The Public Choice of Public Stadium Financing: Evidence from San Diego Referenda

Abstract

Local politicians and team owners frequently argue that the public financing of stadiums is important for local economic development. The sports economics literature, however, has largely found that new professional sport facilities do not generate any new net economic activity. We provide context to this literature by exploring the public choice in the public financing of stadiums. In 2016, San Diego had two ballot measures related to the San Diego Chargers. Measure C would allow officials to raise hotel taxes to pay for a new downtown stadium for the Chargers. Measure D would also raise hotel taxes, but explicitly prevented any money being spent on the Chargers. Both measures failed to receive 50% of the votes cast. We find that zip codes with a higher voter turnout were more likely to vote against both measures, highlighting the importance of the timing of referenda in limiting the ability of clearly defined groups, such as Chargers fans, to have a large influence on the voting outcome. Meanwhile, areas with more Trump voters were more likely to support higher taxes for the purpose of building the Chargers a new stadium.

The impact of professional sports franchises and venues on local economies: A comprehensive survey

“…The results are consistent with a Goldilocks zone, where residents who experience convenience in commuting without the disamenities of hosting games value the stadium the most among area residents. Johnson and Hall (2019) find no evidence that voters living close to a proposed new NFL stadium in downtown San Diego were more likely to vote in favor of a construction subsidy in a 2016 referendum.…”

Editor’s Introduction

“…Their study "provide[s] context to this literature by exploring the public choice in the public financing of stadiums," with particular attention to the two 2016 ballot measures related to the San Diego Chargers (NFL franchise). More specifically, Johnson and Hall (2019) analyze voting on two ballot measures that would, respectively, allow officials to raise hotel taxes to pay for a new downtown stadium for the Chargers, and allow officials to raise hotel taxes, but would also explicitly prevent any money being spent on the Chargers. Neither of these ballot measures received 50% of the total votes cast.…”

“…The results of their empirical analyses indicate that populations in "zip codes with a higher voter turnout were more likely to vote against both measures, highlighting the importance of the timing of referenda in limiting the ability of clearly defined groups, such as Chargers fans, to have a large influence on the voting outcome," and that "areas with more Trump voters were more likely to support higher taxes for the purpose of building the Chargers a new stadium." With regard to this latter finding, Johnson and Hall (2019) state that the "results suggest that Trump voters were against tax increases for these public projects; but, if taxes were going to be raised, they wanted the Chargers to be part of the deal. "…”