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In my usual day-to-day discussions, I rarely discuss anything directly related to economics or politics as it has been my experience that these are two bridge-burning topics.

Last night though, I ended up debating some of my friends over the merits of building stadiums which are partially subsidized by taxpayers and the State. Unfortunately, like all arm-chair arguments, neither side had any type of documentation or referred journals they could whip out to back up their points.

Now that finals are over I decided to look into this issue vis-Ã -vis Mr. Internet — and found some information that was quite interesting.

Earlier in the year, Art Carden pointed to an article discussing the economic ramifications of the St. Louis Rams competing in the playoffs:

Much debate is surrounding the economic impact of a St. Louis playoff game to the local economy. While the city officials have determined the impact to be more than $10 million, sports economist Brad Humphreys disagrees. “There is no [academic] research that finds positive impacts associated with any of the [major] professional sports in North America,” Humphreys said. “Economists agree on that.”

Two months ago that same Humphreys (University of Illinois at Urbana-Champaign) followed up with the interview in a paper published with Professor Dennis Coates (University of Maryland-Baltimore County) whom noted in “Caught Stealing: Debunking the Economic Case for D.C. baseball” that:

“… professional sports generally have little, if any, positive effect on a city’s economy. The net economic impact of professional sports in Washington D.C., and the 36 other cities that hosted professional sports teams over nearly 30 years, was a reduction in real per capita income over the entire metropolitan area.”

The paper lists numerous case studies of cities with professional sport stadiums and how their metropolitan areas were economically affected.

Throughout last night’s discussion, I mentioned that the “public interest” argument was simply redistribution in disguise and that proponents were falling into the classic ‘What Is Seen And Unseen‘ fallacy. Incidentally, Gene Callahan mentioned this point in an article discussing this very topic, a new stadium for the New England Patriots. To wit:

What is seen is the activity around the stadium on game day. People buy tickets to the game, which are taxed, producing revenue for the state. Inside, they buy hot dogs and beer, producing revenue for both the vendors and the state. They may go out for a meal before or after the game, enriching area restaurants. Perhaps they will also stop at a local museum, or see a show afterwards. Both while the stadium is being built and after it is in use, local construction companies will have more work, first constructing and later maintaining the stadium, access roads, parking lots, and so on.

The opportunity costs, the foregone investments that could have been made with the scarce resources, is difficult, if at all calculable. However, all that is seen to my viking friends are the kiosks, parking lots, vending machines, jammed restaurants, cheerleaders, commentators and a manifold of other pomp and circumstance. The other productive possibilities (including long-term savings in stocks, bonds, etc.) were erroneously outside their tunnel vision.

“The boost to the local economy is worth the investment,” those are the words the proponents reiterated throughout the night. In some ways, the stadium can be seen as a money pit, as the industry and marketplace fall into the leisure category. While I am not arguing against lifestyles filled with any and all types of leisure activities, proponents of stadium construction fail to see that activities currently and historically carried out within their labyrinthian (sic) halls are not wealth generators for anyone outside the political classes, players and owners of franchises. In fact, a passage in an article from Frank Shostak stuck out as being a facsimile to this point:

For instance, if a government embarks on the building of a pyramid, which adds absolutely nothing to the well-being of individuals, the GDP framework will regard this as economic growth. In reality, however, the building of the pyramid will divert real funding from wealth-generating activities, thereby stifling the production of wealth.

Again, I’m all for living a life filled with leisure, however, empirically speaking, stadiums are similar to aircraft carriers and tanks in that their marginal utility for activities outside of war or amusement is nil (Cowboy Stadium does not double as a pasture for bovine or sheep during the week nor do they grow turnips on the sideline or use locker rooms as horse stalls). If a stadium truly stimulated the growth of an economy to the marked degree at which proponents claim it does, why not build hundreds all over the place, just like pyramids of the past?

Because these stadiums are funded by-in-large from taxpayers (directly) and the State (who receives its funding from taxpayers) and because the investment for the construction of a stadium is done by scoffing at the opportunity costs of What Is Unseen, it is a two-fold strike to rational economic thought and should not be indulged or pursued.