Stadiums Don’t Deliver On Promises

Good afternoon, ladies and gentlemen. Thank you for the opportunity to participate in this hearing. My name is Grant Gulibon, and I am Senior Policy Analyst with The Commonwealth Foundation for Public Policy Alternatives, a non-partisan, statewide research and educational organization based in Harrisburg. Over the past several years, we have written and commented extensively on the subject of taxpayer financing of sports facilities in Pennsylvania.

The push for putting taxpayer dollars on the table to finance stadiums is a gamble, with those in power using other people’s money to bet that the new sports facilities will spark substantial economic development in Philadelphia and other cities. And, they say, the payoff will be seen in growth in population and jobs.

The problem is, this bet never pays out and, as with most gamblers, the people in power are looking for a quick-fix scheme for the problems facing our cities.

It’s far easier to throw cash at high-profile sports teams than to create quality public schools, safe streets, low taxes and efficient public services. Yet until these problems are addressed, Philadelphia’s economic challenges will remain—with or without new stadiums.

That is the evidence we at The Commonwealth Foundation have found in examining the examples of other cities that have subsidized stadiums with tax dollars.

Our conclusions mirror those of other scholars across the United States, who have found that publicly financed stadiums have little, if any economic impact on communities that build them. Cities such as Baltimore, where two new, publicly financed stadiums have opened in the past decade, continue to struggle economically. Baltimore has lost 250,000 residents since 1960—putting the population at its lowest level since 1915—and it continues to lose about 1,000 residents per month. Also, an April 1998 report by Greater Philadelphia First and the Pennsylvania Economy League ranked Baltimore 44th among the country’s top 50 metro regions in employment growth—one spot below Philadelphia.

The evidence also demonstrates that the real winners in the taxpayer-subsidies-for-stadiums game are team owners who, through “sweetheart” leases, are guaranteed to receive almost all of the income a new stadium generates while making little investment of their own funds. Demands for such deals are leveraged against the threat of moving the team, and policymakers face the prospect of either giving in or potentially being blamed for “losing” the team.

We do believe that professional sports teams, as private businesses, may still decide that it is in their best interest to build new facilities in order to compete more effectively with other teams. If that is the case, however, we believe that they should pay to finance their own stadiums—not hardworking taxpayers. Several major league baseball and football teams have built privately financed stadiums in recent years, including the San Francisco Giants, who moved into the new, $262 million Pacific Bell Park this season. After San Francisco-area voters repeatedly rejected the Giants’ demands for a new, taxpayer-funded stadium, the Giants not only listened, but went out and found innovative ways to raise enough money to build the first privately funded, major league baseball-only stadium in more than three decades.

However, Pennsylvania voters have not to date been fortunate enough to have their elected officials take heed of their wishes regarding taxpayer funding of stadiums. Taxpayers have not been bullied by threats of local teams pulling up stakes. Poll after poll shows that Pennsylvanians oppose taxpayer funding of stadiums. And, when given the chance to vote, an overwhelming number of western Pennsylvanians rejected an initiative to help fund stadiums and other projects with higher taxes. The rejection of the Regional Renaissance Initiative was loud and decisive, with citizens in 11 counties voting the measure down by a two-to-one margin. Even in Allegheny County, where the stadiums were to be located, the tax failed by a margin of 58 to 42 percent. Citizens are smart: they know that the private sector can build successful stadiums without relying on public dollars.

But the voters’ verdict was not honored. Local politicians responded by developing an alternative, dubbed “Plan B,” that relies heavily on local and state tax dollars. And early last year, despite statewide opinion polls again showing heavy opposition to state tax dollars for stadiums, Pennsylvania legislators approved partial funding for two stadiums in Pittsburgh and two in Philadelphia (as well as for an expansion of Pittsburgh’s convention center).

Since that time, problems have developed with the Pittsburgh stadium projects. The most serious of those is a federal investigation into alleged improprieties in the awarding of stadium construction contracts—namely, the existence of “pass-through” schemes under which minority and women-owned businesses would be paid not to work on a project, but would be listed as contractors or subcontractors in order to meet affirmative-action requirements. In addition, the two stadiums and expanded convention center are expected to eventually cost more than $1 billion—about $350 million more than projected during the Regional Renaissance Initiative campaign. These experiences provide examples of the problems that can result when public dollars are used to build stadiums.

Building new stadiums will not solve Philadelphia’s most pressing social and economic problems. Census Bureau figures show that Philadelphia lost 11 percent of its population during the 1990s, and other data show that the majority of those leaving are between the ages of 25 and 39—the most attractive demographic group to expanding businesses. And when those who’ve left were asked why they did, the answers were poor public schools, a fear of crime, high taxes, and a lack of quality public services—not because the Phillies and Eagles don’t have new stadiums. If the teams and the community ultimately determine that new stadiums should be built, then all parties should work together to find innovative ways to raise private funds for construction.

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Grant R. Gulibon is senior policy analyst at the Commonwealth Foundation, an independent, non-profit, public policy research and educational institute based in Harrisburg, Pa.