Stadium swindle: The $500M heist from taxpayers to give a handout to a billionaire

The Arizona State Legislature is considering a bill that would further subsidize the 27-year-old Chase Field, which taxpayers provided more than $250 million to help build in 1998, in order to support the Arizona Diamondbacks. But why should taxpayers be asked to foot the bill once again for a venue that is public in name only?

Forbes estimates the Diamondbacks to be worth $1.6 billion — after being purchased for only $238 million in 2004 — and co-owner Ken Kendrick supposedly has a net worth of more than $1 billion. Now, the team wants $500 million from taxpayers to renovate the aging stadium.

The idea that the stadium is a “public asset” that deserves taxpayer dollars is ludicrous. The stadium supports a private business, which largely caters to a wealthy class of patrons. There is no economic justification for subsidizing the profits of a billionaire owner and his upper-crust clientele.

This is a wealth transfer from general taxpayers, many of whom can’t afford to go to a game, to the most well-to-do members of the community. Democrats and Republicans should be joining hands in opposition to this indefensible subsidy rather than making bipartisan toasts over cocktails in the owner’s suite.

Five decades of economic studies have yet to identify a stadium that justifies subsidization.

Researchers have found that stadiums are simply not economic-development catalysts, because they largely just reallocate how local residents spend their money. If citizens weren’t spending it at the ballpark, they would be spending it at other local businesses.

Estimates of non-fiscal social benefits also show that community members tend to place a low value on having a local sports team. Nothing comes close to the hundreds of millions of dollars that the bill’s advocates are seeking. This research evidence is robust, with theoretical and empirical support, which is why it is the consensus view among scholars that stadiums are inadvisable public investments.

The public doesn’t like stadiums, either. A 2022 poll from researchers at Arizona State University found that the public is largely opposed to venue subsidies, with 56% opposing taxes to subsidize professional sports venues, and only 26% supporting higher taxes for this purpose.

If legislators really think a renovated ballpark is something that the public values, then the proposal should be put directly to voters at the ballot box. The reason it is being pushed through the Legislature is because its chief advocates know that the public does not support it.

And if they go forward with the plan, they should be aware that there will likely be electoral consequences. See former Wisconsin state Sen. George Petak and the late Cobb County Commissioner Tim Lee in Georgia, who both ended their political careers after supporting unpopular ballpark subsidies for the Milwaukee Brewers and Atlanta Braves, respectively.

The funding mechanism being proposed to benefit the Diamondbacks relies upon what public finance economists call “fiscal illusion.” The tax mechanism was selected to understate the public cost. By drawing funds from the district around the stadium, it gives the appearance of a use tax, being paid for only by customers.

This is not correct. What it is doing is taking tax dollars that are scheduled to be allocated to other public purposes and instead redirecting them to underwrite this special-interest project. Even though the hundreds-of-millions of dollars figures being discussed would be collected from the geographic area, the revenue has the opportunity cost of funding other public projects or simply cutting taxes to put the money back in taxpayers’ pockets.

If the government is devoting public dollars to a stadium project, then the public must be out that same amount of money. You cannot pull this money out of thin air; otherwise, we would fund all public projects like this. It’s important to remember: THERE IS NO SUCH THING AS A FREE STADIUM.

I urge the Arizona Legislature to give thoughtful consideration to this policy issue.