Minor League Ballpark, Major League Subsidies
Since 2001, the State of Ohio has paid $850,000 towards the cost of a new stadium in Eastlake, a suburb of Cleveland.[1] The stadium will be home to the Lake County Captains, a Class-A affiliate of the Cleveland Indians.
The construction cost of the stadium is estimated to be around $19.5 million.[2] The total cost of the project could be much greater. The Eastlake City Council has already issued $22 million in notes and bonds to pay for land acquisition and their share of the construction cost.[3]
To pay for the bonds, the city has asked the county to raise the bed tax from 1.25 percent to 3 percent and funnel the extra $2 million revenue stream to repaying their stadium bonds. Since Eastlake has only one hotel, most of the revenue from the bonds will come from business owners and visitors elsewhere in Lake County. Supporters of the tax claim all Lake County will be economically rejuvenated that the stadium is a tourist attraction that will help the economic rejuvenation of all of Lake County.[4]
“They’ll be coming from all over the state,” claims City Council President Robert Mahler.[5] Given that Ohio has five professional baseball teams competing at higher levels, including the nearby Cleveland Indians, other public officials in Lake County quickly disputed this statement. For example, Mentor City Council President Robert M. Skinner argued “the only people who will come from out of town to the stadium are the relatives of the players."[6]
Academic studies have consistently shown that stadiums produce little or no economic benefit to a community. Economist Andrew Zimbalist has shown that sports arenas financed with public funds result in no net new economic activity in a region and that new stadiums merely shift around current entertainment spending.[7]
This historical evidence implies that families may now forego seeing a movie in Willowick in order to attend a ball game in Eastlake. While Eastlake policymakers will view this as a benefit, policymakers and taxpayers elsewhere in Lake County probably won’t. Lake County policymakers should evaluate the historical record concerning the economic effects of sports stadiums before making all Lake County taxpayers bear the burden of paying for Eastlake’s stadium.
Notes
[1] State appropriations through the Ohio Arts and Sports Facilities Commission were $350,000 in 2001 and $500,000 in 2002.
[2] Estimation by the Ohio Arts and Sports Facilities Commission, available online at: http://www.state.oh.us/afc/
[3] “Lake County, Ohio, debates request to pay off stadium loans with bed tax money”, The News Herald, January 13 2003
[4] “Lake County bed tax increase considered”, The Plain Dealer, October 23 2002
[5] “Lake County, Ohio, debates request to pay off stadium loans with bed tax money”, The News Herald, January 13 2003
[6] Ibid.
[7] Interview on NPR, March 10 2003, by Mr. Zimbalist.
Aengus Barry is a former Policy Analyst with The Buckeye Institute.
