Originally published at the Mises Institute.
It’s probably inevitable that landing the #1 pick in the NBA draft, like the San Antonio Spurs did this spring, while playing in a 20-year-old building, would spawn chatter about a new arena. As usual, the preeminent concern is tapping the taxpayer to foot part of the bill. And as usual, that should be a no-go.
The first reason is obvious: professional sports teams are not owned by poor people. These folks didn’t become wealthy without a few, and then many, financial backers expressing confidence in their ideas for goods and services by providing the necessary capital.
If that network, steeled by market competition, doesn’t think a venue is worth it, why should taxpayers be compelled to pick up the tab? If new-arena forces think it’s cheaper to pay for a marketing campaign, and fill politicians’ campaign coffers to get them onboard, citizens should beware.
One routine selling point is the promise of “economic development.” East-siders here are wise to that now since it did not materialize. It’s a shame that fans are ever sold that snake oil.
Entertainment is a consumer good. Consumption does not spur growth or “development,” much less represent it. It is literally the opposite. That goes double for seasonal sporting events.
Real economic growth springs from production. This could be a factory, or a software engineering firm that grows or relocates, and brings with it steady, well-paying jobs. Doctors’ offices, restaurants, cleaners, etc. will follow. Despite this organic community benefit, some in the establishment might be susceptible to leveraging a new arena as a cash cow to fund social programs.
For one, government is rarely an effective, much less efficient way to allocate resources to provide a good or service. With no competition or threat of going out of business, and a coerced source of financing, it has no incentive to do a good job. Plus, programs often discriminate against some of their tax-paying benefactors by declaring them ineligible to tap these services.
Moreover, what’s to stop local government from unleashing the eminent domain bulldozer? Adorning your establishment or home with the home team’s paraphernalia might not be enough to avert the gaze of elites being sweet-talked by those who’ll be watching the games from luxury suites.
Shouldn’t our leaders look out for us more than well-heeled pro-sports team owners, developers and their lobbyists?
Alas, when the public balance sheet has been loaded up with billions in sometimes-counterproductive debt (as interests rates rise), citizens have been told “affordable housing” can be achieved if municipally-driven, and more pressure is put on taxpayers with flailing programs, not much confidence is inspired.
Putting a gag order on arena discussions merely adds insult to injury.
