Billionaires Beware: Taxpayer Funded Stadiums Nearing the End Zone

Billionaires Beware: Taxpayer Funded Stadiums Nearing the End Zone

Posted by Adam Kazda on 06/16/2017

AT&T Stadium Dallas CowboysThis week, two Senators took the first steps to end federal subsidies for sports stadiums. Senators James Lankford (R-OK) and Cory Booker (D-NJ) introduced a bill, along with Congressman Steve Russell, that “would close a loophole in the tax code that allows professional sports teams to finance new stadiums with municipal bonds that are exempt from federal taxes.”

According to Senator Lankford’s waste report ‘Federal Fumbles’, since 1986, $17 billion worth of debt to build sports stadiums has gone tax exempt. The Department of Treasury estimates that eliminating federal subsidies for sports stadiums could save $542 million over the next 10 years.

Senator James LankfordSenator Lankford said in a press release, “The federal government is responsible for a lot of important functions, but financing sports stadiums for multi-million—sometimes billion—dollar franchises is definitely not one of them. Everyone likes free federal money to build their expensive stadiums, but with $20 trillion in federal debt, this is waste that needs to be eliminated.”

He is absolutely right. Taxpayers have been on the hook for sports stadiums for decades even though professional sports franchises are raking in billions.  

Since 2000, “$3.2 billion in federal taxpayer money, through municipal bonds, has been used to fund 36 newly built or renovated sports stadiums. The largest federal subsidies, according to [a Brookings] report, include the New York Yankees ($431 million), the Chicago Bears ($205 million), the New York Mets ($185 million), the Cincinnati Bengals ($164 million) and the Indianapolis Colts ($163 million).

However, in recent years, many have questioned the policy and the supposed benefits stadiums bring to communities. 

According to a 2016 Brookings report, “evidence for large spillover gains from stadiums to the local economy is weak. Academic studies consistently find no discernible positive relationship between sports facility construction and local economic development, income growth, or job creation.”

Local politicians see using municipal bonds, that are exempt from federal taxes, as a bargaining chip to keep their team in town or attract a new franchise. People that purchase these municipal bonds do not have to pay federal taxes on their gains - thus reducing the rate that local governments have to charge to attract investments.  However, the local taxpayers still have to pay back the debt through taxes.

Municipal bonds were originally intended to finance projects that had clear benefits for local taxpayers, such as hospitals, roads, and schools. But during the last few decades, teams have taken advantage of cities, demanding they issue these tax-free bonds in order to build or renovate their stadiums. By closing this loophole, the federal government will no longer be subsidizing this behavior.

Chargers StadiumOne of the most recent cities caught in the taxpayer funded stadium crossfire was San Diego. The Charger football team wanted a new stadium deal from city taxpayers, but after not receiving a good enough deal, the ownership group left for Los Angeles.

Before the Chargers left for greener pastures, a local economist said this about taxpayer funded stadiums, “I am not aware of a recent example of a major sports facility investment that earned anything approaching a reasonable return on capital or turned out to be self-financing in terms of tax revenues. The owners of major sports franchises essentially hold cities up for ransom with constant threats to relocate to other communities, not because of better market conditions but because the local governments are prepared to subsidize the sports team even more heavily.”

Jerry JonesWhile local residents are often bullied by billionaire franchise owners, it is great to see that our leaders in Washington are trying to put an end to the federal support for these tactics. More importantly, the federal government is $20 trillion in debt and cannot afford to be in the business of subsidizing multimillion dollar sports franchises. Jerry’s World should be paid for by Jerry, not Uncle Sam.


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Adam KazdaAdam Kazda
Digital Content Creator
@Adam_Kazda
Adam joined Restore Accountability in 2016 and manages the Foundation's day to day creative operations. Previously, he spent two years on Capitol Hill working for Senator Tom Coburn and Senator Jeff Flake...FULL BIO