Fund soccer stadium by taxing fans who attend

By Jay Evensen
Deseret Morning News
Published: Saturday, Aug. 14, 2004 6:06 p.m. MDT
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What would lead Dave Checketts, the principle owner of Utah's new Major League Soccer franchise, to state publicly that the team will generate $179 million for the local economy over the next 10 years and create 200 new jobs? What would lead him to tout the "economic development" benefits of a new soccer stadium?

If he intends to use public financing in any part of the construction of the stadium, then certainly no scholarly research on the subject would back him up. A lot of economists and other researchers have looked at the effects of stadium construction on local economies. None, to my knowledge, has found any appreciable benefits, regardless of the sport — unless construction is done entirely with private money. Some have even found that stadiums, if they are publicly financed, actually are a drag on local economies.

You virtually never hear that from team owners. Maybe that's because their own personal economies typically do quite well in these deals.

If I sound like a broken record (that may be an outdated expression, but "broken MP3 file" doesn't cut it), it's because I feel the need to keep repeating myself. Some key people aren't listening. Right now, many cities along the Wasatch Front are lining up for the chance to lure the new stadium into their own borders. Most of them insist the new stadium would be built with a large amount of private cash, but virtually all of them hint at some degree of public funding.

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Usually, city officials talk about using a redevelopment agency. The city would loan an amount of money to the team, which in turn would retire the debt through the property taxes or sales taxes the new project generates. Taxpayers don't pay a thing extra, city officials say. The stadium pays for itself.

It's a compelling argument, unless you consider the opportunity costs. Simply put, without a public subsidy, the taxes a stadium generates would go to the city to spend as it pleases, not to pay off a debt. And even if the stadium didn't locate on that site, perhaps something else would come along to generate revenue. Anything, even a pet store, would be more beneficial than something that doesn't generate taxes.

As for the economic benefits, it's easy to look at the area around the E Center in West Valley City or the Delta Center in Salt Lake City and believe those facilities sprouted restaurants, shops and theaters. Indeed, they probably did attract those things, but only because they pulled them in from other parts of the community. People have got to eat. They enjoy going to the theater. A sports arena doesn't create more demand for those things. It just tends to concentrate them in one spot, especially if other tax subsidies are used to attract the shops and theaters, as well.

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