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Santa Clara County vs. the San Francisco 49ers: The Battle for Stadium Financing

2 min readBy: Richard Morrison

Santa Clara County has thrown a (small) wrench into the $1.2 billion project to build a new stadium for the San Francisco 49ers. County and taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. district officials have vowed to pull back $30 million of taxpayer money that had previously been promised to the project. County tax collector George Putris told the Associated Press that he believes the money would be better spent on local school districts.

No doubt attorneys for the 49ers and the other entities involved with the construction and financing of Santa Clara Stadium will have something to say about this development (AP has quoted no responses as yet), but in the meantime it provides an opportunity to return to the question of when (if at all) taxpayer money should be used to subsidize facilities for privately-owned sports franchises.

Tax Foundation Vice President Joseph Henchman blogged on the issue back in 2009, quoting the National Taxpayers Union’s Andrew Moylan. Both were writing around the time that the Santa Clara Stadium financing deal was first agreed to. Moylan strongly questioned the plan to put California jurisdictions deeper in debt at a time when the weight of the Great RecessionA recession is a significant and sustained decline in the economy. Typically, a recession lasts longer than six months, but recovery from a recession can take a few years. had already put significant strains on public finances in the Golden State.

Economist Mark Robyn also wrote in 2011 about efforts by the owners of the Minnesota Vikings to get the taxpayers to foot approximately $600 million worth of the bill for that team’s new stadium. Mark didn’t mince words then, stating that this was clearly “bad policy” and giving readers a taste of a Brookings Institution study debunking the economic development arguments made by proponents of taxpayer financed sports stadiums.

Unlike the case of the Santa Clara County and the 49ers, which is still very much in flux, the financing for the Vikings stadium recently reached an end game, and the owners got a generous deal from the taxpayers of Minnesota. State Sen. John Marty (DFL-Roseville), in a commentary for Minnesota Public Radio, strongly condemned the deal:

Data from the Senate Fiscal Analysis Office shows, under the final legislation, that the taxpayer “investment” in the Vikings stadium breaks down to a $72 public subsidy for every ticket, to every game — including preseason ones — for the next 30 years.

And this calculation doesn’t include the granting of a property tax exemptionA tax exemption excludes certain income, revenue, or even taxpayers from tax altogether. For example, nonprofits that fulfill certain requirements are granted tax-exempt status by the Internal Revenue Service (IRS), preventing them from having to pay income tax. for the stadium. Counting that, the subsidy climbs to over $110 per ticket.

In an interesting case of strange bedfellows in politics, the stadium deal is also being opposed by Americans for Prosperity Minnesota, which is campaigning against three incumbent state legislators – two of them Republicans – who voted to approve the deal.