Cutting Arena Subsidies: A Win-Win for Taxpayers and the Economy

In recent years, the debate surrounding public subsidies for sports stadiums and arenas has intensified. While proponents argue that these subsidies stimulate local economic growth, a growing body of evidence suggests that the benefits are often overstated or nonexistent. Now, a think tank has proposed a solution: cut arena subsidies to help fund tax cuts, a move that could benefit both taxpayers and the broader economy.



The argument for cutting arena subsidies is compelling. First and foremost, these subsidies are a significant drain on public funds. According to a study by Dennis Coates, a prominent sports economist, state and local governments in North America have spent over $59 billion on new professional sports stadiums and arenas since 1950, with more than 75% of that spending occurring after 1990. Of this total, over $36 billion was in the form of government subsidies. This money could be put to better use elsewhere in the economy.

Moreover, the economic benefits of arena subsidies are often overhyped. A study by Noll and Zimbalist found that newly constructed subsidized stadiums had a very limited and possibly even negative local impact on jobs and economic growth. Similarly, a study by Coates and Humphreys concluded that the growth effects of sports franchises, stadia, and arenas were insignificant. In other words, the money spent on arena subsidies could be better invested in other areas of the economy.

Reallocating funds from arena subsidies to tax cuts could have several positive effects on the broader economy. For one, lower tax rates can encourage businesses to invest more in their operations and expansion, leading to job creation and higher wages. According to the Congressional Research Service, the 2017 U.S. Tax Cuts and Jobs Act, which reduced corporate tax rates, was estimated to create around 1.5 million new jobs and increase wages by 1.5%. Additionally, lower tax rates can incentivize businesses to invest more in research and development, leading to technological advancements and increased productivity. This can benefit sectors like technology, healthcare, and manufacturing.

Reallocating funds from arena subsidies to tax cuts could also boost consumer spending, as lower tax rates for individuals would increase disposable income. According to the Tax Foundation, the Tax Cuts and Jobs Act was estimated to increase the after-tax income of the average American household by $2,100 in 2018. This increased consumer spending could benefit retail, hospitality, and other consumer-facing sectors.

Finally, reallocating funds from arena subsidies to infrastructure projects could have significant economic benefits. Infrastructure investment can create jobs, stimulate economic growth, and improve productivity. According to a study by the American Society of Civil Engineers, investing $2.5 trillion in infrastructure over five years could create 15 million jobs and increase the U.S. GDP by $4 trillion.

In conclusion, cutting arena subsidies to help fund tax cuts could be a win-win for taxpayers and the broader economy. By reducing the drain on public funds and reallocating resources to more productive areas, this move could stimulate economic growth, create jobs, and improve overall productivity. It's time for policymakers to recognize the limited benefits of arena subsidies and prioritize investments that truly drive economic progress.