Joseph Miller

As the fight over funding a new riverfront stadium, designed to keep the Rams in Saint Louis, plays out in the courts, many misconceptions about the plan have been allowed to take root. This blog post will try to set a few of them straight.

Myth 1: Professional sports teams generate development and boost regional economies.

The consensus among economists is that this is not the case. Nearly every study on stadiums finds no tangible impact on job creation or economic activity. As for redevelopment, economists Dennis Coates of the University of Maryland and Brad Humphreys of West Virginia University wrote:

“. . . strategically placed stadiums and arenas can sometimes ride existing redevelopment trends, but they are never the cause of these trends.”

Myth 2: A riverfront stadium plan will pay for itself.

Total subsidies to the riverfront stadium in Saint Louis will likely exceed $400 million, no small sum. Even so, public officials and respected news outlets like the Post-Dispatch claim that the stadium will pay for itself through increased tax revenue. The mass of scholarly literature rebuts this assumption. Most economists find that sports stadiums have very little impact on tax revenue and do not recoup large public subsidies.

A review of the literature suggests that the optimistic assumptions of stadium backers and local newspapers tend to rest on overestimated direct tax revenue from sports teams and underestimated opportunity costs for government expenditures. However they go wrong, when politicians claim an NFL stadium will pay for itself, they are ignoring clear economic evidence to the contrary.

Myth 3: The stadium will be built with no new taxes.

First, extending bonds (and the taxes that back those bonds) is an increase in taxation when those taxes would otherwise expire. Beyond that, the existing stadium plan does not account for the following costs:

1. New stadium maintenance

2. Renovations to the Edward Jones Dome

3. $150 million in state tax credits

Someone will pay for these policies, and it’s unlikely to be the Rams. Furthermore, according to the lawsuit the Regional Convention and Sports Complex Authority (RSA) filed against the city, officials plan to use other methods of funding that will result in more taxpayer dollars getting spent (or diverted). These include using public dollars to purchase land (which is already underway), setting up new downtown taxing districts (more TDDs and CIDs), and tax increment financing.

Missouri residents should understand that if they subsidize a stadium, they may get an NFL team, but they aren’t likely to make their money back. There also isn’t any reason to think that it will create significant economic benefits for the region. The plan’s high costs and limited public benefit should make some sort of public approval a necessity. Unfortunately, depending on how the courts rule, public involvement might be sidestepped altogether.

About the Author

Joseph Miller
Policy Analyst
Joseph Miller was a policy analyst at the Show-Me Institute. He focused on infrastructure, transportation, and municipal issues. He grew up in Itasca, Ill., and earned an undergraduate degree from Georgetown University’s School of Foreign Service and a master’s degree from the University of California-San Diego’s School of International Relations and Pacific Studies.