In July 2023, the Nevada legislature approved and Governor Joe Lombardo signed $380 million in public financing to relocate the Oakland A’s to Las Vegas. John Fisher, the current owner of the A’s, will be the second owner to have public funding for a stadium here. A look at past taxpayer subsidies for sports facilities shows that this spending is misguided.
The Cost of Public Financing for Stadiums
Seven years ago, in October 2016, the Nevada legislature approved $750 million in public funds for the Allegiant Studium, a new home for the Raiders. At the time, this was the largest public contribution to a sports stadium in American history. The plan for repayment was a hotel tax paid by tourists. However, Nevadans are on the hook for far more than $750 million. The actual cost to taxpayers is estimated at $1,354,215,804. As of May 2024, $1,178,161,041 remains as the hotel tax is failing to generate projected revenue. Meanwhile the value of the privately owned Raiders franchise has increased from $1.43B in 2015 to $6.7B in 2024.
Despite the large payoff amount for Allegiant Stadium, Nevadan legislators approved funding for the A’s stadium. Jeremy Aguero, a paid consultant for the A’s, in favor of the move, argued “The difference is that we are different as an economy, which sets us apart.” Sean Golonka, Jacob Solis, and Tabitha Mueller report that “proponents of the bill argue that… Las Vegas is different from other cities that have not seen positive returns from public investments in stadium projects” because of Las Vegas’s tourism-based economy.
Taxpayer Subsidies: A Growing Concern
Yet, the logic that Nevada is “different” flies in the face of consensus of economists. Roger Noll noted that taxpayer subsidies for stadiums have “an extremely small (perhaps even negative) effect on overall economic activity and employment.”
Economists also note that the economic impact of sports stadiums is mainly because consumers are substituting for other entrainment goods, such as concerts or restaurants, or Las Vegas casinos. Consumers might choose to attend a sporting event instead of a more expensive activity in Las Vegas, but one critic of the A’s subsidy states that this may be a loss in tax revenue because consumers could be “spending $200 going to Britney Spears or spending way more than $200 losing the money in the casino.”
The prospective Oakland A’s stadium will be funded like Allegiant Stadium with a hotel tax. This creates two major problems. Firstly, the basic rules of supply and demand dictate that increasing the costs of hotel rooms via government fiat in Las Vegas will reduce the demand for hotel rooms. Secondly, the actual revenue such a measure will raise is unpredictable. In 2020, the global Covid-19 pandemic shattered global tourism. As a result, a surcharge on hotel rooms failed to raise the estimated revenue for Allegiant Stadium. Nevadans will have to pay the staggering $1,117,161,041 via other measures, such as increased taxes or diverted funding from education or public safety. Now, Nevadans are looking at having to pay a modest $380 million appropriated for Oakland A’s stadium.
If history is any guide, it appears the impact of Oakland A’s on the economy will be minimal to even negative, an unneeded burden on Las Vegas taxpayers, and a boon for the owners of the franchise.
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