Three weeks after College of the Holy Cross economist Victor Matheson wrote a widely read op-ed calling the Buffalo Bills‘ $1 billion subsidy deal “one of the worst stadium deals in recent memory,” the Buffalo News, whose editorial board called it “good for all” and “worthy of broad public support,” took notice and called Matheson up for an interview. Matheson answered a bunch of challenges to his “worst deal” assessment: yes, spending $1 billion on a $1.4 billion stadium can be considered worse than spending $500 million on a $500 million stadium; sure, New York taxpayers got a raw deal in part because Buffalo is a small market that the team owners could more viably threaten to leave; agreed, using tax revenue from an upstate casino on an upstate project is justifiable, but there are lots of other upstate things the state could have spent on instead, and a stadium is “probably in the very bottom of benefits to the area.”
Then Matheson was asked about the idea that the NFL generates lots of state income tax money through spending brought in via the league’s TV deals, and ended up giving an excellent rejoinder to the Casino Night Fallacy that any tax money touched by a sports team really belongs to that team:
Basically, the Bills and the governor are saying, “Hey, we should be counting all of that income tax as a gain for the state. And therefore, we should be willing to spend any of the income tax being gained on that stadium.” If we were to apply that to every business, that would basically mean that no one in the state ever contributes to the state; they just contribute money back to building the factory they work in and building the store that they work in.
If we apply that to the state as a whole, goodbye health care, goodbye roads, goodbye education, goodbye sanitation, goodbye transportation, goodbye all of the things that we expect government to provide for us. Because basically, you’re giving a group of extremely wealthy athletes a complete pass saying, “Don’t worry about contributing to the public good, in terms of paying your fair share of the state’s taxes. We’ll just put that back into the stadium that you play in, which thereby will increase revenues for the league and thereby increase your salaries again.”
No other workers get that.
This is an excellent point regarding pretty much all tax breaks: Even if a developer can legitimately argue that “this is tax money that wouldn’t exist without my project,” taking that to its logical extreme would mean that nobody would ever pay taxes for anything, because no taxes would exist if people didn’t.
Matheson is also asked why everyone is making such a big deal over a project that’s only costing a small fraction of the state’s annual $220 billion budget — this has been a prime talking point of Bills stadium boosters, including the News — and while he could legitimately have gone with a similar slippery-slope argument about a billion here, a billion there, he instead makes an important point about the peculiar nature of sports subsidies:
I have colleagues here in my department who study what I would call “important things,” like genocide, like macroeconomics. We’ve got a $20 trillion economy and they don’t go on podcasts. I write something about this and it gets viewed half a million times on The Conversation and on Yahoo Sports, right? This is definitely a sexier topic. And it gets a lot more discussion than we should be thinking about.
The entire spectator sports industry in the entire United States, all put together, is roughly the same size as Johnson & Johnson, a drug company. Right? The NFL is roughly the same size as Sherwin-Williams paint. Right? You guys would not be interviewing me if I was an expert on retail paint stores. It’s just not very exciting. But somehow we talk about this in terms of sports and everyone’s interested.
And this is why this website is about sports subsidy deals and not the broader issue of corporate giveaways in general. There’s another excellent website for that, but you’re reading this and not that because you just care more about sports stadiums than electric car plant subsidies, admit it. (Well, that and maybe because Good Jobs First doesn’t offer art prints.)
Anyway, back in the actual news world, Bills owners Terry and Kim Pegula are looking to sell naming rights to their as-yet-unbuilt stadium, and Front Office Sports estimates they could get $100 million over 10 years, which if anything sounds like a modest goal. The Pegulas will get to keep all the naming-rights proceeds from the publicly built and owned building — because reasons, okay? — so added to the $150 million in refundable grants provided by the NFL and the $1 billion in public money, the $1.4 billion stadium will end up costing the team owners … $150 million, maybe? That’s not the worst publicly funded stadium deal in recent memory, that’s the best! So long as you’re the one collecting the public funds, that is.
As somebody who writes about the medtech industry, I have to object to his characterization of J&J as “a drug company.” They’re the leader in a number of major medical device categories.