What do leprechauns, ghosts, and economic benefits from sports stadiums all have in common? They lack any substantive evidence for their existence.
Would-be owners of a Saint Louis Major League Soccer team are trying to persuade the public to part with $60 million so they can build a new stadium just west of Union Station. In their effort to woo tens of millions of dollars away from an already over-burdened public, proponents and officials are promising a host of economic benefits if the stadium is built.
Unfortunately, the vast majority of economists can’t find any evidence that these promises will be kept—and Saint Louis is definitely the wrong place to start looking. Despite hundreds of millions of public dollars for the convention center and dome, downtown Saint Louis continues to languish. In fact, the areas adjacent to the dome are mostly empty, and development on Washington Avenue is propped up mostly by decades of subsidies through tax increment financing, abatement, and special sales tax districts. Why should Saint Louisans think that “investing” in a new stadium is anything but doubling down on the same-old, wrongheaded policies?
Stadium boosters often come armed with reports predicting their projects will deliver prosperity in a handbasket. These promotional studies completed by for-hire economists will be packed with predictions of new jobs, urban revitalization, and boosted tax revenue. But as economists Dennis Coates and Brad Humphreys explained in a 2008 Econ Journal Watch article on the topic, such promotional studies suffer from “a long list of methodological and theoretical problems.” And as far back as 2000, John Siegfried and Andrew Zimbalist wrote in the Journal of Economic Perspectives that studies cited by developers “inevitably adopt unrealistic assumptions regarding local value added, new spending, and associated [economic] multipliers.” In short, we should be suspicious of “studies” commissioned by stadiums proponents for stadium proponents.
The scenarios presented by stadium boosters aren’t just fanciful—they are in direct conflict with expert economic opinion. Eighty-five percent of economists are in favor of eliminating subsidies for stadiums, while only 5% are against jettisoning such handouts. Consensus like this exists virtually nowhere else in the economic literature. And why are economists all singing the same tune? Because the economic benefits touted by stadium proponents are as elusive as Bigfoot. As Coates and Humphreys put it, “No matter what cities or geographical areas are examined, no matter what estimators are used, no matter what model specifications are used, and no matter what variables are used, articles published in peer reviewed economics journals contain almost no evidence that professional sports franchises and facilities have a measurable economic impact on the economy.”
If your doctor tells you a medicine won’t cure your illness, you don’t go purchase five bottles of it. If your financial advisor warns that a company is far too risky for its potential payoff, you don’t buy a majority share in it. And if economists counsel against subsidizing a stadium in order to grow the economy . . . well, you see the pattern here. Before committing millions of taxpayer dollars to a new soccer stadium, Saint Louisans should demand something more compelling than “analysis” from the only people these stadiums have been shown to benefit—the developers themselves.