. Paul - Journal of Sport and Social Issues 2002; 26; 248

NOTE: This is an abstract (summary) of the article. The full article can be accessed at the King Library via the Sage Journals database.

NOTES: "This study provides a detailed, comprehensive overview of the population of these important ballot measures."