Financing professional sports: Lessons from Columbus
The scene was ever so familiar for Ohio voters.For five months in 1997, Franklin County residents were pummeled with a professional sports marketing blitz. New sports facilities were important for the economy. They were important for the community. The downtown sports complex, said Columbus’s mayor, was “the next step in our journey to become a world class city.”
Two professional sports facilities would be the core of the complex – a 21,000 seat hockey arena and a 35,000 seat soccer stadium. On more than one occasion, team owners told citizens their investment plans hinged on approval of a sales tax increase in Franklin County to publicly fund the facilities.
So, as voters went to the polls last May, they faced a tough choice. They could vote down the sales tax and, according to conventional wisdom, accept their fate as a second-class city. Or, they could approve the sales tax to help finance the proposed $285 million project.
It was a scene played out previously in Cleveland and Cincinnati. It is a scene that may play out in Dayton and Toledo as well.
Much to the chagrin of boosters, Franklin County residents decisively voted down the proposal 56% to 44%. The voter turnout was 39%, significantly higher than the expected turnout of just 21%. Ironically, experts had predicted that a high turnout would help the pro-tax forces.
According to most pundits, the defeat of the sales tax killed any hope for private funding. "I don't see a way of this coming together under totally private funding," lamented a co-chairman of Citizens for Downtown's Future.
This is not just a tale of voters turning down a stadium deal, although that story would still be significant even if that were all there was to it. Most communities approve higher taxes to finance the construction projects of sports team owners and their players.
What sets this story apart from others is what happened next.
Columbus, it turns out, did not become the backwater of sports. Within four weeks of the vote, two private companies came forward to privately finance a hockey arena: Nationwide Insurance and the Dispatch Printing Company. Within six weeks, the NHL awarded a hockey franchise to the city. Franklin County voters were off the hook. The experts were wrong.
Moreover, the facilities will be built for substantially less money. The privately-financed arena will cost just $125 million. A privately-financed soccer stadium intended for suburban Columbus is expected to run just $26.5 million. Moreover, the public sector commitment represents 17.2% of the combined cost of both projects, compared to 80% under the first proposal. The total tab for a new arena and soccer stadium fell from $285 million to only $183 million when financed primarily through private sources – a 35.8% reduction.
That’s good news for Franklin County residents and sports fans, but the lessons are also important for all Ohioans and policymakers.
Citizens and policymakers should be skeptical of any proposal to pay for professional sports stadiums and arenas with public funds. Financing professional sports, like other private businesses, should be left to the private sector. Indeed, when asked, two-thirds of Ohioans say sports stadiums should not be publicly financed.
More than three decades of scholarly research has found little, if any, economic benefit to downtowns, cities and counties from professional sports. What little economic benefit results is confined to the few blocks adjacent to the stadium.
Sport stadiums don't add significantly to local economies. It’s time for teamowners to stop feeding at the public trough.
Samuel Staley, Ph.D., is a senior research fellow with The Buckeye Institute for Public Policy Solutions. David Swindell, Ph.D., is an urban affairs professor at Wright State University.
