The Washington Football Team’s adoption of the “Commanders” as its new name didn’t surprise anyone. Nor should it be shocking to learn that the team, now fully owned by the Snyder family, will soon have command of taxpayer dollars.
Proving that bipartisan ideas can be just as bad as those cooked up by a single party, legislation just passed in both the Virginia House and Senate to create a “Virginia Football Stadium Authority” — a government entity that would fund construction of a new stadium and entertainment complex (probably with an attached casino). In response, politicians in D.C. and Maryland have stepped up their own stadium subsidy efforts. But there’s a way to avoid this meaningless and wasteful competition.
Here’s what most people don’t understand about Virginia’s multibillion-dollar proposal:
At this point, it looks like nearly all taxes — sales, corporate income and personal income — collected at the stadium and entertainment complex will go to the stadium authority, not Richmond. The stadium authority then funnels the tax revenue back to the team, meaning the legislation creates a miniature tax haven for the team owners. In other words, the state taxes that the Snyder family pays will effectively boomerang right back into their own pockets, along with any taxes that football fans and the facility’s workers pay.
Some state legislators say this arrangement helps ensure that the stadium wouldn’t be funded by tax dollars. That’s false. It means that other Virginia residents and businesses will have to compensate for the fact that the Commanders will pay almost nothing at all.
Thankfully, three leading sports economists — J.C. Bradbury, Dennis Coates and Brad Humphreys — just threw a penalty flag. Their recent research summarizes more than 120 academic studies from the past 30 years regarding the effects of stadium subsidies. Here’s the “too long, didn’t read” version: “The large subsidies commonly devoted to constructing professional sports venues are not justified as worthwhile public investments.”
That confirms the results of a University of Chicago survey of some of the nation’s leading economists, including seven Nobel Laureates. The consensus was that subsidies cost communities more than they deliver in economic benefits. Only 4% disagreed.
That makes sense when you realize that an NFL team’s average annual home attendance is equivalent to the annual customer count at a small (and probably unsubsidized) grocery store. As D.C. Council Chair Phil Mendelson recently said: “I don’t want us to pay for a football stadium that is used less than 10 times a year.”
So if the subsidies aren’t worth the cost, why do politicians rush to offer handouts whenever a team (or corporation) wants to build a megaproject?
It’s not because subsidies change most companies’ decisions over where to locate. Surprisingly, in most cases, they don’t. Nor do corporate handouts cause net increases in tax revenue, economic growth or local quality of life. But the subsidy does allow politicians to claim credit for the jobs the subsidized business creates, or for any high-profile economic activity associated with the project. Lost in the glare of the spotlights, though, is the slower overall job growth and reduced economic activity caused by the higher taxes needed to fund the subsidy.
It’s fair to acknowledge that some policymakers are only reluctant supporters who fear backlash for not at least making a show of competing for the team. That means the Snyder family’s trump card is playing Virginia against Maryland and the District. So far, it’s working, because Virginia’s legislation has motivated renewed attention from D.C. Mayor Muriel Bowser and Maryland legislators.
It’s easier for retired politicians. Former Virginia and Maryland Governors Doug Wilder and Parris Glendening have both spoken out against using public money for the stadium, and 77% of taxpayers agree.
There’s a cooperative solution to this competitive dysfunction. Forward-thinkers, including Virginia Delegate Michael Webert and Maryland Delegate David Moon, have in the past proposed a three-way interstate compact that would deflate the team’s ability to play the taxpayers’ representatives in the DMV against one another. It’s worth revisiting, especially in light of comments from Mendelsohn and others.
Every business would love to have the government give back the taxes it pays — along with those paid by its employees and customers —to build and maintain a state-of-the-art headquarters. But that’s a privilege apparently reserved for the Snyder Family Football Team. Not even Amazon got this sweet of a deal.
Maybe a better team name would be the Washington Tax Demanders.
• Michael D. Farren is a senior research fellow with the Mercatus Center at George Mason University in Arlington. John Mozena is president of the Center for Economic Accountability.