Public Risk, Private Gain: How Cities Keep Paying for Stadiums They Were Told Would Pay for Themselves

The basic shape is familiar to anyone who has watched a city council meeting end in a stadium vote. A professional sports franchise — almost always owned by a billionaire or a consortium of them — announces that its current home is obsolete. A new one is required: larger, glassier, equipped with the suites and the screens and the premium experiences that modern leagues demand. The cost runs into the billions. And the team, regretfully, cannot be expected to pay all of it. The city is invited to contribute, in the public interest, for the jobs and the growth and the civic pride that a new stadium will surely bring.

The city, very often, says yes.

It says yes despite the fact that the economic premise is not seriously in dispute among the people who study it. This is the strange part. On most contested questions of urban policy — rent control, congestion pricing, zoning reform — economists genuinely disagree, and the disagreement is honest. On stadium subsidies, they mostly do not. The professional consensus has been stable for a generation, and it is unflattering.

What the evidence actually says

In 1997, the economists Roger Noll and Andrew Zimbalist published a review for the Brookings Institution that has become the foundational text on the subject. Their conclusion was blunt: a new sports facility has an extremely small — perhaps even negative — effect on overall economic activity and employment. The money spent at a stadium is, for the most part, money that local residents would otherwise have spent somewhere else nearby: at restaurants, at theaters, at other local businesses. The stadium does not create new spending so much as it relocates existing spending into a building owned by a wealthy franchise. No recent facility, they found, appeared to earn anything close to a reasonable return on the public investment.

That was nearly three decades ago, and one might reasonably ask whether the finding has aged well. It has. In 2023, the economists J.C. Bradbury, Dennis Coates, and Brad Humphreys published a comprehensive survey of the literature — more than 130 studies accumulated over thirty years — and reached essentially the same conclusion. Professional sports teams and venues, they found, generate very limited economic impact, and whatever public benefits can be identified fall well short of covering the public outlays. The signal here is not noise resolving into uncertainty. It is the opposite: an unusually clear and stable finding across an unusually large body of work.

The mechanisms behind the null result are not mysterious. A household's entertainment budget is roughly fixed; a night at the stadium is a night not spent at the local cinema or the neighborhood restaurant. The jobs a stadium creates are disproportionately seasonal, part-time, and low-wage — parking attendants and concession workers for eighty days a year. The high-income jobs, the players' salaries, frequently leave the local economy entirely, banked or spent elsewhere. And the building itself sits dark for most of the calendar, a vast single-purpose structure occupying land that could host denser, more continuous economic life.

If this were merely a question of evidence, the subsidies would have ended around 1998. They did not. So the more honest question is not whether the deals make economic sense. It is why they keep happening anyway.

The architecture of the deal

The subsidy survives because it is engineered to survive. Several mechanisms work together, and understanding them is more useful than relitigating the economics.

The first is leverage through relocation. A sports franchise is a monopoly asset operating inside a league that deliberately keeps the supply of teams below the demand from cities. There are always more metropolitan areas that want a team than there are teams to go around. This artificial scarcity is the engine of the whole arrangement. A team does not need to want to leave; it only needs the city to believe it might. The threat is usually unspoken and always present, and it transforms a negotiation between a city and a business into something closer to a ransom.

The second is the tax-exempt municipal bond, which is where the deal stops being merely local. When a city borrows to build a stadium, it typically issues tax-exempt bonds — debt whose interest is not subject to federal income tax. The investors who buy that debt are disproportionately wealthy, and the tax they do not pay is revenue the federal government does not collect. The result is a subsidy paid by every federal taxpayer for a building most of them will never enter. A 2016 Brookings analysis estimated that stadiums built or renovated since 2000 cost the federal treasury roughly 3.2 billion dollars in lost revenue — and about 3.7 billion once you account for the windfall to high-income bondholders, who often save more in taxes than the cost of the federal subsidy itself. Local desperation, in other words, is quietly converted into a national expense, and the conversion happens through a mechanism almost no voter ever sees on a ballot.

