Utah’s $2 billion investment in NHL and MLB won’t help the economy, economist says

A bill that would channel nearly $2 billion in public funds to build a National Hockey League arena and Major League Baseball stadium in Utah’s capital is headed to Gov. Spencer Cox’s desk for signature.

Lawmakers on Wednesday night introduced HB562 (Utah Fair Park Regional Investment and Restoration District), which would put nearly $1 billion in public funds toward construction of a Major League Baseball stadium in hopes of expanding the league in Utah in the coming years. ) gave final approval.

And on Friday morning, the last day of the legislative session, the Senate gave final approval to SB272, allowing Salt Lake City to create a 10-block revitalization zone and increase the citywide sales tax by 0.5 percentage points. Similarly, about $1 billion in tax revenue will go toward development around Delta Center, aimed at attracting a National Hockey League franchise to the city.

“Every time we’re told we can’t do something, we find a way to do it,” said Sen. Dan McKay (R-Riverton), the bill’s sponsor. “We are hopeful that the resolution we passed will become a reality.” [supporting hockey] If you combine this with this, you will be satisfied [the NHL] We are committed to the success of not only the National Hockey League, but also NBA teams. But they will not be successful, they will be successful in our urban centers. ”

Assuming Gov. Spencer Cox signs the two bills, Utah will become the latest state to join a national trend of injecting public funds into professional sports franchises, funding new stadiums and surrounding entertainment districts across the country. Billions of tax dollars will be poured into it.

But JC Bradbury, an economist and leading expert on the impact of publicly-funded sports arenas, says sports arenas are “rogues” and a terrible use of taxpayers’ money, and that the promised economic benefits are not worth it. It warns that it does not provide.

“Sports stadiums are poor public investments, something economists have demonstrated in decades of exhaustive research. And we can see why. It’s just a redistribution,” said Bradbury, a professor at Kennesaw State University in Georgia. “I know someone is whispering in your ear, ‘No, this isn’t right.’ … It’s not. Trust me, it’s not.”

“A thriving state needs a thriving downtown.”

Both bills received broad bipartisan support, as well as endorsements from Salt Lake City Mayor Erin Mendenhall and Salt Lake County Mayor Jenny Wilson.

“A thriving state requires a thriving downtown in our capital. With today’s passage of the Capital City Reinvestment Zone bill, we are ready to invest deeply in Salt Lake City’s downtown experience.” Utah Jazz owner Ryan Smith, Wilson and Mendenhall said in a statement after the passage of the hockey bill on Friday.

“Today is a great day for all Utahns, and we look forward to continuing to work together toward our goal of creating an unparalleled experience in downtown Salt Lake City,” they said.

On Wednesday afternoon, Mr. Smith, who is petitioning for an NHL franchise, was touring the Capitol with Mr. Mendenhall, Mr. Wilson, a group of lobbyists and security guards, trying to get a deal done.

The state’s $900 million loan for the baseball stadium is contingent on acquiring a franchise. Gail Miller and the Larry H. Miller Company are looking to create an MLB expansion team, but that will likely be several years away. The Millers would pay for the other half of the stadium construction and lease it from the state. The state’s share would be covered by sales taxes collected within the district, but sponsors acknowledge that other revenue may be needed.

Regardless of whether the team comes, increases in property taxes and several other taxes within the 200-acre district along North Temple will be used to fund infrastructure improvements in the area and ownership of hotels, bars, restaurants, and other facilities. The funds will be used to subsidize facilities used by politicians and politicians. please imagine.

Sen. Lincoln Fillmore (R-South Jordan), the Senate sponsor of the MLB bill, said the state already estimates it will need $500 million to improve state facilities in the areas where the ballparks will be built. . The Millers expect $3.5 billion in civilian improvements.

“[They said] We look at your $500 million, we’ll raise you $3 billion – and that has nothing to do with whether the state is awarded a baseball franchise or not,” he said. “This is a generational opportunity, and if we miss it, it will never happen again as long as any of us who are voting for this bill live.”

Steve Starks of the Larry H. Miller Company said the survey shows widespread support for the baseball team, which is expected to draw 27,000 fans per game in its opening season.

In the case of the hockey district, the subsidy would kick in if the Salt Lake City Council approves a 10-block district boundary and sales tax increase. Rep. Val Peterson (R-Orem) said he hopes that will include Abravanel Hall, where the Utah Symphony Orchestra performs, and the Salt Palace Convention Center.

