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Peter’s Take: No Virginia Tax Dollars for New Redskins Stadium

peter_rousselot_2014-12-27_for_facebookPeter’s Take is a weekly opinion column. The views and opinions expressed in this column are those of the author and do not necessarily reflect the views of ARLnow.com.

Last week, Virginia Governor Terry McAuliffe announced that the state of Virginia is in “very serious negotiations” with the Washington Redskins to help the team build a new stadium in Virginia.

Governor McAuliffe explained how he plans to negotiate:

“What I always say is it’s got to make sense for the taxpayers of Virginia. We’ve got to negotiate a deal — my job as governor is to get economic activity — but you’ve also got to protect the taxpayer dollars. And we’ve got to be creative with this thing, so we’re protecting the taxpayers, it’s in the taxpayers’ best interests, and it’s a win-win for the Redskins.”

Discussion

The evidence is overwhelming that subsidizing the construction of a proposed new Redskins stadium will never be in the best interests of Virginia taxpayers.

Sports stadiums do not spur significant economic growth

Independent experts (like Roger Noll, a Stanford professor emeritus of economics and specialist on sports economics) repeatedly have concluded that sports stadiums do not spur significant economic growth:

“By comparison, other billion dollar facilities–like a major shopping center or large manufacturing plant–will employ many more people and generate substantially more revenue and taxes.”

These conclusions by independent experts contradict the rosy publicity bankrolled by self-interested owners or any government partners they can recruit.

The direct costs far outweigh the benefits

A very extensive study by the Federal Reserve Bank of Kansas City found that a typical stadium costs taxpayers more than four times more than any long-term benefits from jobs and tax revenues. Or, as this study diplomatically put it:

“Proponents of using public funds to finance stadium construction argue that the benefits from increased economic activity and increased tax revenue collection exceed the public outlays. But independent economic studies universally find such benefits to be much smaller than claimed.”

The opportunity costs further tilt the balance against taxpayer funding

The costs of a new Virginia stadium for the Redskins are even higher when you factor in the opportunity costs. Money spent on such a stadium is money that could have been spent:

  • on a new dedicated funding stream for Metro’s capital replacement program, or
  • to redress some of the critical deficiencies in Virginia’s mental health facilities, or
  • for additional job retraining in areas of persistently high Virginia unemployment.

And, these are only three of hundreds of far more deserving uses of our Virginia taxpayer funds.

Dan Snyder doesn’t need the money

Redskins’ owner Dan Snyder is a billionaire who doesn’t need a public hand out. Public subsidies for a new Redskins stadium in Virginia will go directly into Dan Snyder’s pockets and into the pockets of already highly-compensated Redskins football players. A 2003 study by a member of the University of Texas economics department documented that a new stadium increases:

  • team profits by an average of $13 million annually,
  • payroll salaries by $14 million annually, and
  • team book value by $90 million.

All these numbers are likely to be much higher in 2016 and into the future.

Conclusion

I admire Governor McAuliffe tremendously for all of the excellent work he has done to promote Virginia as a place to do business. In this particular case, he should hand the ball back to Dan Snyder.

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