By Brett Davis, economic analyst
The University of Washington’s quest to receive public funding for renovation of its Husky Stadium has rekindled the debate over taxpayer financing of sports facilities.
The issue has become incendiary in light of the state’s current budget difficulties—a deficit of at least $6 billion—and a poor economy that has caused major Northwest employers such as Boeing, Microsoft, and Starbucks to shed jobs.
There is little doubt the 90-year-old Husky Stadium, a regional landmark where the school’s football team plays, needs repairs. The lower part of the stadium essentially has to be rebuilt for safety and for accessibility to disabled persons.
UW President Mark Emmert says the taxes the university hopes will finance half the cost of the $300 million renovation have nothing to do with the state’s or the university’s budget problems. The current “tourism tax” on rental cars and hotel rooms is being used to pay off Qwest Field and Safeco Field, home to Seattle’s professional football and baseball teams, respectively. Emmert wants that tax extended after those stadiums are paid off—2014 at the earliest—and redirected to Husky Stadium.
Less than Pro Stadiums
The university stresses it’s asking for less money than the Seahawks (football) and Mariners (baseball) did, and that its 50-50 split is a smaller share of public dollars than for those stadiums. Public money made up about 70 percent of Qwest and Safeco Field costs.
On a recent local television news program, Emmert tried to use the faltering economy to the university’s advantage, arguing the project would create about 7,000 jobs.
“We create jobs right now,” Emmert said. “I bet there’s some Boeing workers right now who wouldn’t mind working on Husky Stadium.”
Similarly, the university’s Web site plays up the presumed economic impact of the university’s athletic program in calling for public help to pay for stadium repairs.
According to the Web site, the program supports more than 2,000 jobs in the state economy, of which 500 are direct jobs. In addition, the site argues, the program generates about $12.5 million in taxes annually—about $8.2 million to state government and $4.3 million to local governments. It also results in up to $210.6 million of sales made within the state, creates labor income of approximately $83.4 million, and attracts out-of-state sports fans in larger numbers than those attending Seahawks or Mariners games, according to the Web site.
Opponents Not Impressed
Opponents of taxpayer funding for the stadium’s repairs aren’t buying any of those arguments, saying it would be a poor use of public funds during a budget crisis. The taxes in place for Qwest and Safeco Field should end when those two stadiums are paid off, critics say, and the university should finance the renovation project on its own.
In addition, they note, with the university facing a big budget cut because of a growing state deficit, now is not the time to request stadium funding. Adversaries of public financing point to evidence showing sports teams and facilities are not a source of local economic growth and development.
‘Not Much Back’
Federal Reserve economist Adam Zaretsky contends financing sports facilities brings minimal returns to the public. “The weight of economic evidence ... shows that taxpayers spend a lot of money and ultimately don’t get much back,” he said. “And when this paltry return is compared with other potential uses of the funds, the investment almost always seems unwise.”
Prof. Allen Sanderson of the University of Chicago, who has extensively studied sports facility subsidies, says sports arenas do not stimulate economic growth or generate new public revenues. Sanderson says entertainment dollars are fungible for individuals, meaning money spent on ballgames is money not spent at theaters, department stores, or other places.
Ironically, the SuperSonics—Seattle’s former professional basketball franchise—last year went to court to get out of a lease at Key Arena and agreed sports facilities do not promote economic development.
“The financial issue is simple, and the city’s analysts agree, there will be no net economic loss if the Sonics leave Seattle,” the Sonics said in a brief. “Entertainment dollars not spent on the Sonics will be spent on Seattle’s many other sports and entertainment options. Seattleites will not reduce their entertainment budget simply because the Sonics leave.”
The Sonics’ demands for 60 percent public funding of a new basketball arena did not sit well with the public and politicians. In spite of efforts from other local entities to come up with competing offers for the team and input from the mayor, legislature, and governor, the Sonics moved to Oklahoma City in 2008.
Spent Plenty Already
Taxpayers have already contributed substantially—hundreds of millions of dollars in the past decade-and-a-half—toward sports facilities in Washington, including funding for construction of Qwest Field and Safeco Field, remodeling Key Arena in 1994, retiring the debt on the Kingdome (former home of the Seahawks and Mariners), and freeway access improvements for Qwest Field.
It remains to be seen what the legislature will do during the current session. Last year, the legislature killed state funding for Husky Stadium repairs.