Why Stadiums Rarely Pay for Themselves: The Economics of Sports Subsidies

Cities often fund stadiums with the promise of jobs and tourism, but the math is rarely that simple. Most ticket and merch spending is substitution—money locals would have spent somewhere else—so net new demand is smaller than headline figures suggest. Add opportunity cost (what the city could have done with the same funds) and the picture changes again. The winners are typically franchise owners who capture rents through exclusive rights and scarce licenses, while taxpayers absorb the downside. If I were advising a city, I’d model realistic multiplier effects, require private co-investment, and tie subsidies to verifiable metrics: year-round utilization, wage floors for event staff, and transparent revenue-sharing. In sports—as in tech—who captures value depends less on gross activity and more on bargaining power and contract design.