AEI-Brookings Joint Center Policy Matters 04-25


Marion Barry Hits One Out of the Park. Scott Wallsten. September 2004.

Ward 8 residents are celebrating Marion Barry’s recent primary victory and certain ascension to the Washington, DC city council.  They’re not the only ones who should be happy.  All DC businesses and citizens interested in Washington’s economic future might consider joining the party.

Mr. Barry made a lot of mistakes, to say the least, in his earlier tenure in government.  It’s taken a long time for the city to dig itself out of the holes he dug.  But Barry, along with his fellow councilmembers-elect Kwame Brown and Vincent Gray, are poised to give the city a huge gift: blocking Mayor Williams’s ill-conceived and expensive taxpayer-funded plan to lure major league baseball to the District.

Mayor Williams claims that a taxpayer-subsidized stadium will generate enormous economic benefits for the District.  Politicians around the country use precisely the same sales pitch to convince their constituents to cough up public money to pay for new stadiums.

Unfortunately, those claims are almost always unfounded.

A wealth of research has demonstrated the fallacy of the stadium fetish: stadiums rarely increase tax revenues, revitalize neighborhoods, or generate economic growth. Unfortunately, politicians prefer to ignore that research and focus instead on a few success stories and so-called “studies” done by consultants who have an interest in seeing the stadium built.

A large department store would probably generate more economic benefits to the city than a stadium, but nobody seriously considers giving Macy’s a $300 million subsidy to come here.

The mayor and other stadium supporters make two major mistakes in examining the costs and benefits of the stadium proposal.

First, they count all economic activity associated with the stadium as a benefit.  But much of that activity is simply transferred from one part of the city to another, making the net benefit of the stadium much smaller.  The transfer element may be less for DC than elsewhere because the city would benefit from people who go to a ball game rather than to a movie in Arlington.  Still, the point remains: not all spending at the stadium will represent new economic activity.

Second, they claim that spending on the stadium won’t take funds from other city priorities since the necessary tax revenues would come from an extra levy on businesses.  This is a preposterous and illogical claim.  If additional tax revenues can be extracted from businesses with no adverse effects, then those taxes could be raised to fund any number of other priorities in DC, like school repairs or the Anacostia waterfront initiative.

Some will object to this criticism and point to the MCI Center and the economic renaissance of DC’s downtown as proof that the stadium would benefit the city.  The MCI Center, though, is different.  One difference is that it is much smaller than a workable baseball stadium and could be integrated into downtown.  But most importantly, Abe Pollin financed it almost entirely on his own at least in part because he thought it would be a good investment.

Though anecdotes of success or failure should never be used for making policy, go take a walk around RFK stadium.  RFK, much-hyped when built in the 1960s, has done nothing for that neighborhood.  On the heels of that failure, why does Mayor Williams think that DC stadium version 2.0 will do any better?

And if neighborhood revitalization is one goal, even the DC Sports and Entertainment Commission’s contracted study suggests that rehabilitation is happening anyway.  The study expresses concern that all the proposed sites are in transitioning areas and that “development can and will occur on and around each of these locations.”  Stadium space may not be available for long, it warns.  But if these areas are already transitioning, then they don’t need a stadium to promote change.

District residents aren’t stupid.  A survey conducted in August found that 70 percent of DC citizens opposed public funding for a stadium.  But that hasn’t stopped city officials from trying to trying to pull the wool over our eyes.

The DC Sports and Entertainment Commission, whose power and budget would grow if it has a new stadium to manage and therefore has an interest in promoting the idea, sponsored a ludicrous survey in response.  The Commission’s survey found that 82 percent of baseball fans in DC, Northern Virginia, and Maryland support a team in Washington rather than in Loudoun county.  Talk about stacking the deck.  And maybe this survey shows that Virginia and Maryland baseball fans aren’t stupid either: they’d love to have baseball in the area, but only if District residents foot the bill.

The bottom line is that a publicly-financed stadium will be a boon to Major League Baseball—that corporation will be thrilled with a transfer of wealth from poor DC residents to superrich owners and players.  Construction companies and others who get contracts related to the project will also benefit.  The average DC citizen will be the clear loser.

Marion Barry knows this.  So do Kwame Brown, Vincent Gray, and almost three-quarters of DC residents.  Mayor Williams better learn it soon, too, or despite all the good he’s done for the city, he’ll end up as just another citizen who has to cough up 120 bucks for a pair of tickets to see his team play a game in the stadium his tax dollars built. 

See related analysis of stadium financing.

Scott Wallsten is a fellow at the AEI-Brookings Joint Center for Regulatory Studies and a resident scholar at the American Enterprise Institute.