This practice of funneling hundreds of millions of dollars into privately owning multibillion-dollar sports franchises has allowed for rare exceptions, such as the owner of the Los Angeles Rams privately financing a new $5 billion stadium. Except for this, it has become the norm.

Between 2000 and 2023, U.S. and Canadian governments invested more than $19.3 billion in sports stadiums, and teams are lining up for more, according to Bradbury’s research.

Examples of recent news coverage include:

• Last December, Wisconsin Gov. Tony Evers signed a bill committing $500 million in state, county and city funds to renovate the Milwaukee Brewers Stadium.

• St. Petersburg, Florida, is offering $1.6 billion in loans, tax breaks and land to help the Rays build a new stadium when the team’s contract in Tampa Bay expires.

• The Jacksonville Jaguars are seeking $1 billion in public aid to build a new stadium. Polls last fall found voters divided on whether they supported the project.

• Taxpayers will pay half of the construction costs for the Buffalo Bills’ new stadium, scheduled to be completed in 2026. Cost overruns have already pushed the total to more than $1.7 billion and could reach $1.9 billion.

• The public is paying $1.26 billion to build a new $2.1 billion stadium in Nashville for the NFL’s Tennessee Titans.

• Maryland taxpayers are paying $430 million to renovate the Baltimore Ravens’ football stadium.

• Last week, a bill was introduced that would allocate $2 billion to create a sports entertainment district in Northern Virginia to attract the NBA’s Washington Wizards and NHL’s Washington Capitals to the region, but the bill stalled. However, proponents have not abandoned the idea.

• Last June, the Nevada Legislature approved $380 million in public funds to build a new $1.5 billion baseball stadium in Las Vegas in anticipation of the Oakland A’s relocation. The facility will be built near the $2 billion stadium where the NFL’s Las Vegas Raiders play, which was built with $750 million in taxpayer funds.

• In Chicago, White Sox owner Jerry Reinsdorf is seeking $1 billion in tax aid to build a new baseball stadium.

• Last December, Oklahoma voters approved a 1% sales tax increase to pay for a new $900 million arena for the NBA’s Oklahoma City Thunder.

• In April, voters in Jackson County, Missouri, will decide whether to increase sales tax to raise $1.7 billion for six blocks of new development, including the new Kansas City Royals baseball stadium.

“Luxury palace”

In Utah’s case, voters won’t have a say in whether their tax dollars go toward building the two stadiums unless they work to gather enough signatures to repeal the law.

Bradbury and his colleagues analyzed about 130 previous studies on the effects of publicly funded sports stadiums and found that while governments tend to pay for some of the stadium costs, He said the total construction cost is rapidly increasing.

“These are special luxury palaces being built that are exclusive to a wealthy section of the city,” Bradbury said. “So why is the government subsidizing this? We know that because these things are easy to privately fund and that’s how baseball was born. Masu.”

Fillmore, who sponsored the MLB bill in the Utah Senate, said studies he’s seen so far look narrowly at the economic impact around stadiums, but if baseball were to be played, billions of dollars would be generated. In addition, he said he expected it to have a broader economic impact. Development money poured into Salt Lake City’s declining west side.

There was relatively little resistance to the proposed public financing.

The original version of the ballpark bill, which relied on increasing hotel taxes, was rewritten amid opposition from the state’s tourism industry and local lawmakers who opposed the influx of taxes into Salt Lake City. That opposition disappeared when the source of funding shifted to consumption tax.

The main opponent was the Utah chapter of Americans For Prosperity, a conservative group that advocates for smaller government.

“This bill is a loss for Utah taxpayers, who will face higher taxes and fewer public services as a result,” said AFP Utah State Director Kevin Green. “Everyone in Utah would be excited about a new sports team, but wealthy sports franchises who want a new stadium should pay for it themselves. $1 billion of hard-working families’ money to play ball.” If it’s the price, Utah shouldn’t be playing ball.”

But both bills easily passed with bipartisan support.

Bradbury said one reason why so many governments are so keen to get subsidies for sports stadiums is because their MPs tend to be older, wealthy men, the target demographic for professional sports. Stated. The team’s owners can more easily solidify their pitch than convince voters, as the Millers did with former Braves star Dale Murphy, by poaching a retired star player who lawmakers watched play.

Regardless of how it is approved, the outcome is the same, he said.

“There is no evidence that stadiums promote economic development, and in fact they tend to be very harmful,” he said, noting that stadiums bring crime and, when used sporadically, lead to businesses such as grocery stores. He pointed out that stable business could be hindered.

“Those are very bad anchors for economic development,” Bradbury said.