‘Boondoggle’: Economist warns Utah against $2B stadium spending plan

The Utah Legislature has passed a pair of bills that would gives billions in tax dollars to build an MLB stadium and NHL arena in Salt Lake City.

Legislation to commit nearly $2 billion in public funding to build a National Hockey League arena and Major League Baseball stadium in Utah’s capital city are headed to Gov. Spencer Cox’s desk for signature.

Lawmakers gave final passage to HB562, or the Utah Fairpark Area Investment and Restoration District, Wednesday evening, which would commit nearly $1 billion in public financing to build a Major League Baseball stadium in hopes the league might expand in Utah in the next few years.

And Friday morning — on the last day of the legislative session — the Senate gave final approval to SB272, allowing Salt Lake City to create a 10-block revitalization area and raise the citywide sales tax by 0.5 percentage points. The tax revenues, also about $1 billion, would go toward developing the area around the Delta Center hoping to lure 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 McCay, R-Riverton, the sponsor of the legislation. “I’m hopeful that the resolution that we passed [supporting hockey] along with this will be enough to convince [the NHL] we’re committed to not only the National Hockey League, but we’re committed to our NBA team being successful. But not will they be successful, they’ll be successful in our urban core.”

Assuming Gov. Spencer Cox signs the two bills, it would make Utah the latest state to join the nationwide trend toward pumping public financing into professional sports franchises, with billions of taxpayer dollars pouring into new stadiums and the surrounding entertainment districts nationwide.

But J.C. Bradbury, an economist and leading researcher on the impacts of publicly financed sports arenas has a warning: They are “boondoggles,” a terrible use of taxpayer money and don’t deliver the promised economic benefits.

“Sports stadiums are poor public investments, and this is something economists have demonstrated with decades full of research. And we understand why. It’s basically just a reallocation of local commerce,” said Bradbury, a professor at Kennesaw State University in Georgia. “I know someone is whispering in your ear saying, ‘No, this one is going to be different.’ … It’s not. Trust me, it’s not.”

‘A thriving state needs a thriving downtown’

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

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

“This is a great day for all Utahns and we look forward to continued collaboration toward our goal of creating an unrivaled experience in downtown Salt Lake City,” they said.

Wednesday afternoon, Smith — who has also petitioned for an NHL franchise — was making the rounds at the Capitol, along with Mendenhall, Wilson, a fleet of lobbyists and a security detail trying to close the deal.

(Trent Nelson | The Salt Lake Tribune) Steve Starks and others look on as legislators in the Senate Chamber vote to fund a new baseball stadium and the surrounding entertainment district, at the Utah Capitol in Salt Lake City on Wednesday, Feb. 28, 2024.

The state’s $900 million in financing for the baseball stadium is contingent on landing a franchise. Gail Miller and the Larry H. Miller Company have been pursuing an MLB expansion team — which is likely a few years away. The Miller’s would pay for the other half of the stadium construction and lease it from the state. The state portion would be paid for using the sales tax collected within the district, although sponsors concede other revenue may be needed.

Whether or not a team comes, the growth in property taxes and several other taxes within the 200-acre district along North Temple would be used to subsidize the infrastructure in the area as well as hotels, bars, restaurants and other amenities that owners and lawmakers envision.

Sen. Lincoln Fillmore, R-South Jordan, the Senate sponsor of the MLB bill, said the state already projected that there would need to be $500 million in improvements to state facilities in the area targeted for the ballpark. The Millers have projected $3.5 billion in private improvements.

“[They said] we will see your $500 million and we will raise you $3 billion — and that is independent of whether the state is awarded a baseball franchise,” he said. “This is a generational opportunity and if we pass on this opportunity it will never come again as long as any of us who are voting on this bill are alive.”

Steve Starks from the Larry H. Miller Company said surveys show broad support for a baseball team with a projected attendance of 27,000 a game in the opening season.

In the case of the hockey district, the subsidies would kick in once the Salt Lake City Council approves the boundaries for the 10-block district and increasing the sales tax. Rep. Val Peterson, R-Orem, said he expects that will include Abravanel Hall, where the Utah Symphony performs, and the Salt Palace Convention Center.

This practice of pumping hundreds of millions of dollars into privately held multi-billion sports franchises has become the norm — with rare exceptions, like the Los Angeles Rams owner privately financing a new $5 billion stadium.

