Warner Todd Huston
Stadium deal in LA a moneypit
By Warner Todd Huston
September 8, 2010

Whenever I think of this new Staples sports stadium deal going down in Los Angeles I can't help but think of the "bread and circuses" that contributed to the fall of the Roman Empire. Here is the City of L.A. sinking millions into this entertainment project leaving the people destitute and all for what? After all, as I wrote in the last column, these stadiums don't seem to pay for themselves. So why is LA doing this? Is it just the prestige of having a football franchise?

Is having a football franchise enough of a palladium to justify sinking millions of tax dollars into a project like this? The city and the state it is in are going bankrupt, yet the city fathers of Los Angeles are pursing this football team with stars in their eyes. Is this the sort of hard-nosed, grown-ups we want leading our government?

Even more ridiculous is the plan to tear down a portion of the convention center to build the stadium. In a city starving for revenue does it make any sense to tear down a facility that brings in money and to leave that space fallow until the new stadium is finally finished years later?

We have but to look at the Olympics to dash the idea that sports venues built and supported by tax dollars will pay for themselves. Few to none of the Olymics projects have returned on the investment anywhere in the world. Interestingly, one of the few Olympics to be held to a revenue neutral standard was the 1984 games held in L.A. If they could do it then, why can't they do the same thing today with a new stadium deal?

Instead millions of tax dollars are thrown away on these ventures with the result that all the cities and countries that have sponsored them have after all is said and done is the purported prestige of having them. Unfortunately prestige doesn't pay the bills. Taxpayers do.

There seems little doubt anymore that the costs of these stadium deals far outweighs the benefits. A study by the Kansas City Federal Reserve Bank (download .pdf of study) found that a typical sports stadium costs taxpayers $188 million while bringing in only $40 million in long-term benefits from jobs and tax revenues. The study finds that the costs outweigh benefits by more than 4 to 1.

And if the good citizens of L.A. don't find the Kansas City Federal reserve study convincing, they should just ask the citizens of New Jersey how they feel about their sports stadium deal. Recently the Wall Street Journal published an article showing that New Jersey's Meadowlands Stadium is in hock for $830 million that it can't pay back and the deal is costing the state $100 million in bonds that will add up for decades to come. And this is on top of the $302 million that the state borrowed to build the facility in the first place.

It wasn't any better for Washington D.C. when the idea of a stadium was floated there in 2003. At that time the Fiscal Policy Institute released a study that showed that the proposal of a stadium there was not a good idea.

The study found that, "stadiums don't contribute strongly to economic growth," and stated that, "public subsidies for stadium construction typically do not generate enough new tax revenue to offset the construction costs."

    A study of 25 stadiums built between 1978 and 1992 found that none of them generated a net increase in tax revenue for the host city. Even Baltimore's Camden Yards, which is considered a highly successful stadium, is a net loser for the state.

None of this adds up to a smart investment by the taxpayers of Los Angeles or any other city.

But do city officials care about the taxpayers? With the revelations of the exorbitant salaries of city officials in the cities of Bell and Oakland, California, perhaps our politicians have at last come to to treat our taxes as Monopoly money, not real, fake stuff they can just use at will without any connection to reality.

And this stadium deal being pushed by AEG and the city fathers of Los Angeles reeks of a disconnect from reality.

And what of that location? Is it "the perfect location" for a stadium? Not many think it is.

© Warner Todd Huston


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Warner Todd Huston

Warner Todd Huston's thoughtful commentary, sometimes irreverent often historically based, is featured on many websites... (more)

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