President Obama’s fiscal year 2015 budget proposes to increase taxes on individuals by over $820 billion and on businesses by about $500 billion, for a total of over $1.3 trillion in new taxes over the next ten years....
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- Cobb County, Future of the Atlanta Braves, Strikes Out
Cobb County, Future Home of the Atlanta Braves, Strikes Out
Recently, the Atlanta Braves surprised many in the announcement of their move from Turner Field in downtown Atlanta to the suburb of Cobb County, Georgia, about 10 miles outside the city. Cobb County officials touted their new team as an economic success. They cited the millions of dollars in economic activity the team would bring in both during the construction and upon completion in 2017. But this “economic boom” comes at a great price to the people of Cobb County. The county is projected to have to finance around $300 million for the development. This includes a one-time $14 million transportation improvement subsidy, a $10 million commitment from the Cumberland Community Improvement District (CID), and payments worth $276 million of a bond issue. The bonds are financed by redirecting funds from two existing taxes (hotel & property taxes) and creating three new revenue sources (a rental car tax, a property tax in the Cumberland CID, and a hotel fee) combined to the tune of $17.9 million annually for the next 30 years.
Liberty Media, the owner of the Braves, despite being a very successful company (owning stakes in SiriusXM, Barnes & Noble, and Time Warner) had their investment subsidized by Cobb County taxpayers. Liberty Media retains most of the rights to the stadium and profits while Cobb County gets next to nothing except the promise of “surefire” economic development (the city won’t even be allowed access to the stadium they built except for special occasions).
This unfortunately is often the case. Bridgeview, Illinois and Commerce City, Colorado were lured into the idea that bringing a sports team could do great things for their city. Bridgeview built a stadium for Major League Soccer’s Chicago Fire. Since then the city’s property taxes have more than doubled, and they still have over $200 million in related debt, approximately $17,666 per resident. In addition there has been next to no new business and the stadium itself had an operating loss every year from 2006 to 2011 except for 2007. Commerce City, home of the MLS Colorado Rapids, donated hundreds of acres to a developer who claimed he would bring in lots of economic development, yet after 6 years and several million dollars of city funds spent they are still waiting on the economic boom.
Developers vow that there will be “no increase in property taxes” and that they will simply redirect funds from existing revenues. However, that means that other spending projects are unable to use those funds. Also, history and academic evidence show that sports stadiums don’t really convey a positive externalities onto a community, so we can’t really think of them as a “public good.” As we noted in 2011:
In light of the opposition from academics, many proponents have resorted to the intangible, quality of life arguments, noting that there is a sense of regional pride that comes along with a sports team. ...What about cities with terrible teams? Could there be a negative impact on the quality of life? But even if the presence of (a) team does have a positive impact on the quality of life, not everyone will benefit. Those that don't care about (sports) derive little or no benefit. And…the tax revenue used to finance the stadium could have been used for other purposes, or left in the taxpayer's pocket, both of which would impact quality of life.
To read more about the details of this bad deal click here.
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