League Regulations and Stadium Subsidies: Part II

by Evan Zepfel

Previously, I determined that league regulations contribute to differences in average subsidy sizes across the three major leagues.  As I hypothesized, NFL regulations that contribute to credible threats to relocate, as well as revenue sharing and salary structures that promote parity increase the size of the average subsidy for NFL stadia relative to those in the NBA and MLB.  However, this model is not useful for predicting the size of the subsidy for any particular stadium; rather, it demonstrates trends across the leagues.

One might suspect that Republicans would be less likely to increase overall public spending by giving large sums of money to professional sports teams to construct stadia.  According to the Republican National Committee, subsidies undermine the free market economy that their party advocates.  However, it is likely that subsidies (in some form) will persist regardless of which party is in control, leaving only the question of how the two parties’ views differ over their preferred allocations.

In this section, I will attempt to determine if the partisan affiliations of local government officials have any effect on the share of the total subsidy that the municipality contributes.  I use the relative share of the subsidy as the dependent variable.  The relative share rather than the total value of the subsidy was utilized in order to control for differences in subsidy sizes.  For example, a stadium that is subsidized 100% and one that is subsidies only 10% can have the same municipality share (if the municipality contributed 50% and 5%, respectively).  This number is calculated by dividing the municipality’s contribution to the stadium by the total value of the public funding.  A distribution of municipal subsidy shares can be found in the chart below.

As is clear from the chart, the most common size of the municipal subsidy share was between 0% and 14% of the total cost of the stadium.  However, the range of subsidy shares spans all the way from 0% to 100%, meaning that some stadia are entirely funded by the municipality.

The model produced the following result:

*p<0.05

I fit this data with a linear model due to the use of a dummy variable.  As is evident, the partisan affiliation of a city’s mayor at the time of a stadium’s construction is a significant factor in predicting the municipality’s share of the overall subsidy.  When Republican mayors are present, the municipality’s share increases by more than 20%. The R^2 value is low, at only 8.2%.

This finding is significant and unexpected, as no particular causal mechanism would lead one to believe that Republican mayors would provide a significantly higher municipal share of the total subsidy than those mayors that affiliate with other parties.  As in part 1, this model is not valuable for predicting the municipal subsidy share for a particular stadium, but rather for recognizing broad trends.

A similar study involving state subsidy shares and Governor partisan affiliation yielded no significant findings.

The stadium complex in Arlington, Texas (NFL’s Cowboy Stadium and MLB’s Ballpark at Arlington) is a relevant example of the influence that Republican mayors can have on the share of municipal subsidies.  Republicans Richard Greene and Dr. Robert Cluck ensured that the Ballpark at Arlington and Cowboys Stadium, respectively, received enough funding from the city of Arlington to ensure that both teams would construct stadia in the Dallas suburb.  These two stadia have transformed Arlington into a major city in the Dallas-Fort Worth metro area.

* All subsidy data was drawn from  Judith Long’s Ph.D Dissertation: Full Count, as well as the Marquette Sports Law Institute (Matthew Mitten).  Franchise value data is from Rodney Fort.