Pro sports teams are on a stadium-building binge, with help from state and local governments. Cities and counties from St. Petersburg, Florida, to Clark County, Nevada, have spent hundreds of millions of dollars in recent years to keep teams like baseball’s Tampa Bay Rays at home, or lure wayward franchises like the Las Vegas Raiders. In the past three years, 14 other cities and states have considered $15 billion in taxpayer-funded arena projects. Is it time for taxpayers to stop subsidizing corporate real estate deals that don’t justify the price tag? Or can new stadiums breathe life into cities and bolster local economies?
Billionaires don’t need subsidies
Taxpayers should not be footing the bill for what amounts to a prestige project. “Since the funding comes from across the state or city and only a narrow subset of that population receives any benefit, stadium subsidies often impose an invisible tax burden on consumers,” writes Adam Hoffer, director of excise tax policy for the Tax Foundation, a nonprofit dedicated to tax reform. There are simply more pressing priorities where city and state governments should be spending tax dollars.
Governments are losing money on the deals, too, as financial returns almost never offset their investment. In one project published by the Journal of Economic Surveys, the authors reviewed 130 studies on the economic impact of professional sports arenas over a 30-year period. They concluded that “nearly all empirical studies find little to no tangible impacts of sports teams and facilities on local economic activity, and the level of venue subsidies typically provided far exceeds any observed economic benefits.”
Stadium projects don’t create new local economies, nor do they bolster job growth. The idea that “new” cash is being spent at or around a stadium is a fallacy; that money is just reshuffled from other places, where it can no longer be spent. While arenas do create jobs, reality often falls short of projections. In Nevada, the construction of Allegiant Stadium ultimately employed a fraction of the projected number of people expected. And most of those jobs disappear when the facility is completed, leaving only part-time and low-wage positions.
Rather than financially benefiting communities, stadium funding and tax breaks subsidize valuable sports teams and wealthy stadium owners, placing optics above the everyday needs of constituents. “The harsh reality for even the biggest sports fan is that arena subsidies are a terrible use of finite government resources,” writes Scott Lincicome, the vice president of economics and trade at the Cato Institute. “And a ridiculously egregious redistribution of wealth from regular Americans — fans and haters alike — to some of the wealthiest people and organizations on the planet.” Worse yet, these beneficiaries shop various locations against each other to spark bidding wars and get the most advantageous deal. Owners walk away with shiny new stadiums while communities are stuck paying the bill for decades to come.
But communities do
Community means more than dollars and cents. Local and state governments need to invest in development, regardless of sector, and stadium packages — often involving tax breaks, loans and cash subsidies — are one great way to do that. Such incentives can attract new businesses, which become generators in local economies. No wonder the Council for Community and Economic Research has identified 2,402 different tax incentive programs offered to private entities around the country.
Stadium deals often look better when seen through a wider scope, accounting for the totality of their impact. Beyond construction, new arenas employ thousands in concessions, outlets, security and operations. Each transaction in and around the venue, as well as in transit, generates tax revenue. Some funding packages go beyond the stadium. In Atlanta and Salt Lake City, owners of arenas in redevelopment are spending millions on nearby amenities, like art projects, plazas and new parks, as part of their respective deals.
New and improved arenas can revitalize entire neighborhoods, drawing millions of visitors to local businesses and encouraging redevelopment of neglected communities. Since the city of Sacramento built the Golden 1 Center in 2016, foot traffic around the arena is up 200 percent, property value has increased 29 percent, $7 billion has been invested in the surrounding district, and 3.6 million square feet of office and retail space have been redeveloped. As the World Bank argued in 2023, new infrastructure fosters growth: “The right investments by the state can strengthen the incentives for firms to form, invest, and hire, thereby generating self-sustaining economic growth as well as providing a source of tax revenues to recoup the cost of the investments.”
Stadiums and the games played inside them raise community spirit, providing an intangible, positive benefit to a city’s culture, vibrancy and civic pride. “Fans of a team may gain value from being able to root for their team and talk about their team’s successes and failures with friends and colleagues even if they don’t directly spend any money,” writes Victor Matheson, economics professor at the College of the Holy Cross. In a single deal, local governments are investing in the infrastructure, economy and quality of life of their constituents.
This story appears in the March 2025 issue of Deseret Magazine. Learn more about how to subscribe.