January 9, 2013

Bait And Tackle

When Saint Louis hosted the Major League Baseball All-Star Game in 2009, it was the center of the sports universe. You could watch Mike and Mike in the Morning broadcasting live from downtown or hear Chris Berman during the Home Run Derby yelling his signature “back, back, back . . . gone!” from Busch Stadium. The same was true when the city hosted the Final Four. That is why I understand the desire to use any and all (legal) means to keep attracting major sporting events to Missouri.

I have written a lot about public subsidies that are given to sports teams, especially for sports stadiums. Now the state is looking to go even further and start subsidizing amateur sporting events with a $3 million tax credit. The reasoning behind this is that these large events bring in a lot of tourists who will boost the economy. A new tax credit, it is argued, would make it easier for Missouri to attract these events, such as a Final Four.

However, I do not see how the state can justify this tax credit. According to Victor Matheson, a sports economist from Holy Cross, as quoted in a St. Louis Post-Dispatch article about the proposed tax credit, “the overwhelming majority of independent academic studies of these events have shown that their economic impact appears to be limited.”  Yet, despite this, some in the state believe these events are worth subsidizing. What, in the state’s history of economic development projects, would give you the confidence to believe that this time, the state is making a wise investment?

I am not immune to the emotional arguments based on civic pride or other intangible measures. However, considering that the state issued close to half a billion dollars in economic development tax credits already, the state should not add to that amount. There are better ways to stimulate the state’s economy; another tax credit is not one of those ways.

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