With the state and federal governments looking for ways to jump-start the economy, a New Jersey businessman has an ambitious public works project he says will create more than 5,500 jobs and provide $500 million or more to local contractors.
The businessman is Zygi Wilf, principal owner of the Minnesota Vikings.
The project: A $954 million, state-of-the-art stadium for his football team in downtown Minneapolis -- to be constructed using more than $635 million in public money.
"Why not? The Vikings are a public asset," said Lester Bagley, the Vikings' vice president in charge of stadium development. "This is going to create an economic boost."
Story here. Frederic Bastiat (and others) would disagree. Besides, the Vikings are not a public asset. They are a privately-held franchise, an entertainment business, that generates profits for its owners.
Moreover, shoveling $635 million for a stadium in which a private team plays would do no more to create jobs than shoveling $635 for some other private project. $635 million in public money has to come from somewhere: taxes. And that means $635 million less for private transactions. And when tens of thousands of Minnesotans spend money to watch the Vikings, that's tens of thousands of Minnesotans that are not spending their money at theaters, retail shops, etc. At best, the stadium is a wash.
And to the extent that most of the players make their permanent homes outside the state, a stadium project could generate a negative economic impact because the primary resource owners associated with sports teams (i.e. the players) live and spend their incomes elsewhere.
Thankfully, according to the article, the proposal is falling on deaf ears because of the weak economy. But even without the weak economy, the stadium is not likely to create economic activity for the reasons stated above. At best, it redistributes economic activity.
Update: the idea that the Vikings are a public asset is ludicrous. Yes, there may be an essence of "publicness" in that there are some things - a spirit of community, for instance - generated by the presence of the Vikings in Minnesota that is impossible for them to capture. But just because something has an essence of publicness is not sufficient to make it a public asset. Moreover, the Vikings are not a public asset for the simple reason that Minnesotans can be excluded from watching the Vikings play. In fact, that is one of the purposes of a stadium (and media blackouts!): to keep people who don't somehow pay from watching a game.
It's well-document in the economics literature that sports and stadium construction are not vehicles of job and income generation, regardless of what the a-priori economic impact studies say. But it is documented that new stadiums generate benefits reaped by sports team owners. That's the impetus of all these requests for public money.
Public money is warranted to the extent that the Vikings create external benefits. But keep in mind that other uses of public money also create external benefits. Is the opportunity cost of using public funds for a new stadium sufficiently low?