Americans love their sports, but that affection does not automatically justify asking taxpayers to underwrite new stadiums and arenas every time a professional league or franchise comes calling. That is the central argument advanced by economists Abigail Hall and Aaron D. Wood in an analysis published by The Conversation and reviewed under Science X's editorial process. The numbers involved are enormous, and the economic case for public subsidies is far weaker than the promises often suggest.
The Staggering Cost of Big-League Facilities
Professional sports generate massive revenue. In 2025, the NFL reported roughly $14.5 billion in revenue, while Major League Baseball brought in an estimated $12.2 billion and the NBA earned close to $12 billion. With that kind of money flowing through the leagues, it is no surprise that teams want bigger, more elaborate venues. The planned stadium for the Washington Commanders is expected to cost $4 billion. SoFi Stadium in Los Angeles, which was completed in 2020, carried a price tag of $6.75 billion and remains the most expensive NFL stadium ever built.
These projects are not just expensive; they are also rarely financed entirely by the teams that will profit from them. Instead, state and local governments frequently step in with public money, which means taxpayers often end up covering a substantial share of the construction bill.
Who Actually Pays for Stadiums?
Between 1970 and 2020, taxpayers in the United States and Canada contributed about $33 billion toward the construction of sports arenas. That figure represents roughly 73% of the total cost of those facilities. In other words, the public has funded nearly three-quarters of the bill for venues that primarily enrich private owners and leagues.
This pattern is not accidental. Leagues and franchises have developed a well-practiced strategy for securing public funds. They present policymakers and the public with a mix of incentives and threats. The incentives include promises of new jobs, sustained economic growth, improved infrastructure, higher tax revenues, and rising property values. The implicit threat is that if public money does not come through, the franchise may relocate, taking those promised benefits with it.
The Promised Benefits
Sports are undeniably woven into the fabric of American culture. About 75% of Americans watch live sports in some form—whether in person, on television, or on digital devices—and some fans dedicate 10 or more hours a week to following their favorite teams. That passion is real, and it is understandable that communities want to keep their teams close.
But the emotional connection between a city and its teams does not by itself prove that public subsidies are a sound investment. The case for stadium funding typically rests on the idea that a new venue will act as an economic engine, drawing visitors, creating jobs, and generating tax revenue that exceeds the public outlay. As economists who study public policy, Hall and Wood argue that these promised benefits are vastly overblown.
What Economists Find
Decades of research on stadium economics have generally failed to find the kind of transformative economic impact that proponents claim. While a new stadium may produce some visible activity—packed bars on game days, temporary construction jobs, and a burst of local spending—much of that spending is simply redirected from other parts of the local economy. Residents who spend money at a game might otherwise have spent it at a restaurant, a movie theater, or a concert. The net new economic activity is often far smaller than the headline figures suggest.
Moreover, the jobs created by stadium construction are typically temporary, and the permanent jobs inside the venue are often low-wage and part-time. The tax revenues generated by a stadium rarely cover the cost of the public subsidies, especially when debt service, infrastructure improvements, and tax breaks are factored in. Property values near a stadium may rise in some cases, but those gains are unevenly distributed and can come at the expense of other neighborhoods.
- Jobs: Promised employment gains are often temporary or low-wage.
- Growth: New spending frequently substitutes for existing local spending rather than adding to it.
- Tax revenue: Public returns seldom match the size of the subsidy.
- Infrastructure: Public costs for roads, transit, and utilities often exceed projections.
The Playbook: Carrots and Sticks
The dynamic between leagues and cities is not a negotiation between equals. Teams can play one city against another, extracting ever-larger packages from the municipality that fears losing its team the most. The threat of relocation is a powerful lever, even when the economic evidence does not support the public investment. Fans, local businesses, and politicians all face pressure to keep the team, making it politically difficult to say no.
At the same time, the leagues themselves are not struggling. The combined revenues of the NFL, MLB, and NBA run into the tens of billions of dollars annually. Critics argue that if these enterprises are so profitable, they should be able to finance their own facilities without asking taxpayers to shoulder the risk.
Why the Cycle Persists
If the economics are so unfavorable, why do cities keep shelling out? Part of the answer lies in the intangible value that fans and civic leaders place on having a major-league team. Sports teams are seen as a source of civic pride and identity, and the prospect of losing them can feel like a cultural loss rather than a purely financial one. That emotional attachment can override careful cost-benefit analysis.
Another factor is the structure of the decision-making process. The benefits of a stadium are often concentrated among a relatively small group—team owners, construction firms, and some local businesses—while the costs are spread across the entire tax base. Those who stand to gain have a strong incentive to lobby for the subsidy, while individual taxpayers have little incentive to organize against it.
A Path Forward
Hall and Wood do not argue that cities should never support sports. Rather, they call for rigorous scrutiny of the claims made by teams and leagues. Before committing public funds, policymakers should demand independent economic impact studies, consider the full cost of infrastructure and debt service, and weigh the potential benefits against alternative uses of the same money.
They also suggest that cities could explore other models, such as requiring teams to pay a larger share of construction costs, sharing in the profits of the venue, or investing in public amenities that benefit a broader cross-section of residents. The key is to recognize that the passion Americans feel for sports does not obligate them to subsidize private businesses, especially when the economic returns are so uncertain.
As the authors conclude, the debate over stadium subsidies is ultimately a debate about priorities. Public money is finite, and every dollar spent on a new arena is a dollar not spent on schools, roads, health care, or other public services. Sports can be a valuable part of community life, but that value should not be used as a blank check for private interests.
This article is based on reporting by Phys.org. Read the original article.
Originally published on phys.org
