Nashville MLS study ignored cannibalized sales taxes, author says it’s still “modest”

Hey, the Associated Press actually asked some economists whether the $75 million in subsidies for a new MLS stadium that Nashville approved last week could ever pay off via increased sales tax receipts, and it turns out they’re split: The economist who did the city’s study says it will, and everybody else says it won’t.

  • “It doesn’t seem to be the kind of objective appraisal that the city would need to render a believable opinion on why they should spend public money subsidizing the stadium,” said Lake Forest College economist Robert Baade, noting that the city’s study failed to account for “substitution,” where people spending money at at a soccer match will then spend less on other entertainment options that they’re skipping in order to go to a soccer match.
  • University of Colorado economist Geoffrey Propheter says the idea that a sports team increases local area income “has been debunked.”
  • University of Tennessee economist Lawrence Kessler, who co-authored the city’s study, admitted he didn’t try to account for substitution effects but said “we tried to be as modest as possible” in projections. Which, it seems like being as modest as possible would actually involve trying to account for the fact that you’re relying on the Casino Night Principle to make your numbers work, but I’m not paid the big bucks to be an economics professor, so okay.

This seems like it could have gotten a stronger headline than USA Today’s “Cost study for proposed MLS stadium in Nashville questioned” — under the new rules of subjunctive journalism, you’d think it could at least warrant “Proposed MLS stadium could be massive money pit.” (The Tennessean, which ran a longer version of the USA Today article, used the headline “Nashville’s proposed MLS stadium may have hidden costs to city coffers,” which is a lot better.) But then, I’m not paid the big bucks to write headlines, so — hey, wait, I actually am. Props on fact-checking the city’s stadium claims, then, USA Today, but points off for not having the backbone to report what the actual evidence says: Friends don’t let friends count stadium sales tax revenue as new money, because it’s not.


9 comments on “Nashville MLS study ignored cannibalized sales taxes, author says it’s still “modest”

  1. In Niles, Illinois, a large corporation wanted the town to buy an adjacent lot so they could put their branded gas station on it, or they would close the store if refused. It was to be purchased with sale tax diverted from the town revenue.

    The town agreed to this 20 year diversion of tax revenues from its needs to the corporations needs.

    It’s possible that this scam is replicated in sports venue appropriations,also.

        • And here’s the part, Ben, where I ask you for any evidence at all that the substitution effect isn’t real, to counter the innumerable studies that indicate that it is.

          • Neil,

            When a new business is made the residents in a community just magically get more money teleported into their wallets. Didn’t you know?

            I know last time they built a new amusement park i my town 3M gave everyone a raise! Oh wait…

  2. Very simple way to eliminate the substitution effect. Simply ban Nashville residents from patronizing soccer games. Only out-of-towners allowed.

    It works in the Bahamas!

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