David R. Henderson  

For the Separation of Stadium and State

GMU's Visionary... The Corruption of Politics...

The title of this post is the same as the title of an article by Jonah Goldberg about the Colin Kaepernick incident. (If you haven't been paying attention to the NFL lately, here's the summary: Kaepernick is a San Francisco 49er who refused, and still refuses, to stand for the U.S. national anthem.)

I had been pondering writing a similar piece myself. And then I saw his title. Darn, I thought, Goldberg has beat me to it.

Except that he didn't.

Goldberg's article is all about his narrow way of keeping politics out of sports: players should stand for the national anthem. Some people would see this as a way of inserting politics into sports.

But how would you keep politics out of sports in a fundamental way? It would be by not forcing people to pay for sports.

You don't have to know a lot about the 49ers or the NFL to know that local governments tax their residents and others heavily to pay for luxurious stadiums.

That means that people who don't like what Kaepernick did are being forced to pay for the very property on which he did it. On the other hand, it also means that people who don't like the flag-waving that goes on at NFL games are also forced to pay for the property on which that occurs.

There's a simple solution here: actually separate sports and state. That is, quit forcing taxpayers to pay for sports.

Now that's a solution that I will salute.

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COMMENTS (6 to date)
AntiSchiff writes:

Dr. Henderson,

I'm glad someone finally made this point. I simply see no reason why government should be involve in helping create infrastructure for sports teams.

David R. Henderson writes:

Thanks. Yes, I thought it was obvious to people who think in principles and so I was surprised that Jonah, who is a principled person, wasn’t making this point.

Doug T writes:

This is a nice "fish-in-a-barrel" kind of shooting. So how would you go about eliminating government financing of sports stadiums? Eliminate the income tax? Good luck with that. "Fair tax" proponents are usually the kind of zealots that I avoid--like folks who sell Amway products.

Eliminate the tax-exemption for interest on municipal bonds? Perhaps less big of a windmill to tilt at, but it's been attempted, usually as part of a comprehensive tax reform effort. The short answer is, if they couldn't kill it in 1986, when it was a bipartisan effort--Democratic Congress, Republican Senate, charismatic President--this crew won't be able to reform individual income taxes.

Chip away at stadium exemption via eliminating all Industrial Revenue Bonds? Now you're talking. But this "down-in-the-weeds" type of reform is usually killed with a thousand cuts. Apart from the folks at Cato and over here, nobody cares. Most folks can't even spell IDR, much less identify how killing the bonds might impact their taxes.

I'm a professional money manager. I don't like sports stadium or convention center bonds--the credit is lousy, and they usually indicate a governance problem in the municipality where they're issued. Yankee Stadium parking bonds defaulted, if anyone wants to know.

But there are plenty of people who will pony up to get the extra yield -- whether or not it is tax-exempt. As long as we have sports leagues, we will have cities that compete to win the franchise location. People like sports. Stadiums provide consumer surplus, even if the economics are lousy (another reason I don't like the bonds). And I'm afraid that politicians reflect their constituents' wishes when they bid for the teams by subsidizing their workplaces.

At least the States where the teams play are taxing Colin and every other team member who stands -- or sits -- in their stadiums. Wait ...

David R. Henderson writes:

@Doug T,
So how would you go about eliminating government financing of sports stadiums?
By, at a minimum, not imposing special taxes to fund them and by not using municipal bonds to fund them. You seem to think that I think it’s easy. I never said it was easy. Most political changes that are worthwhile are not.

Doug T writes:

Part of the reason I think the politics is so hard is because people like their sports teams. And with a mobile society, you have a choice: you can live in a city that pays off its sports team owners (Minneapolis, Los Angeles), or one that doesn't (Cleveland, Portland, Boston).

In addition, you get IDR bonds issued by Intel to build a fab plant in Albuquerque, or by Verizon to build a call-center in Phoenix. The degree of tax-subsidy for those muni bonds vs. corporate issuance amounts to chump change--and changing the tax code to disallow IDRs involves so much economics education that most policy-mavens figure the cost-benefit isn't worth the effort.

But you're right: these kind of special measures are like barnacles on the bottom of the ship-of-state. They make it hard to navigate.

Floccina writes:

Government building stadiums along with offering companies free land and tax free period offers seem to be interference with interstate commerce equivalent to a tariff. The feds should stop this.

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