The third is the asymmetry of the timeline. The costs of a stadium are borne over thirty years of bond repayment; the political credit is collected on the day of the groundbreaking. The mayor who cuts the ribbon will be out of office long before the debt is retired. The incentive structure rewards saying yes now and leaves the bill to a future the decision-makers will not be accountable for.

The fourth is the bundling of identity with infrastructure. A stadium is not sold as a building. It is sold as the city's standing in the world — as proof that the place is major-league, that it matters, that it has not been left behind. This is genuinely felt, and it is not contemptible. The error is in letting a real emotional good be used to launder a bad financial deal, so that anyone who questions the subsidy can be cast as someone who does not love the city.

The cases, and the direction they point

What makes the pattern damning is that the deals have grown larger precisely as the evidence against them has grown stronger.

Consider the recent run of them. In 2022, New York State and Erie County committed 850 million dollars in public money — 600 million from the state, 250 million from the county — toward a new roughly 1.4-billion-dollar stadium for the Buffalo Bills, securing the team with a thirty-year lease. In 2020, Las Vegas opened Allegiant Stadium with 750 million dollars in public funding, raised through an increase in the county's hotel room tax, on the theory that tourists rather than residents would pay. And in 2023, the Nashville Metro Council approved over 1.2 billion dollars in public support for a new Tennessee Titans stadium — the largest public subsidy for an NFL stadium in history. Three decades into a settled academic consensus that these deals do not pay for themselves, the checks were not shrinking. They were setting records.

And then there is St. Louis, which is the cautionary tale that should haunt every city that believes the threat to leave is a bluff. The St. Louis Rams left for Los Angeles in 2016. The city, the county, and the regional stadium authority sued, arguing that the NFL had ignored its own relocation rules. In 2021, rather than face trial, the league and owner Stan Kroenke settled for 790 million dollars. It is one of the only times a city has clawed back real money from a departing franchise — and it is worth being clear about what it cost to get there. St. Louis recovered its money only after losing its team, only after years of litigation, and only because the league preferred a settlement to a courtroom. The clawback was real. It was also a consolation prize for a city that had already lost.

The St. Louis settlement is sometimes cited as evidence that cities hold the upper hand after all. It is closer to the reverse. The money arrived after the bargaining power was gone. A clause that prevents the loss is worth more than a lawsuit that compensates for it.

What a better deal would look like

The reforms are not exotic, and the economists who have studied the problem mostly agree on them. They are simply unpopular with the only parties who currently hold the negotiating power.

The cleanest fix is federal, and it is narrow: close the tax-exempt bond loophole. If cities want to subsidize stadiums, they are free to do so, but the rest of the country should not be quietly forced to chip in through the tax code. Versions of this reform have been introduced in Congress more than once, with bipartisan sponsorship, precisely because the loophole is so difficult to defend on the merits. It has not passed, which tells you something about the strength of the interests arrayed against it.

At the local level, the principle is to refuse to socialize the risk while privatizing the gain. If a stadium will generate the economic windfall its boosters promise, the team should be willing to share in the downside as well as the upside. That means real, enforceable commitments written into the deal: clawback provisions that return public money if promised jobs or revenues do not materialize; non-relocation clauses with teeth, so the city is not paying for a building the team can abandon; community-benefit agreements that direct concrete value — affordable housing, local hiring, public access — back to the neighborhoods that bear the disruption. And it means subjecting the deal to the same scrutiny as any other billion-dollar public investment, rather than the accelerated, emotionally charged process that stadium votes so often become.

The deepest reform is the hardest, because it is about how the decision is framed at all. As long as the choice is presented as "this stadium or no team," the city will keep paying, because no mayor wants to be the one who lost the franchise. The task is to change the question. Not "how do we keep the team?" but "what is keeping this team actually worth, and who should bear that cost?" Those are different questions, and only the second one has an honest answer.

A city is a structure for deciding what to do with shared money over long stretches of time. The stadium is a test of whether that structure can hold a clear, well-established fact in mind against a loud, emotionally compelling, and extremely well-financed argument to ignore it. For thirty years, the fact has been clear and the argument has won anyway. The lights of the new stadium are the brightest thing on the skyline, and the easiest thing in the world to vote for. The bill comes later, in the dark, to people who were not in the room.