Imagine a stadium as a giant drain. Money flows from the community into the stadium, where it whirls around for a bit, then funnels down some murky pipes, exiting far, far away. Some leaves with players, some with owners and ownership groups, some with the league itself, the headquarters of which are in New York. That last leakage is similar to when you shop at a corporate chain. “If you go to a local bar, that’s probably locally owned, and servers and bartenders are spending it locally, and that causes this ripple effect that doesn’t happen in sports,” says Victor Matheson, a professor of economics at Holy Cross University.
Sure, some of the money will stay local, thanks to the new economic activity that a stadium helps generate. That’s most likely if a new cluster of restaurants and sports bars sprouts up in an underused part of town around a new stadium. But even then, the economic impact can be limited. When new “stadium towns” are built, residents tend to spend their money in the new geographical location rather than another one around town.
“It’s reshuffling deck chairs instead of developing anything new,” Leeds says. “Cities give tax breaks or subsidies to businesses that locate in a particular area, and it might help that specific area. But it’s simply robbing Peter to pay Paul.”
Worse, the new activity may actually hurt the overall economy by “crowding out” other events. (Have you ever stayed home instead of risking the game-day traffic jam?) This effect is perhaps strongest during massive sports events like the Olympics or the Super Bowl. The arguments for hosting them are the same—draw tourists, create buzz, increase economic activity. More tourists arrive, but they often cost cities more than they’re worth.
Read: How taxpayers keep the NFL rich
In 2016, when San Francisco hosted the Super Bowl, the city paid to reroute cars and Muni buses, to fund police overtime for security, and for sanitation workers to clean it all up. In all, the city spent an estimated $9.6 million. Whether it made that money back is heavily contested. “Restaurants were telling us they had a 40 to 50 percent reduction in reservations and services,” says San Francisco Supervisor Jane Kim, who was outspoken against this deal at the time. “I don’t think public taxpayers should subsidize a party for a $12.4 billion company.”
Yet, they do, for one-time parties and longtime drains. And, usually, city-dwellers in big sports towns are happy to do it, because we’ve been conditioned to view ourselves as lucky that franchises would want to be located in our city, on our land. It’s a mind-set that pits cities against one another, resulting in a humiliating race to the bottom. But is there any way to shift power to the cities, and their citizens?
Private ownership is standard policy in every pro-sports league. Major League Baseball even forbade Joan Kroc from passing ownership of the Padres to the city of San Diego. And despite what you might have heard about public ownership of Green Bay Packers, what the team’s superfans own are more collectible gimmicks than actual shares. In part, that’s because leagues don’t want to open their books. “Most teams are more profitable than they say,” Cryan insists. “There are a lot of depreciations of assets, including player contracts, that allow teams to honestly say, ‘We didn’t make any money this year,’ even though the owners have millions more in their bank accounts.” When only one side in a negotiation has accurate intel about a product’s worth, the other side is at a distinct disadvantage.