Saturday, January 10, 2015

Rams' stadium plan is corporate welfare at its worst

I was going to write a post about the how study after study shows that the economic impact of pouring public money into sports stadiums is effectively zero.  I was also going to describe how whatever economic benefit there is from having an NFL team was in the amenity value, not the economic development effect. It turns out that I don't have to write that post because Dave Nicklaus has already written an excellent piece making those arguments. Read the whole thing, but here's his conclusion:
St. Louis is being asked to pay dearly for the prestige of remaining an NFL city, so I think Peacock described his stadium plan accurately when he called it a “crown jewel.” A jewel can sparkle and make its owner feel good, but it’s hardly a productive use of half a billion dollars.
I'll add two things for now:
  1. We will no doubt be hearing from those who support the stadium plan that the economic impact of the project will easily exceed the investment. We'll even be given a number for economic effects that is in excess of double the amount of public funding. This study will come from economic consultants, not from independent economists. The study will sound convincing but will be complete bunk. Here is something I wrote recently that provides a list of the deceptions to look for when hearing about the supposed economic impact of the stadium plan.
  2. We've already been hearing how the plan doesn't involve any new taxes, which is true, but irrelevant. In Missouri, tax increases require a popular vote, and this proposal would go down in flames if it were put to the voters of the state. So instead, the state government would rely on the refinancing of existing bonds from the stadium we're still paying off, and on tax credits. Tax credits are functionally equivalent to a bag of cash from taxpayers. If I have a $100 tax credit, my tax bill is lowered by $100. If I don't owe taxes, I can wait until a year in which I do, or I can sell my credit to someone else at a price very close to its face value. So, the tax credits in the stadium plan are nothing short of a cash giveaway that reduces the amount that is available for the state to spend on other things. Thus, either the state will have to raise taxes to make up for the tax credits, or some possibly worthwhile government spending will not be done because the state decided instead to give away hundreds of millions of dollars to a billionaire NFL owner.