ESPN reports that the New York Yankees have just broken ground on construction of their new stadium, which will be partly financed with $200 million in state and New York City government subsidies, as well as an undetermined quantity of tax exempt bonds.
There is absolutely no justification for this kind of government subsidization of big business. Studies by both liberal and conservative/libertarian economists have uniformly shown that stadium construction provides no net economic benefits to the communities where they are built. See, e.g., this study by leading sports economists Roger Noll and Andrew Zimbalist, published by the liberal Brookings Institution. Professor Zimbalist, by the way, has done work for the Major League Baseball players union, which (like the owners) has an interest in promoting public subsidization of baseball; If even he concludes that stadium subsidies do not create net economic benefits, that is a telling sign.
One could argue that, even if there is no net benefit to New York City as a whole, public subsidies for the new Yankee Stadium are justified because of the benefit to Yankees fans. I too am a big baseball fan, but I do not believe I have the right to government subsidization of my entertainment preferences. I also love science fiction, for example, but that does not justify government subsidies for science fiction writers or the producers of Star Trek and Battlestar Galactica.
In this case, moreover, average Yankees fans are actually likely to be harmed rather than benefited. According to the ESPN report, the new Yankee Stadium will have some 4000 fewer seats than the current one and a higher percentage of luxury boxes. So there will actually be fewer seats affordable to ordinary fans. Middle and lower class Yankees fans are being asked to foot the bill for the public subsidy while at the same time having fewer opportunities to go see games. Definitely a case of adding insult to injury! The stadium subsidy is a straight wealth transfer from New York taxpayers to multimillionaire Yankees owner George Steinbrenner, his wealthy players players, and (to a lesser extent) those few fans who can afford luxury boxes. Of course there may also be some dead-weight losses to society as a whole. To be clear, I am not opposed to George Steinbrenner wanting to build a stadium with more luxury boxes, if he spends his own money on it. But I do oppose government subsidies for this kind of activity.
Some longtime VC readers might suspect that I am only blogging about this issue because I'm a die-hard Boston Red Sox fan and don't exactly have warm feelings for the Yankees. I don't deny disliking the Yankees. But I also opposed 1980s and '90s plans by the Red Sox to build a new Fenway Park also partially financed with public funds. In any event, the possible impurity of my motives in no way undermines the validity of my point!
UPDATE: Some commenters argue that the stadium subsidy is defensible because the public money is being used to pay for new public infrastructure in the area. In reality, as news reports make clear, infrastructure is only part of what the $200 million in public funds will be spent for (see, e.g., here). More to the point, if the infrastructure is only needed because of the construction of the new stadium, using government money to pay for it is no less a subsidy to the Yankees than if the money were used solely on the stadium itself. Subsidization of infrastructure that is purpose-built in order to complement a specific privately owned construction project is no different than subsidization of the project itself, and must be judged by the same standards.