October 1, 1999
Submitted by: Richard Rider
Hard-pressed American taxpayers who want to abolish stadium subsidies for well-heeled sports teams may find an instrument to aid them in an unlikely place — the North American Free Trade Agreement ( NAFTA ) and an ally, CANADA. NAFTA creates a continental market and prohibits offering premiums in one part of the market at the expense of another part of the market. Canadians are upset that U.S. cities can lure away their hockey teams with giveaways like publicly-funded stadiums and special tax breaks, which teams in their country rarely get. Also, Canadian team owners pay much higher tax rates than American businesses in general.
Whether Canadian sports associations will sue the U.S. over the stadium issue is uncertain — since they would most likely favor getting the same kind of subsidies from their own government. Nevertheless, stadium subsidies have become a hot political topic here, with an overwhelming majority of taxpayers opposed to the give-aways.
A report from the Congressional Research Service that found "almost all stadium spending is spending that would have been made on other activities in the U.S., which means that benefits to the nation as a whole are nil while supporters of stadium subsidies claim that sports teams create jobs, study after economic study has found that the impact is not great — and may even be harmful. Basics such as good schools and roads are much more likely to attract companies to locate in one city over another.
(Portions are from a report by John Berlau, "Stadium Subsidies Striking Out," Investor's that appeared in Business Daily August 23, 1999.)
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