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‘Net-Negative’: DC Beltway Sports Stadium Battle Could Leave Taxpayers With A Massive Bill

The NHL’s Washington Capitals and NBA’s Washington Wizards could be relocating to northern Virginia in just the latest competition among Washington, D.C., Virginia and Maryland to secure professional the capital’s professional sports teams — but, as with such projects across the country, local taxpayers could end up bearing the brunt of the costs.

Virginia Gov. Glenn Youngkin announced a tentative deal Wednesday with the parent company of the teams, Monumental Sports and Entertainment, to facilitate $2 billion in developments in Alexandria, Virginia, including for a new stadium, luring them away from downtown D.C. to the ire of district officials, who also offered a substantial sum. The competition is one of several around the nation’s capital, with the subsidies for large projects like new sports stadiums coming out of local taxpayers’ pockets, even though many will never financially benefit from them, according to experts who spoke to the Daily Caller News Foundation.

“For sports stadiums, local economies never see a positive return on investment because of the gratuitous subsidies,” E.J. Antoni, a research fellow at the Heritage Foundation’s Grover M. Hermann Center for the Federal Budget, told the DCNF. “They are actually a net loss. That’s not to say that some local establishments won’t benefit. Oftentimes, restaurants or other service businesses will do better after a sports arena comes to the area, but that’s the exception and not the rule.”

Monumental Sports, which owns the Caps and Wizards, hasn’t taken up the D.C. government’s competing offer of a $500 million incentive package to keep the teams in the district, which included refurbishments to the current stadium, according to the AP. The teams are currently housed in the Capital One Arena in D.C.’s Chinatown neighborhood, where they moved in 1997 after leaving the nearby Maryland suburbs.

“In the most visionary sports and entertainment development deal in the world, the governor ensured the best interests of Virginia taxpayers were the utmost priority, it was a good deal for the Commonwealth, and that it was accomplished with no upfront investment from Virginia,” Macaulay Porter, a spokeswoman for Youngkin, told the DCNF.

Virginia officials say the new entertainment district created for the teams will generate a total of $12 billion across the Alexandria and Virginia economies over the next few decades, while also creating around 30,000 new jobs. A new Virginia Sports and Entertainment Authority will be created, issuing bonds to cover the $2 billion price tag, excluding a $403 million investment from Monumental Sports and a $106 million investment from the city of Alexandria, with the teams paying off the bonds through rent over the life of the stadium.

“Taxpayers have to pick up the tab not just of the lost tax revenue from the subsidies but also the increased costs associated with stadiums, such as additional wear and tear on the roads or the necessity of upgrading infrastructure,” Antoni told the DCNF. “If you’re wondering why politicians so fervently try to lure sports teams to their cities or states when it’s a losing economic proposition, remember that it’s usually a winning political proposition. A candidate for reelection can brag that he or she ‘brought jobs to the area’ or ‘increased investment’ without specifying that the investment has a net-negative rate of return.”

In early 2022, Virginia lawmakers also pushed a measure seeking to offer the NFL’s Washington Commanders $1 billion in tax incentives to finance a new stadium in the state, luring the team away from its current Maryland stadium, according to the AP. The team’s lease at FedEx Field in Landover, Maryland, its home since 1997, expires in 2027.

Maryland officials have not announced an official offer to keep the Commanders in the state, but Maryland Gov. Wes Moore emphasized this last summer that he was taking an “aggressive” stance toward keeping the Commanders in Maryland, according to The Washington Post. Moore also said he was willing to provide public funds for a new stadium in addition to the $400 million already committed to the development of the area surrounding FedEx Field.

“The main benefit — and one that is impossible to quantify — is simply having a ‘hometown team’ to root for,” Roger Noll, professor of economics emeritus at Stanford University, told the DCNF. “The ‘economic impact’ of a team usually is cited by proponents of facilities for sports teams, but this is simply a measure of the gross amount of business that is connected to the team/facility. If the team disappeared, the amount that locals spend on discretionary items (entertainment, recreation, restaurants and bars) would be reallocated but not increased. And a small fraction of people in attendance at sports events (small single digits) are tourists who generate new local business, and these are more or less offset by locals who travel with the team. A great deal of research has shown that the net effect of a new stadium/arena on such things as local employment, local income, business investment, etc., is essentially zero.”

D.C. Mayor Muriel Bowser has shown interest in luring the Commanders back to the district, utilizing the land of the old Robert F. Kennedy Memorial Stadium, according to DC News Now. Bowser has not yet announced any proposals to the Commanders to entice the move, but has met with team leadership.

The government of D.C. also pledged to pay between $20 million and $22 million for renovations to the home of its Major League Baseball team, the Nationals, in October, after complaints it had a hard time keeping up with the game, according to WJLA News. The district is giving the funds as an obligation to the current lease requiring that D.C. maintain the facility.

“A standard outcome for a government with a population of 500,000 to 1 million is that an arena deal will end up costing its citizens in the range of $10 to $100 per household per year,” Noll told the DCNF. “Each person has to ask whether having a local team is worth this amount to them. The answer is probably a resounding yes for the owner of a bar or restaurant across the street from the facility, but no for grandma who relies on social security to get by and has no interest in sports.”

The D.C. mayor’s office and the office of the governor of Maryland did not respond to a request to comment from the DCNF.

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