- The Washington Times - Monday, March 25, 2002

As baseball fans eagerly await the start of another season, political leaders in Washington and Northern Virginia are planning to make this year the last without a team in the Washington area. The immediate future of baseball here still hinges on whether the league decides to shed unprofitable franchises or move them before the 2003 baseball season. Even so, D.C. and Virginia officials are both hoping for the latter and are engaged in a fierce battle over the location of a potential franchise.
Of course, most Washington-area residents would love to see a team move here, but not at a high price to taxpayers. In this day and age, sports teams have grown accustomed to receiving a healthy dose of public money for nearly any stadium project. Out of 16 new major-league ballparks built since 1990, only the San Francisco Giants built their home without public funding. A team owner moving to Washington is likely to expect a great deal of tax money to seal the deal. The Virginia Stadium Baseball Authority already has a proposal on the table for constructing a $360 million stadium in the state. Meanwhile, Mayor Anthony Williams has pledged $200 million in land and financing for stadium construction in the District of Columbia.
Large new public works projects are a tricky proposition in the best of budgetary times, but in light of budget crises in Virginia and the District, this is the worst possible time to approve construction of a sports facility. While engaged in a heated battle to provide a sweeter deal to a relocating baseball franchise, both Virginia and the District have postponed significant tax cuts. The District put on hold an income tax cut designed to make its tax rates more competitive with Maryland and Virginia. The D.C. government's savings from halting the tax reduction will amount to a mere $35 million in 2002, or about one-sixth as much as the mayor has committed to a baseball franchise.
In Virginia, the state faces a revenue shortfall of $3.5 billion in the next two-and-a-half years and phase-out of the car tax is stalled at 70 percent complete. The total revenue increase from maintaining the car tax for two-and-a-half more years is estimated to be $119 million, about one-third the amount that Virginia officials have proposed for stadium spending. In addition, Virginia's governor and legislature have repeatedly tried to increase the sales tax to fund additional transportation and education spending but have been unable to agree on a plan so far. In the words of Delegate Jeannemarie Devolites, "There will not be a single penny left to build the roads and transit we need or to build the classrooms and renovate. If we do not come up with a source of revenue … we will continue to fall behind." Politicians should respect their original promises to taxpayers before spending money on frivolous new projects.
With area officials falling all over themselves to offer subsidies to a relocating baseball team, one might think that they were absolutely essential. In reality, subsidies should not be necessary to bring a team like the Montreal Expos or another struggling franchise to the Washington area. With the eighth-largest media market in the country and a wealthy fan base, the Expos' worth would nearly quadruple from the recent sale price of $120 million to $400 million or more. Politicians in Virginia and the District should require that an ownership group moving a team to the area plow part of that windfall back into a privately financed stadium. Taxpayers should not be forced to foot the bill.
Stadium backers and many politicians argue that building a sports facility is an investment. They believe that economic activity brought about by the stadium will actually have a "multiplier effect" that generates revenues for state and local economies. No research has actually proven that the multiplier effect actually exists. Public finance experts Roger Noll and Andrew Zimbalist conducted the most exhaustive nationwide economic study of stadium construction. In their work, the authors found that "a new sports facility has an extremely small effect on overall economic activity and employment. In fact, no recent facility appears to have earned anything approaching a reasonable return on investment and no recent facility has been self-financing in terms of its impact on net tax revenues."
Studies commissioned by stadium backers that promise economic development and job creation simply fail to account for the opportunity costs (i.e., lost business in the private sector or deferred public projects) of the construction. Local supporters are no different. While glossing over other potential uses for the $360 million in public money dedicated to a Northern Virginia stadium, a study posted on the stadium backers' web site estimated $8.62 billion in economic gain over the stadium's 30-year life. In this same period, the state and local governments are theoretically supposed to reap $693 million in new revenues as well. If the $360 million in seed money came from heaven and not the pockets of taxpayers, at least Washingtonians would not be worse off once the rosy economic projections start to wilt. In the end, this game of bait-and-switch must not swindle taxpayers into an even bigger con game government-subsidized baseball.

Paul J. Gessing is a policy associate with National Taxpayers Union.


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