The soccer boondoggle

Deseret Morning News editorial
Published: Friday, March 3, 2006 8:08 p.m. MST
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After a long and complicated Legislative session, comparisons as to which bills passed and which failed can be unfairly used to show a lack of proper moral grounding. It is true, however, that Utah lawmakers this year chose to not fund dental and vision services for Medicaid recipients, which would have totaled less than $5 million, while deciding to find a way to funnel about $45 million toward construction of a professional soccer stadium.

This comparison has merit. Plenty of scholarly evidence exists to show the public reaps few benefits from taxpayer-funded stadiums. Professional soccer, meanwhile, is among the least popular of Americans sports, making such an investment all the more dubious.

Lawmakers made the point that they fear runaway expenses tied to Medicaid benefits. That may be difficult news to swallow for children who are in desperate need of major dental services, but it does represent a legitimate philosophical position. That position, however, crumbles when one considers the decision to allow eight times as much money to enrich the owners of a sports franchise.

How is runaway spending a bigger concern than the squandering of tens of millions?

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The soccer plan still has to undergo a bit of tweaking in the halls of Salt Lake County government. The county is the entity that would bond for the money, and its leaders have been less than enthusiastic over the details they have heard so far — details that could jeopardize the county's good bond rating. We hope good sense prevails.

The plan lawmakers passed relies on the use of hotel taxes, which are paid entirely by people who visit the state. It would merely extend the life of a tax already in place. We have characterized this as among the least offensive taxes for local residents. Indeed, it hardly would be felt by any locals except when entertaining out-of-town guests who stay at hotels.

And yet no tax is free. This one, at the very least, represents an opportunity cost. Hotel taxes ought to be used to defray the impacts of tourism and to encourage more visitors to come to the state. At some point, however, those taxes become a deterrent when they make a hotel stay too expensive. This tax won't cross that threshold, but it makes raising hotel taxes for legitimate reasons more difficult for many years to come.

The greater issue, however, has to do with the return taxpayers can expect on their investment. To that, we quote from only one of many studies. This is from an article in Regulation Magazine by Dennis Coates and Brad R. Humphreys, both of whom are assistant professors at the University of Maryland Baltimore County:

"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."

They were talking about major sports, like football and baseball. To give $45 million to a soccer team doesn't compare well no matter what is placed against it.

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