(The Center Square) – Taxpayers in St. Petersburg and Tampa are next to see if their dollars put to use for a major sports stadium reap the benefits as promised.
The executive director of the nonprofit group Florida Taxwatch and an economics professor at Temple University say it’s not always the case.
A new stadium in downtown St. Pete for the Rays baseball team will be built with $600 million in public funds, the team announced on Tuesday. Long chided for its Tropicana Field home in St. Pete, the project moves Major League Baseball closer to stable stadium situations for all 30 franchises and the possible expansion to 32 teams.
The public funding will be split evenly between the city of St. Petersburg and Pinellas County. The Rays will cover the remaining $700 million in stadium costs.
The county will fund its portion with taxes charged to tourists who stay in hotel, motels and other short-term rentals while the city plans to raise the money through “bonding of a number of revenue streams,” Mayor Ken Welch said.
Welch called the dollars, “an investment that will pay dividends for the city of St. Petersburg.”
Sports stadiums can be good for local economies, but governments should make sure to be fully transparent with taxpayers before deciding to contribute public funds, Dominic M. Calabro, executive director of the nonprofit group Florida Taxwatch, told The Center Square.
“View it from the lens of stewardship,” he advises local officials. “View it from the lens of your fiduciary duty.”
Temple University economics professor Michael Leeds told The Center Square, “In theory, there is a reasonable justification for it. There are spillovers into the surrounding community, public good aspects to it, the idea that it will benefit people who don’t go to the games or even watch it on TV.”
He said the reality often is that, “The benefits tend to be very small, and tend to be in areas that are not central to the economic growth of the city. There is a very, very limited case to be made that a ballpark contributes significantly.”
However, Leeds added, baseball parks do contribute more economically to cities than other sports arenas such as football stadiums, simply because of the number of games held each year there.
“If you are going to pick any sport that will have an impact, baseball will have the biggest impact,” he said. “It’s still small, but it’s hugely bigger than football. Even in a terrible year, a baseball team will draw two to three times more fans than a football team will in the best of possible worlds.”
To his point, the NFL Tampa Bay Buccaneers drew 620,898 for nine home games in 2022 – 14th best of 32 teams. The Rays, in a six months baseball season with homestands lasting about a week at a time, are 27th of 30 teams this year with more than 1.3 million and a week of home games to go. The Rays drew 1.1 million for 81 dates last year, 28th in the majors.
Even when the team pays all the cost of constructing the stadium – as was true with Yankee Stadium in New York, governments are still socked with costs such as road improvements, said Leeds.
Funding stadiums with hotel/motel room taxes raises the cost of tourism, potentially decreasing demand and therefore lowering overall room revenue for the businesses, Leeds added.
“Out of towners may pay $6 or $7 per night more because of the tax, but the hotel itself takes in $3 or $4 less per night per room overall,” because of fewer guests, Leeds said. “It doesn’t always work out the way people think it does.”
