Make Them Pay!
John Oliver Nails It Once Again in Public Financing for Sports Stadiums
The issue of stadium financing is hardly new. For example, in 2001, the St. Louis Federal Reserve asked the following:
QUESTION: The use of public funds to lure or keep teams begs several questions, the foremost of which is, “Are these good investments for cities?”
The short answer to this question is “No.” When studying this issue, almost all economists and development specialists (at least those who work independently and not for a chamber of commerce or similar organization) conclude that the rate of return a city or metropolitan area receives for its investment is generally below that of alternative projects. In addition, evidence suggests that cities and metro areas that have invested heavily in sports stadiums and arenas have, on average, experienced slower income growth than those that have not.
Tax exemptions on interest paid by muni bonds that were issued for sports structures cost the U.S. Treasury $146 million a year, based on data compiled by Bloomberg on 2,700 securities. Over the life of the $17 billion of exempt debt issued to build stadiums since 1986, the last of which matures in 2047, taxpayer subsidies to bondholders will total $4 billion, the data show.
Note – President Obama has proposed removing tax free treatment for interest on bonds issued after December 31, 2015.