The Atlanta Journal-Constitution
Should public pay for private sports clubs’ stadiums?
Vegas ballpark revives issue about using funds that could help others.
Nevada Gov. Joe Lombardo wants to help build Major League Baseball’s smallest ballpark, arguing that the worst team in baseball can boost Las Vegas, a city striving to call itself a sports mecca.
Debate about public funding for private sports clubs has been revived with the Oakland Athletics’ ballpark proposal. The issue pits Nevada’s powerful tourism industry, including trade unions, against a growing chorus of mostly progressive groups nationwide raising concerns about the use of tax dollars to finance sports stadiums that could otherwise fund government services or schools.
The debate over relocating the team from California to Nevada echoes others around the country. Politicians have approved large sums of taxpayer money going to sports clubs in Buffalo, New York; Atlanta; and Nashville, Tennessee. In Tempe, Arizona, though, voters rejected a $2.3 billion proposal that would have included a new arena for the NHL’S Arizona Coyotes.
The Oakland A’s hired more than a dozen lobbyists to persuade lawmakers in Nevada’s state capital to approve the proposal to build a $1.5 billion stadium, arguing the project will create jobs, boost economic activity and add a new draw to the tourism-based economy in Las Vegas — all without raising taxes. Central to the pitch is the city’s newfound sports success, with NFL, NHL and WNBA teams that were nonexistent or based elsewhere seven years ago.
“Las Vegas is clearly a sports town, and Major League Baseball should be a part of it,” Lombardo, a Republican, said in a statement.
Those against giving pro teams incentive packages have said tax credits and other means of public financing aren’t beneficial. They cite growing evidence that dollars generated from the new stadium would not be spent at
nearby resorts and restaurants.
Half of the tax credits may not be paid back to the state. Much of the Athletics’ investment in the community, including homelessness prevention and outreach, hinges on whether the club has money left over after stadium costs.
“I just cannot justify giving millions of public dollars to a multibillion-dollar corporation while we cannot pay for the basic services that our folks need,” Democratic Assemblywoman Selena La Rue Hatch said.
Last month, Lombardo’s office introduced the stadium financing bill with less than two weeks left in the legislative session.
The bill would provide up to $380 million in public assistance, partly through $180 million in transferable tax credits and $120 million in county bonds, which are taxpayer-backed loans, to help finance projects and a special tax district around the stadium. Backers have pledged the district will generate enough money to pay off those bonds and interest.
The A’s would not owe property taxes for the publicly owned stadium and Clark County, which includes Las Vegas, also would contribute $25 million in credit toward infrastructure costs.
In places like Buffalo and Oakland, proponents of new stadiums have argued tax incentives prevent the departure of decades-old businesses. But the debate in Nevada differs.
The state already heavily relies on entertainment and tourism to power its economy, and lawmakers or appointed boards for years have talked about diversifying the economy to justify incentives to businesses including Tesla. Another deal that legislators are weighing would expand a film tax credit system to $190 million annually over at least 20 years to bring major film studios to Las Vegas.
The Legislature has until today, when the session adjourns until 2025, to push through the stadium and film proposals, although the possibility of a special legislative session looms.
Both proposals are far from a done deal as lawmakers prepare to vote.
In recent decades there has been an increase in new stadium deals that are mostly — but not always — publicly funded. Two vastly different examples already are visible on the Strip.
A last-minute bill in Nevada’s 2016 special session paved the way for $750 million in public funding from hotel room taxes for the $2 billion Allegiant Stadium, home of the Las Vegas Raiders and host of the upcoming Super Bowl.
T-mobile Arena, home to the NHL’S Las Vegas Golden Knights, opened in 2016 after MGM Resorts and a California developer covered the full $375 million price tag. On Saturday, the arena hosted the first game of the Stanley Cup.
The A’s recently received the backing of the powerful Culinary Union, a 60,000-member group of workers on the Las Vegas Strip, after agreeing to let stadium employees unionize. It’s a key endorsement from the state’s most prominent labor group, often seen as a vital mobilizing force for Democratic campaigns in the western swing state.
“We will support largescale projects — whether they’re pro-teams, event centers or large companies — if they’re going to bring good union jobs with healthcare and pensions,” said Ted Pappageorge, the Culinary Union’s secretary-treasurer.
While the debate surrounding public financing for private sports stadiums has animated governing bodies nationwide, there isn’t a debate among economists.
Roger Noll, a Stanford University economics emeritus professor, said economists question whether bringing new stadiums to cities has a slightly negative or positive net impact without public assistance.
To be effective, a stadium in Las Vegas would have to draw a substantial number of visitors who would not normally come to the city. If stadiums are another asset in an existing structure, then most of the spending there would likely be in neighboring attractions, like the Sunset Strip’s resorts and restaurants, Noll said.
Much of the club’s financing also goes toward player salaries, who often don’t live in their team’s city yearround, he noted.
“It’s not that they don’t exist, but they’re tiny,” Noll said of the economic benefits. “They can’t possibly be big enough to justify hundreds of millions of dollars in expenditure.”
Noll, who authored a book about stadium financing, added there is “no serious contrary view” among his peers who study the topic.
Jeremy Aguero, the founder of a firm partnering with the A’s, acknowledged the criticism at the recent hearing, but told lawmakers that Las Vegas’ tourism-driven market was different. In a study funded by the A’s, Aguero’s firm projected 53% of the stadium’s annual attendees would come from beyond the city, and 30% of the estimated 405,000 out-of-towners would not visit Las Vegas without stadium events.
“They come and they stay in our hotel rooms, and they eat in our restaurants and they shop in our stores,” Aguero told lawmakers. “It drives a tremendous amount of value.”