LAST month, Fredericksburg entered into a preliminary agreement to subsidize a new $35 million ballpark for Minor League Baseball’s Potomac Nationals. By approving the letter of intent, the City Council is taking steps toward giving the team $1.05 million annually for the next 30 years.
Add this proposal to a long list of poor decisions by politicians who mistakenly believe stadiums foster economic growth.
For Northern Virginians, the deal is part of a public, multi-decade game of financial Russian roulette. Owner Art Silber first demanded $40 million in public subsidies from Prince William County in the late 1990s, but failed to find other takers when county leaders refused.
Last year, after abruptly cancelling yet another round of negotiations with Prince William County, he pitched the idea to Fairfax, Falls Church, Alexandria and Loudoun County.
By refusing to cave to the Potomac Nationals’ demands, each area dodged an economic bullet.
Here’s why subsidizing professional sports is such a bad idea:
First, a baseball team is not what economists call a “public good”—something normally funded by the government because the marketplace doesn’t meet the public’s need for it. Public safety and national defense are common examples.
Baseball, for all its merits, is entertainment and does not qualify as a public good. They don’t let people into the games for free, and fans “pay” for seemingly free broadcasts with commercial breaks.
Nor do the Potomac Nationals need government handouts to be profitable. Our research on the team’s previous deal with Prince William County found that annual attendance steadily grew during the very same period when ownership claimed the aging stadium was “literally rusting away.”
In fact, the P-Nats climbed into the top 20 percent for attendance among all Class A-Advanced Minor League Baseball teams, outpacing teams in new or renovated stadiums.
And if private banks don’t think a new stadium—which should earn even higher profits—is worth a loan, then it’s definitely not a good public investment either.
Furthermore, Fredericksburg taxpayers should consider the tradeoffs they’ll have to make to subsidize a private ballpark. Every dollar spent on the Potomac Nationals is a dollar that can’t be spent on true public services like parks, roads, and public safety.
For example, instead of subsidizing the project, the city could increase its annual $2.7 million parks and recreation budget by nearly 40 percent. To put this in perspective, $1.05 million could completely pay for the cost of maintenance across Fredericksburg’s 1,168 acres of public parks this year.
Or, it could double the budget for special events like the Christmas Parade and Downtown 31—and still cover admission fees to programs offered by the Dorothy Hart Community Center.
Instead of paying for the privilege of using a ballpark for only half the year—which very few cities actually take advantage of—Fredericksburg could maintain and improve its existing public spaces and community programs year-round. Extra resources could have kept the Soapbox Derby, which was canceled because of a lack of funding, in town.
Adding insult to injury, independent academic research shows that stadium subsidies simply don’t create strong economic development or increase tax revenue, no matter what hired consultants say. Politicians love the publicity that accompanies construction and ribbon-cuttings, but economists overwhelmingly agree that such deals produce no significant financial benefit to the community.
The public knows it’s unwise to give tax dollars to private corporations: 70 percent of Americans oppose taxpayer-funded professional sports facilities. These deals can even destroy a city’s finances, as Pearl, Miss., found out when stadium debt liabilities reduced its credit to junk status.
This isn’t to say that Fredericksburg wouldn’t be a great home for the Potomac Nationals. And it’s perfectly normal to be excited about the idea. But baseball is a business, and just like any other business, it should sink or swim on its own merits.
Michael Farren is a research fellow and Anne Philpot is a research assistant with the Mercatus Center at George Mason University in Arlington.