Letters

May 23, 2005

An Open Letter to Governor George Pataki, Mayor Michael Bloomberg, and the New York City Council from 106 Economists* on the Likely Impact of a Taxpayer-Financed Football Stadium in New York City

A vast body of economic research on the impact of sports stadiums suggests that the proposed Jets Stadium on Manhattan’s West Side, now estimated to cost $1.925 billion – more than three times the cost of any other NFL stadium – will not generate significant net economic or fiscal benefits. Most studies find that new sports stadiums do not increase employment or incomes, and sometimes have a modest negative effect on local economies. The reason appears to be that sports stadiums do not increase overall entertainment spending but merely shift it from other entertainment venues to the stadium.

Rather than providing economic revitalization for an underutilized area, the proposed football stadium would occupy four blocks of prime waterfront land along the Hudson River. Three of these blocks are owned by the Metropolitan Transportation Authority (MTA). An appraisal commissioned by the MTA estimates its property alone is worth $923 million. Yet, under political pressure, the MTA has accepted the Jets’ bid of $250 million and turned down a competing bid of over $400 million. The MTA’s below-market sale is a public subsidy of at least $150 million. The MTA itself already receives hundreds of millions of dollars in annual taxpayer subsidies, which makes it an even more inappropriate vehicle for funneling subsidies to millionaire Jets stakeholders.

In addition, the State and City each plan on providing direct subsidies of $300 million. Payments in lieu of real property taxes and sales taxes on construction materials that are normally collected by the City and State will be used to service an additional $450 million of tax-exempt bonds for the stadium. The stadium will also be exempt from mortgage recording taxes. Lastly, the City and the State will pay for improvements: $30 million for a pedestrian tunnel connecting the stadium to the Jacob K. Javits Convention Center and $66 million for a lobby, game porch, and other spaces physically connected to and servicing the stadium.

These massive subsidies are both unnecessary for economic development and very inappropriate given that New York City and State already place heavy tax burdens upon their citizens. Economically speaking, these subsidies, along with the additional tax burdens and/or opportunity costs they would place upon taxpayers, are unwise.

Sincerely,

Donald L. Alexander Western Michigan University	Charles W. Baird California State University - East Bay
Doug Bandow American Legislative Exchange Council	John H. Beck Gonzaga University
James T. Bennett George Mason University	John E. Berthoud George Washington University
Elizabeth C. Bogan Princeton University	Michele Boldrin University of Minnesota
Samuel Bostaph University of Dallas	Donald J. Boudreaux George Mason University
Scott Bradford Brigham Young University	Wayne Brough FreedomWorks
David P. Brown University of Wisconsin - Madison	John Bryant Rice University
Steven Call Metropolitan State College of Denver	John S. Chipman University of Minnesota
Barry R. Chiswick University of Illinois - Chicago	Gregory Chow Princeton University
Lawrence R. Cima John Carroll University	Dennis Coates University of Maryland - Baltimore
R. Morris Coats Nicholls State University	John P. Cochran Metropolitan State College of Denver
Lloyd Cohen George Mason University	Susan Dadres Southern Methodist University
Donald R. Davis Columbia University	Gregory J. Delemeester Marietta College
Jeffrey Dorfman University of Georgia	Dennis Ellis The University of Michigan - Flint
Bert Ely Ely & Company, Inc.	Paul Evans The Ohio State University
Arthur A. Fleisher III Metropolitan State College of Denver	Fred Foldvary Santa Clara University
Micah Frankel California State University - East Bay	Kenneth R. French Dartmouth College
Dave Garthoff The University of Akron	David E.R. Gay University of Arkansas
Otis W. Gilley Louisiana Tech University	Peter Gordon University of Southern California
Richard L. Gordon Pennsylvania State University	Kenneth V. Greene Binghamton University
James Gwartney Florida State University	David D. Haddock Northwestern University
Dennis Halcoussis California State University - Northridge	David R. Henderson Hoover Institution
Robert Stanley Herren North Dakota State University	Bill Huneke Professional Economist Member, American Economic Association
Steven J. Jordan Virginia Polytechnic Institute and State University	Raymond J. Keating Small Business & Entrepreneurship Council
William Kern Western Michigan University	Daniel Klein George Mason University
Richard N. Langlois The University of Connecticut	Robert A. Lawson Capital University
Stan Liebowitz University of Texas - Dallas	Yuri N. Maltsev Carthage College
Deryl W. Martin Tennessee Technological University	John Merrifield The University of Texas at San Antonio
Harry Messenheimer Rio Grande Foundation	Matt Metzgar Mount Union College
Roy Miller Fire Privatization Consultants	Tracy Miller Grove City College
James Mintert Kansas State University	Jeffrey Miron Harvard University
Dan Mitchell The Heritage Foundation	John C. Moorhouse Wake Forest University
Michael C. Munger Duke University	Richard F. Muth Emory University
Lee E. Ohanian University of California - Los Angeles	David J. O'Hara Metropolitan State University
James B. O'Neill University of Delaware	Alexandre Padilla Metropolitan State College of Denver
Judd W. Patton Bellevue University	Mattias Polborn University of Illinois at Urbana - Champaign
Joe Pomykala Towson University	Barry Poulson University of Colorado
W. Robert Reed University of Oklahoma	Timothy Roth University of Texas - El Paso
Charles K. Rowley George Mason University	Mark Rush University of Florida
Michael Saliba Loyola University - New Orleans	Raymond D. Sauer Clemson University
Roger A. Sedjo Resources for the Future	Carlos Seiglie Rutgers University
John Semmens Laissez Faire Institute	Rich Shields The Keller Graduate School of Management
Stephen Shmanske California State University - East Bay	William F. Shughart II The University of Mississippi
Neil T. Skaggs Illinois State University	James F. Smith University of North Carolina
Vernon L. Smith George Mason University 2002 Nobel Laureate in Economics	Stan Spurlock Mississippi State University
Mark Steckbeck Hillsdale College	Frank Stephenson Berry College
Courtenay C. Stone Ball State University	René M. Stulz The Ohio State University
Leo Troy Rutgers University	John T. Warner Clemson University
John T. Wenders University of Idaho	Robert Whaples Wake Forest University
James B. Whisker West Virginia University	John Wicks University of Montana
Larry T. Wimmer Brigham Young University	Wayne Winegarden Marymount University
Gary Wolfram Hillsdale College	Tom Wyrick Southwest Missouri State University
Andrew Zimbalist Smith College	Benjamin Zycher Pacific Research Institute for Public Policy

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