Stadium promises never pay

By Rick Eckstein

If you build it, they will come. This is usually the mantra of those in favor of publicly financed sports stadiums, including the current proposal for a new soccer stadium in Chester. In this case they are visitors whose spending would turn devastated cities and neighborhoods into exciting destination points. Local schools, merchants, and residents all would benefit as municipal coffers swelled.

There's only one problem with this scenario. It's not true. Never has been. They do come, but cities are not saved. Over the past two decades, academic research has generated literally hundreds of articles and books empirically challenging the alleged economic wonders of new stadiums, even when they're part of larger development schemes. I have been studying and writing about publicly financed stadiums for more than 10 years and cannot name a single stadium project that has delivered on its original grandiose economic promises, although they do bring benefits to team owners, sports leagues and sometimes players.

There are many reasons for these consistently unmet expectations. Among them are, first, stadiums (and ancillary projects) almost always cost more than projected, forcing municipalities to cough up extra subsidies for fear of having a half-built ballpark in the neighborhood. Second, ancillary development projects rarely unfold as initially promised. However, it's difficult holding (usually) well-meaning developers accountable for this since the stadium "anchor" of the project always gets built first - and, again, municipalities have no use for half a stadium.

Finally, the economics simply don't work. Stadium anchors are generally used for 10, 15, or 81 days per year (football, soccer and baseball, respectively). There might be more activities, but there's no guarantee for this and, given historical reality, few stadiums get used much beyond their primary purpose. Also, recently built stadiums have increased the options for customer spending inside the gates, making it less likely that money will be spent in the outside neighborhood. But, most important is what social scientists call the "substitution effect" whereby consumer leisure spending is shifted from some other entertainment venue to the stadium, thereby generating limited net tax revenue increase.