A Flood of Tax Dollars

Do sports teams benefit cities enough to justify the tax dollars spent on them? Louisiana Governor John Bel Edwards seems to think so as he rolls out a $450 million plan to renovate the Superdome that comes with a 15 year extension for the Saints to stay in New Orleans.

Of course the Saints and officials with the Superdome itself will tell you that these upgrades are needed for the the dome to be competitive. There is always the lingering threat that some other city will build the Saints a new stadium and lure the team away with something nice and shiny.

Roger Noll, a Stanford economist, calls this idea hogwash. With infrequent use, the tax dollars generated by these stadiums will never justify the money spent on them. To Noll, “[a]renas are used more often”.

But it is difficult to take Noll’s words as the gospel in New Orleans. Other stadiums may only be used for 10 games a year. The dome is used year round. Concerts, Mardi Gras balls, monster truck shows, and many other events make use of the Superdome. When the Rolling Stones finally performed in New Orleans, they used the Superdome as their venue. It was a great show.

I also have some questions that I do not feel get answered by economists when discussing these issues. Let’s say the Saints don’t extend the deal with the state because we said that Louisiana’s portion of the plan could be better spent other places (ignoring for a second that the Saints are putting up about a third of the money and the rest is going to come from bonds). If the Saints go away and the season ticket holders are now holding extra money to spend, who is to say that money will be spent here in New Orleans? What if those people decide that they will take an extra trip to Disney World instead. Perhaps they will take a cruise. At least with the Saints here, the locals will spend money to support their beloved team. Without the Saints, money could very well leave the state.

With the Saints picking up $150 million of the cost and $210 million raised via a bond issue, I assume the other $90 million would be provided by the Louisiana itself. This would mean that in order to justify the amount of money raised with bonds the Saints would have to generate $14 million plus bond interest each year for 15 years to pay off the bond. If they are able to generate that amount, then the bond is clearly worth it.

What if the amount of money generated doesn’t equal $14 million plus interest. Is it worth it to see the team go? There are some immeasurable factors that come with having a team in general, let alone one like the Saints. New Orleans has always loved the Saints. Even in the bad years, we supported our team. The rebirth of the City of New Orleans after Hurricane Katrina came hand in hand with the reopening of the Superdome. On a national stage, via the Saints, New Orleans announced “we are back”. It didn’t matter that we won or lost (of course the fact that we beat the Falcons made it that much more sweet). What mattered is that we were not going to give up.

New Orleans has a lot of pressing issues that still need to be resoled. Recent flooding issues being the biggest of them all. Unnamed rain storms flood areas that Katrina never touched. Our pumps are aged and failing. We absolutely need help in getting those fixed. We did get some of that this year from the Louisiana legislative session. We all know that we need more. But what would New Orleans be without the Saints? They kept us afloat during the hard times, it is difficult to justify letting them go now. We can walk and chew gum at the same time. When we need something to hope for, why let our best shot at redemption go down the drain?

There is one more thing to consider. Governor Edwards faces a potentially difficult reelection bid for a second term in a state where he probably shouldn’t have won a first term. Only by making the runoff with David “serious sins” Vitter did Edwards manage to pull off a first term. In the same election, a Republican won the Lt. Governor’s seat by a similar margin. Twelve percent of Louisiana voters felt that Edwards was just conservative enough to support over the former Senator who admitted to serious sins involving prostitutes.

Governor Edwards repaid those Conservatives by signing a redundant abortion ban following the wave of “heartbeat bills” that passed in the South. Louisiana already had an abortion ban that would trigger if Roe v Wade was overturned, so his signing this new law was merely a symbolic gesture.

Now that Edwards tossed a bone to the extremist Conservatives, he may need to throw everyone else a bone as well. That could very well be the reason he is supporting the new renovations to the dome. If voters in the New Orleans area knew that Edwards simply let the Saints go, his grim changes of reelection could vanish. By seeing a commitment to the area, perhaps enough voters will keep his campaign afloat.

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