Recently, Governor Rendell and Republican state lawmakers stood side-by-side to announce a multi-million dollar taxpayer grant to build a soccer stadium in Chester, under the guise of "economic development." Major League Soccer (MLS) obliged and awarded an expansion franchise to the region. Unfortunately, a new soccer stadium and team will likely fail to revitalize the area's economy, and will just become another financial burden on state and local taxpayers.
Governor Rendell and the legislature promised $47 million out of the state taxpayers' wallets for the stadium, and Delaware County residents will be forced to give another $30 million. Team investors will thus only cover half the costs ($80 million) of the new stadium, and pay next to nothing in exchanges for these government hand-outs.
Chester is a city plagued by high levels of poverty and crime rates. Elected officials promise that a soccer stadium, financed heavily by taxpayer dollars, will be part of solving Chester's economic woes. Governor Rendell said, "I believe this guarantees that Chester will be one of the first-class cities in Pennsylvania."
Yet economic research finds that athletic stadiums do not result in economic growth. Economist Phillip Miller demonstrated in his empirical study of St. Louis that stadium construction has no net effect on employment. Miller concluded that stadium construction shifts employment from other projects, and fails to create any new net jobs. Economics professor Ian Hudson found similar evidence. Using regression analysis, Hudson found,
The number of sports teams in a city has no statistical relationship to changes in employment levels, creating much doubt among economists about the frequent claims by lobbyists that professional sports franchises are essential for a city's continued economic development.
Other studies, including Dennis Coates and Brad Humphrey's analysis, "The Stadium Gambit and Local Economic Development," are even more pessimistic. Coates and Humphrey go beyond claiming that stadium development has no benefit for local economic development, concluding that projects actually have a negative effect on real per-capita income.
Politicians have a penchant for giving handouts to new facilities. They seem to believe they can hoodwink voters with a façade of progress. Construction offers the illusion
of economic progress, and ceremonies to award tax dollars for new projects make elected officials look and feel like they are helping their constituents. But sports stadiums represent more “political development” for lawmakers than economic development for citizens.
Chester is poised to experience what other communities across the country have learned: athletic parks are no panacea for community revitalization. The benefits of sports stadiums are grossly over-sold by politicians and become extremely costly to taxpayers. Economic growth and subsequent tax revenue will not “make the stadium pay for itself.” Nor will the new stadium generate higher property values. In fact, one recent study demonstrated that local property values decreased when governments embarked on stadium projects. While the financial burden of the stadium lands on taxpayers, the benefits accrue not to families or businesses in the area, but solely to team owners and players who get the taxpayers else to pay for their playground.
The enthusiasm of elected officials to build a soccer stadium in Chester is misguided, at best. At worst, it represents a waste of taxpayer dollars and an economic sham. It is unfortunate that political calculations are trumping sound public policies that would foster real economic growth and true revitalization in Chester. Reducing the tax and regulatory burdens on job creators would bring more lasting improvements to Chester. Harrisburg’s corporate welfare is a flagrant foul and deserves a “red card” from all taxpayers.
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Benjamen Ober, a student at Duke University, is a research intern with the Commonwealth Foundation (www.CommonwealthFoundation.org), an independent, nonprofit public policy research and educational institute based in Harrisburg.
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