Pro Sports
& Subsidies
& Resources
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Concentration & Organization Baseball Basketball  
Concentrated Benefits & Organizational Resources

Political clashes over using government resources to subsidize or otherwise assist the construction and maintenance of new stadiums for professional sports franchises illustrate how concentrated benefits and diffuse costs can favor one group over another. There are typically two main adversaries that are most active in political contests over stadium subsidies: business-based supporters and citizen-based opponents. (Of course, not all businesses support public subsidies and not all citizens oppose such support, as we'll see.)

Business supporters have several obvious advantages, especially financial resources and preexisting organization. But they also enjoy the structural advantage that comes from consisting of a small number of members who share the prospect of considerable financial rewards if the group is successful. This is the advantage we have called concentrated benefits.

In general, citizen-based groups have many fewer financial resources than business groups, and must overcome a structural disadvantage suffered by large groups that seek to win benefits meted out in small amounts among many group members. The benefits that citizens might receive if stadium subsidies are rejected must be shared among literally millions of citizens, providing only minor financial incentive for any individual to get involved in organized opposition. The greatest strength of citizen groups is their determination to fight for their perception of the public good in the form of savings shared by their city, county, or region, or of better alternative uses for resources.

The two groups differ organizationally as well. The core supporters of stadium subsidies include team owners and related groups that may include real estate developers, large banks interested in financing new projects, and large construction companies. These are large, well funded, and hierarchically structured organizations; favorable action on the part of government may produce substantial and unambiguous benefits. By their nature the heads of these organizations are often recognized as leaders in the community, and through their social position have the option of enjoying easy access to the highest levels of state and local government.

Opponents typically include some of the citizens of teams' home towns. Since most of the financial support that sports teams seek must be approved in local elections, voters hold the ultimate authority to approve or deny subsidies to their local sports franchises. But this authority is not wielded very efficiently. Citizens must form new organizations specifically dedicated to addressing whether their cities, counties and states should provide material support to new stadium projects and if so, how much. Whereas businesses enter competition over sports subsidies with at least some degree of organization already existing – for example, with marketers and government relations officers – citizen groups must organize or at least build coalitions from the ground up.

Additionally, the public is often divided over using government resources to help what are in essence private, for-profit corporations. Many sports fans, confronted with the possibility that their teams might move away (as the Houston Oilers did in 1997, and as the owners of the Houston Astros threatened to do in 1999), may be swayed by arguments that major professional sports teams are critical to a city's status and economic well-being. Moreover, some fans will react first and foremost as fans--voting to do whatever it takes to keep "their" team.

Many studies indicate that professional sports franchises have negligible or negative impact on the economic growth of their host cities.* Yet citizens may find it difficult to argue against claims of positive economic impact, especially when these are repeated in well financed media campaigns or by fans whose use of this argument is grounded more in emotional attachment to their teams than in economic analysis. Even clear illustration of economic costs will not sway fans with a nostalgic or emotional tie to their home team. In strictly economic terms, they may be willing to pay the costs and require others who don't share their emotional attachment to pay them, too.

The typical array of interests and resources put in play when sports teams seek public support has tended to work to the advantage of sports teams, despite consistent opposition by some groups of voters. In Texas, some of this may be attributed to the historical advantages of business interests in the political arena, as well as to a culture that has traditionally embraced sports and government efforts to promote business. But the sports franchises have also benefited from the organizational dynamics that make it easier for small groups seeking concentrated benefits to prevail over the efforts of large groups seeking to avoid bearing dispersed costs.

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Footnote: "Are New Stadiums Worth the Cost?" (full footnote)