Art Carden  

Dobelli on Stadiums: What are the Alternatives?

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Recently, the Birmingham Business Journal interviewed me and my colleague Darin White (@sports_biz_prof on Twitter) about the case for and the case against government financing for a domed stadium (info here; subscription required).

Over the weekend, I re-read Rolf Dobelli's excellent The Art of Thinking Clearly and was surprised that I'd forgotten this excellent passage from his chapter on "Alternative Blindness":

Let's say your city is planning to build a sports arena on a vacant plot of land. Supporters argue that such an arena would benefit the population much more that (sic--typo) an empty lot--both emotionally and financially. But this comparison is wrong. They should compare the construction of the sports arena with all other ideas that become impossible due to its construction--for example, building a school, a performing arts center, a hospital, or an incinerator. They could also sell the land and invest the proceeds or reduce the city's debt.

This is what I meant when I said city leaders are thinking about the problem incorrectly. If the important question is "how do we get more sports and convention traffic?" then maybe building a domed stadium and convention center is the answer. However, that's not the right question. If we're interested in making Birmingham a nice place to live and branding the city as a forward-thinking, visionary place, then a stadium has to be compared to the alternatives. The spillovers, if they materialize at all, are almost certainly not large enough to justify tens or hundreds of millions of dollars in government spending on a stadium and convention center expansion.

The Edifice Complex is strong, and it is hard to dislodge. The important institutional question, I think, isn't "should cities pour money into bread and circuses?" but "how can we design rules that would prevent them from even considering such things?"

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COMMENTS (11 to date)
Pithlord writes:

I agree with you on the merits, but I find the last sentence chilling. You don't want to win the argument with your fellow citizens: you want to stop them ruling themselves.

This is a general theme on this site on bigger issues than sport stadiums.

Hazel Meade writes:

I wonder to what extent sports fans drive government spending on stadiums. Is it really all just the team owners and developers, or are sports fans voting based on what's going to be good for their team and sports viewing experience.

Daniel Kendrick writes:
I agree with you on the merits, but I find the last sentence chilling. You don't want to win the argument with your fellow citizens: you want to stop them ruling themselves.

This is a general theme on this site on bigger issues than sport stadiums.

He doesn't want to stop his fellow citizens from "ruling themselves" in areas where they have legitimate authority to rule.

He wants to stop them from ruling everyone else, in ways that violate their rights. Even if accept that taxation is legitimate on matters of public necessity, it is certainly a violation of property rights to take your money by force and give it to a stadium builder for no reason other than that some people would like to build a stadium with your money.

Mark writes:

Pithlord says:

You don't want to win the argument with your fellow citizens: you want to stop them ruling themselves.

Is he advocating stopping "we the people" from ruling ourselves, or is he instead simply considering restrictions and limits on what we can accomplish through the political process? And isn't what Art is advocating here nothing more than what the Founders considered when they designed a constitution that placed strict limits on what "we the people" can do through the political process?

The Founders understood that self-interest drives politically connected narrow factions to serve their own interests at the expense of the rest of us. What we have today with exceedingly intrusive government is the problem that leads to the demise of self-governance due to rent-seeking and political infighting, not the solution or crux of self-governance.

Rick Hull writes:

Your link for Edifice Complex didn't work for me. I found this.

We all know how Edifice Rex ends, right?

Tom West writes:

I don't know, maybe politicians overheard the the same conversation I did with a bunch of (I assume) executives talking about pulling out of town because there weren't any decent sports teams.

Success means bending to the whim of those who make big decisions, and I have little trouble believing that those decisions are significantly influenced by the presence of edifices in the surrounding city.

My experience has been that business decisions don't stop being influenced by the personal as they become larger. Indeed, perception of success seems to matter even more.

And it's not even irrational. If your company isn't taken seriously because your head office is in Podunk instead of a city that's important because it has lots of edifices, that's a huge strike against your company.

ThomasH writes:

Granted stadia :) are very visible (usually bad) public investments, but at least should you not point out that they are but ONE example of the failure to do good cost benefit analysis of public policy decisions (that builds in consideration of alternatives). Is it really any different from creating new bureaucratic restrictions on voting or failing to invest in maintenance of infrastructure when borrowing costs fall?

Mark V Anderson writes:

Tom - I just don't buy that as a rationale for spending millions of dollars on stadiums. I have heard it suggested that a lack of sports teams makes it difficult for large firms to recruit employees. But that just means that it should be these large firms that subsidize the stadiums, not the taxpayers. It is those firms that are benefiting, not the general public.

But of course what you are saying is that these large firms are so worth having in the area that it is worth subsidizing them to keep the firms. Basically the same rationale all politicians use for all corporate welfare. What is ironic is that it is often these same politicians that drive many firms out of the city or out of business because they think every possible evil must be regulated out of business or you know those evil capitalists will be exploiting folks. Business is an evil to be hounded, but also something that has to be subsidized.

I don't think business should be either subsidized nor hounded with regulations. IF we just leave business alone, it will arise as needed. The invisible hand actually works if government doesn't keep slapping it down. OF course we might get fewer mega firms that employ oodles of employees and require much government hand holding, but we'll get more small entrepreneurial firms that will survive tough times because they are expected to.

Tom West writes:

I just don't buy that as a rationale for spending millions of dollars on stadiums.

I'm not sure it's true, either, but if the government is going to build infrastructure such as road for the purpose of attracting business, I'm certain a politician could justify various edifices as cultural infrastructure necessary to support and attract upper management.

DougT writes:

In NH we have lots of small firms. We get them by taxing the big firms away--we have the highest State corporate tax rates in the US. It means, among other things, a brain drain, because young people can't find that initial job where they get experience before they launch off on their own.

OTOH, we only have a few mega-monoliths paid for with tax-exempt bonds and taxpayer funds. And we can always go to Boston if we want to see major league baseball or football.

Ricardo writes:

If I have to build a school for your rotten kids, then the least you can do is build me a sports stadium.

Or we could cut both of them. Either way works for me.

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