No

by Keith Hamburger

Created on: April 10, 2008   Last Updated: January 06, 2009

In a rare admission by a professional sports franchise the NBA's Seattle SuperSonics has admitted that having a professional sports team has no impact on the economy.

According to the January 18, 2008 edition of the Seattle Times, in response to a filing of a lawsuit concerning the team's lease at the KeyArena the team stated, "The financial issue is simple, and the city's analysts agree, there will be no net economic loss if the Sonics leave Seattle. 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,"

Of course this is a completely different answer than the team was giving just months before when trying to get the City of Seattle and the State of Washington to come up with $500 million to build a new stadium. And they certainly aren't telling Oklahoma City that relocation will have no economic impact. When lobbying for subsidies to build the new stadium the Sonics were claiming that the impact of professional sports on the local economy was far greater than the subsidies they were seeking.

But, the team is absolutely correct in their current assertions.

Sports franchises are big business. They are an entertainment business that competes with any number of other things that consumers might spend their money on; movies, concerts, nightclubs and much, much more. By subsidizing these businesses with stadiums or tax concessions governments are favoring one form of entertainment business over another.

Showing favoritism of one business over another is an improper role for government in a free society.

With regards to business, government's role is to ensure an equal playing field for all competitors. By subsidizing one business instead of another governments violate their primary responsibility in regards to business competition. If governments subsidize sports franchises should that not mean that they should subsidize movie theaters, too? After all, people attending sporting events are spending money they might otherwise spend going out to see a movie, or innumerable other options. Where is the line drawn?

Certainly the argument made by team owners that numerous businesses in the vicinity of a stadium would benefit is accurate. Restaurants, bars and shops in the neighborhood of a new sports facility would reap enormous advantage. But advantage over what? Will there suddenly be more dollars available to be spent on leisure activities because a stadium or ballpark is built?

No. There are no more dollars; those dollars just come from elsewhere.

The person who goes to a restaurant before a game will have less money to spend at the restaurant after buying expensive tickets. And, his choice to visit a restaurant near the stadium means he is less likely to visit a restaurant a few miles away. What justification can local or state government give to favor one restaurant over another simply because of their proximity to a sporting facility?

Government financing of sports businesses is granting an unfair advantage to one business over all of their competitors. The Sonics are right in that such subsidies can never serve to generate more spending on entertainment but simply redirect the discretionary spending of consumers. Such favoritism is never a proper function of government.

Learn more about this author, Keith Hamburger.
Click here to send this author comments or questions.