Question

What are the economic costs and benefits of building a sports stadium in a given location? explain why you think taxpayer money should, or should not, be used to help fund sports stadiums

Answer 1

1. Professional sports give people pride and a sense of community. Sports stadiums are huge construction projects. In fact, they are often compared to the medieval cathedral in their attempt to dominate the skyline and inspire civic pride. And, like the cathedrals of old, they are expensive, massive building projects that require years of intensive labor. Proponents of a new stadium often laud the project's ability to generate new construction jobs.

Although construction jobs eventually disappear once a stadium is built, once the games begin, so does consumer spending. Fans who attend games also pay for parking, eat in restaurants, and buy food and drink at the stadium. All that spending generates revenue and jobs for the local community. And, as those parking attendants, restaurant workers, and stadium workers spend their earnings, the money circulates again through the economy. Economists call this the multiplier effect, whereby one dollar of spending (by consumers, businesses, or government) creates more than one dollar in economic activity.

A potential new stadium also holds the promise of new development taking root nearby. Such development might include new restaurants and bars as well as condominium and office space. As interest in the area grows, the value of existing commercial and residential property is likely to improve. In a similar vein, stadium construction can be proposed as an economic-development initiative by choosing to build in a blighted or underdeveloped area.

2. Taxpayer money to subsidize a stadium also has opportunity costs. Government can choose to spend taxpayer money on a variety of things: roads, bridges, airports, police, education, environmental improvements, parks, and walking paths that have benefits for the society as a whole. Spending on education is seen as a form of human capital investment. The tax payers money should first be used on all the important projects that will reap benefits in future and then once there is a surplus pending should be used for the purpose of a stadium.