Are Pro Sports Teams Market Failure?

July 1, 2005

Are sports teams a public good? It’s hard to see how they could be. Baseball games are neither nonrivalrous nor nonexcludable, the two things that define public goods.

That means sports teams are just companies like any other, transforming inputs into profits in the marketplace.

So why would the city of Detroit subsidize security at sporting events with tax revenues, rather than forcing teams to bear the full costs of their operations? From yesterday’s Detroit News:

Police protection at Metro Detroit sporting events is essential, but should not come solely at taxpayer expense. That responsibility should rest mostly on the shoulders of the owners of the area’s professional sports teams.

Detroit’s arrangement with its police department is unusual among big cities with professional sports teams… At Detroit Tigers’ home games, between 20 and 30 officers work in and around Comerica Park. With a 2005 average attendance of about 24,000 people a game, that translates to about one officer for every 1,000 people in attendance. Detroit residents would love to have that kind of police protection in their neighborhoods.

The Ilitch and Ford families can — and should — pay to protect the investments that reap them millions of dollars a year in profit.

As Curtis has pointed out, sports teams are just firms. That means stadiums, security and parking lots are essential inputs into their production process, no different from coffee and water at Starbucks.

Why shouldn’t teams bear the full cost? Why should Detroit’s taxpayers bear the burden of unabashed rent-seeking by local team owners?


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