Between 2000 and 2023, according to Bradbury’s research, governments in the United States and Canada have invested more than $19.3 billion into sports stadiums, and teams are lining up for more.

Examples from recent news reports include:

• Last December, Wisconsin Gov. Tony Evers signed a bill to put $500 million in state, county and municipal funds toward renovations of the Milwaukee Brewers stadium;

• St. Petersburg, Florida, is proposing to commit $1.6 billion in financing, tax breaks and land for a new baseball stadium for the Rays when the team’s contract in Tampa Bay expires.

• The Jacksonville Jaguars are looking for $1 billion in public help to build a new stadium. Polling last fall showed voters were split on whether they supported the project.

• Taxpayers will foot half the bill for the Buffalo Bills new stadium, which is expected to be finished in 2026. Cost overruns have already pushed the total price tag to more than $1.7 billion and it could reach $1.9 billion.

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

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

• Last week, legislation to allocate $2 billion to create a sports entertainment district in Northern Virginia to lure the NBA’s Washington Wizards and NHL’s Washington Capitals to the area stalled, but proponents haven’t abandoned the idea.

• Last June, Nevada lawmakers approved $380 million in public money for a new $1.5 billion baseball stadium in Las Vegas in anticipation of the Oakland A’s move. It will be built near the $2 billion stadium where the NFL’s Las Vegas Raiders play, which was built with $750 million in taxpayer assistance.

• In Chicago, White Sox owner Jerry Reinsdorf is looking for $1 billion in taxpayer help to build a new baseball stadium.

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

• In April, voters in Jackson County, Missouri, will decide whether to increase their sales taxes to generate $1.7 billion for a new six-block development that would include a new Kansas City Royals baseball stadium.

(LHM Company) The Larry H. Miller Company released new renderings for its plans for the Power District development on Salt Lake City’s west side on Feb. 15, 2024. The 100-acre site along North Temple is where the Miller’s proposed Major League Baseball stadium would be built.

‘Luxury palaces’

In Utah’s case — barring a push to gather enough signatures to try to repeal the law — voters won’t have a say in whether their tax dollars go toward building the two stadiums.

Bradbury and his colleagues analyzed some 130 previous studies on the impacts of publicly financed sports stadiums and said the trend has been for governments to pay a smaller percentage of the stadium costs, but the overall amount of these lavish new arenas has spiked.

“These are luxury palaces that are being built that are exclusive and limited to some of the wealthiest people in the city,” Bradbury said. “So why is the government subsidizing this? These could easily be privately funded and we know that because that’s how baseball came into existence.”

Fillmore, who sponsored the MLB bill in the Utah Senate, said the studies he’s seen look narrowly at the economic impacts immediately surrounding the stadium, but he expects baseball — if it comes — will have a much broader economic impact, in addition to the billions of dollars of development pumped into the languishing west side of Salt Lake City.

Resistance to the proposed public financing was relatively scarce.

An initial version of the baseball stadium bill which relied on a hotel tax increase was rewritten amid opposition from the state’s tourism industry and rural lawmakers opposed to taxes flowing to Salt Lake City. That opposition faded when the funding shifted to sales tax.

(Rick Egan | The Salt Lake Tribune) Former Major League great, Dale Murphy, signs a baseball for Sen. Gregg Buxton, R-Roy, in the Senate Chambers, on Tuesday, Jan. 23, 2024.

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

“This bill is a lose-lose for Utah taxpayers, who will face higher taxes and fewer public services as a result,” said AFP-Utah executive director Kevin Greene. “While every Utahn would be excited for new sports teams, the wealthy sports franchises who want new stadiums should foot the bill themselves. If a billion dollars of hardworking families’ money is the price to play ball, Utah shouldn’t play the game at all.”

But both bills passed easily and with bipartisan support.

Bradbury said part of the reason so many governments are eager to get behind subsidies for sports stadiums is that lawmakers are typically older, wealthier males — the target demographic for professional sports. Team owners can bring out retired stars lawmakers watched play — as the Millers have with former Braves star Dale Murphy — to help seal the pitch more easily than they could if they had to convince voters.

Regardless of how they get approved, he said, the result is the same.

“There’s no evidence that stadiums are economic development catalysts and, in fact, they tend to have some very big detriments,” he said, noting that they bring crime and their sporadic use can discourage stable businesses like grocery stores.

“They’re just very bad anchors for economic development,” Bradbury said.