Sports subsidies: The difference between Austin and Detroit


I wrote an article in Towers about the debate over Major League Soccer in Austin. Among other things, I pointed out that virtually all of the economic literature on sports subsidies says that they’re a bad deal for cities that do not produce any economic stimulus.

I would like to add that I can imagine a scenario in which a sports subsidy benefits a city, but I can’t imagine a case in which it would benefit Austin.

Paying a sports team to come to town might make more sense for a place like Detroit, which is desperate to lure back some of the wealthy and middle-class people who fled to the suburbs over the last 40 years. Leaders there might conclude that a major sports franchise could jump-start an entertainment economy and convince those who have long shunned the city to spend more of their time and money there.

In fact, for what this anecdote is worth, I remember somebody who grew up in the Detroit ‘burbs telling me that “the only thing to do in Detroit is to see a Tigers game.” That may be totally unfair to the Motor City, but my sense is that that is a perception that drives behavior in that metro area and is therefore a problem that the city has to deal with.

Suffice it to say, the situation is completely different in Austin. Our problem is not a lack of wealth or entertainment options. On the contrary, the city’s greatest challenge is that the high cost of living is driving out its poor and working-class population.

Incidentally, Detroit is also vying for an MLS team. It has not proposed subsidizing a new stadium, but rather is offering a soccer team access to an existing taxpayer-funded facility: Ford Field, the home of the Detroit Lions.

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