The Fallacy of Tailgate Economics
News flash: Saint Louis is in danger of losing its football team. City and state officials are working feverishly on plans for a new publicly financed state-of-the-art stadium, but it may be too late. The owner sees greener pastures out west, and after years of subpar play on the field, fan support is tepid. Taxpayers may rebel against the use of public dollars to finance a new domed stadium.
That’s right, this story is not about the Rams; it’s about the St. Louis Football Cardinals circa 1988. Then, as now, NFL teams still would prefer that the public subsidize new stadiums, with the possibility of leaving town as the not-so-veiled threat. Saint Louis and Missouri officials hope to oblige, presenting a plan to spend more than $400 million on a new stadium for the Rams.
Saint Louis is a great sports city with enthusiastic support for professional teams (especially the baseball Cardinals), and many local leaders and residents take pride in being an NFL city. However, government officials here and around the country argue that pro sports franchises boost regional economies and spur urban regeneration.
Unfortunately, it just isn’t so. Cities have been funding stadiums for decades. The vast majority of economic research shows little evidence that these subsidies have yielded any economic benefits or growth in tax revenue. Speaking about the plan to subsidize a new stadium for the Rams, one University of Chicago economist said, “. . . building a football stadium is probably one of the worst expenditures of taxpayer dollars there is.” As for urban regeneration, while stadiums can ride a revitalization trend, there is no evidence that they create them. The issue with stadiums is that they tend to divert entertainment dollars that were already being spent in the metro area. Unless the teams draw in many tourists, which is not the case with most teams (including the Rams), NFL stadiums do not have a significant impact on the regional economy.
In the case of Saint Louis, officials do not even need to read up on the economic literature, they can simply look at the results of the Edward Jones Dome, Saint Louis’ current stadium. Originally conceived as an effort to keep the Football Cardinals (now playing in Arizona), the Edward Jones Dome was entirely publicly financed. When it opened in 1995, it was considered state-of-the-art.
Only 20 years later, the Edward Jones Dome, on which the city still owes money, is maligned as outmoded. The arrival of the Rams had no noticeable effect on tax revenue, aside from a small increase in income tax receipts. As for urban regeneration, the area immediately north of the stadium, known as the Bottle District, is an empty lot. There has been no dome-centered growth.
Nevertheless, public officials and representatives still talk as if a new riverfront stadium will cause urban regeneration and generate hundreds of millions of dollars of new state tax revenue. If regeneration means parking lots (which will surround the stadium), then they may have a point.
Even assuming the best case—that Saint Louis is blessed with a football team that holds home-field advantage through two playoff games leading up to the Super Bowl—does anyone really believe that having 10 great tailgate parties a year outside a new riverfront stadium is the key to Saint Louis’, or any other city’s, economic revitalization?
Common sense tells us “no.” So too does past experience, along with an abundance of economic literature.