If You Build It, They Will Pay

  • December 2, 2016

San Diego and Las Vegas are just the latest cities facing the question of public-financing of a sports stadium. Professional team sports owners, typically holding wealth in excess of hundreds of millions (or even billions), beg, plead, or lie about the need for the public to finance a new, sky-box-lined play-pen for their athletes. They claim they cannot afford to finance a stadium themselves. Often, they sugar-coat their plea with the idea that such a stadium will be good for the metropolitan area.

We’ll return to the question of whether a stadium, privately or publicly built, benefits the surrounding metropolitan area in next week’s piece.

Economists often describe the market as a democracy of sorts. People are voters in the market. There are, of course, differences between the market for goods and services and the political market. In the political market, citizens have only one vote for each election. The citizens are often confronted with an “either-or” decision: to approve or disapprove funding for the stadium. In the market for goods and services, each consumer has multiple votes. You can vote “early and often” for the goods and services you want or need. It is true that Bill Gates has many more votes than most of the rest of us, but the fact remains, each of us has multiple votes.

In the market, you can express the intensity of your preference. If you really like Burger King relative to McDonalds, you can repeatedly vote with your dollars for Burger King. In the political market, you have but one vote to give to your favored candidate. You can express the intensity of your preference only indirectly (perhaps by donating to the candidate of your preference’s campaign fund).

There is another difference. In the market, if you do not like a good or service, you do not have to purchase it. In the political market, however, if “majority rules” finds you on the losing end, you are stuck paying for something you don’t want. You are coerced, but, of course, sometimes you will be on the winning side and will be coercing some people who disagree into paying for something they don’t want.

Many citizens enjoy professional team sports. If the team wins a championship, people, even those with lukewarm interest, rejoice. There are probably many citizens, however, who don’t give a fig newton about the success of a local team. Why should they ante up tax money for something they could care less about (or even loathe)?

Given the coercion angle, is it ethical for a business owner to seek public funding for a stadium or any other self-serving project? The taxpayer dollars are not gratis; the money used for the stadium could have been used for schools, roads, or even retained by taxpayers to spend as they choose.

I am being unfair, perhaps, by singling out sports team owners. Business owners plead for a remarkable variety of projects. They are usually savvy enough to cloak their wants with a veneer of public good, but there is no escaping the reality that the bulk of the benefit accrues to their associates and them.

The Golden Rule may be applied in this case. Would the sports team owner acquiesce to a fellow citizen’s request for public funds to build, say, a for-profit bird sanctuary operated by said fellow citizen? Would the sports team owner think, “Why should I involuntarily contribute to such a project? It’s for the birds, and I don’t like birds.” If the sports team owner is unwilling to pay for someone else’s project, then said owner should not be violating the Golden Rule by requesting others to pay for his or her project.

Taxpayer dollars are always in scarce supply. Presumably we want the dollars to fund projects that benefit all of us if possible, but certainly not projects that benefit a small portion at the expense of the whole.

In the next piece, we’ll return to the question of whether a sports stadium benefits the local economy.

The views and opinions expressed are those of the author and do not imply endorsement by the University of Northern Iowa.


More from our blog

See all posts