If you don't oppose Flames' subsidies, you can't oppose any subsidy
There’s no shortage of sophists who argue that taxpayers should help fund a new hockey arena for the Calgary Flames. They include columnists who assert the “real Calgary” should just rise up and get this done. There are also plenty of people who demand that politicians make this their immediate priority: Entrepreneur Brett Wilson recently recommended city councillors and Flames negotiators be locked in a room until they reach a deal.
Those in favour of taxpayer transfers to professional sports teams ALSO include the three main mayoral candidates. Bill Smith endorsed further negotiations. That implies taxpayer involvement (else why negotiate?). Andre Chabot argued for and against subsidies this past week. At a forum, Chabot remarked that he opposes taxpayer involvement. Yet in a later interview, he claimed the city could “do better” than the one-third share already proposed by the city.
Recall that “one-third” share, the existing council offer which Mayor Naheed Nenshi supports: $185 million in cash and land, with repayment by the Flames over time. One part of the subsidy is found in the lack of interest charged on the initial taxpayer cash. Also, the city would pay $150 million for infrastructure necessary for the Flames arena (costs normally borne by developers, not taxpayers). Free land, no interest and forgiven development costs all count as subsidies.
Subsidy proponents, of course, ignore the substantial, peer-reviewed economic literature on why sending tax dollars to professional sports teams and their stadiums is a poor idea.
The best summary comes from a 2008 study from (then) University of Alberta professor Brad Humphreys and University of Maryland professor Dennis Coates. They found that every credible, peer-reviewed study reaches this conclusion: “Almost no evidence that professional sports franchises and facilities have a measureable [net positive] economic impact on the economy.” As Humphreys and Coates wrote, among economists, there is “exceptional consensus” on this finding.
The reason is that disposable income—money spent on tickets and beer—will not be burnt in the fireplace if a team leaves town. Such consumer cash will instead be spent on other entertainment. That too creates jobs, incomes and tax revenues.
Humphreys and Coates point out subsidies may even have a negative effect: Players with multi-million dollar salaries often live and spend their money outside of the cities where they play; that drains money away from the local economy where politicians offered up taxpayer cash.
This exceptional consensus is why subsidy proponents often resort to other appeals: civic pride; ostensible revitalization of a neighbourhood—nonsense because building a park akin to New York’s Central Park will increase nearby property values, whereas more stadium concrete will have the opposite effect over time; or reminders that some team owners are philanthropists.
On the latter, the charitable activities of individual Flames’ owners are legendary. Still, such laudable generosity does not impose a duty on politicians and taxpayers to subsidize for-profit sports teams, ever.
One last problem: Beyond the lousy economics of government giveaways to teams, subsidy proponents might wish to ponder their own credibility applied to any future critiques of government spending. If one does not oppose subsidies for companies with average payrolls in the million-dollar-plus category, one cannot credibly oppose any other taxpayer transfers where the beneficiaries, on average, earn much less.
A few examples: Corporate welfare for aerospace and automotive companies; taxpayer top-ups for government employees where pay, pensions and perks are already above comparable private sector positions; or the de facto subsidies for Quebec’s entitlement state built into the federal equalization program.
The economic and taxpayer arguments against such misdirected government spending are all strong; but so too the case against subsidies for professional sports.
The problem for proponents of taxpayer assistance to the Calgary Flames is that they cannot support that lolly, and then later, oppose subsidies to companies where payrolls on average are much less. Such later opposition would be demonstrably duplicitous.