Super Suckers: Indy taxpayers take bath in red ink to build stadium

If you’re one of the millions of people watching the Super Bowl today, take a good look at that expensive stadium in which the game is being played — and then give thanks that you’re not unlucky enough to have been one of the suckers in Indiana who paid for the thing.

Lucas Oil Stadium cost somewhere in the neighborhood of $720 million to build. Local governments in the Indianapolis area have raised motel taxes, restaurant taxes and rental car taxes to pay for the stadium. The primary tenant of the stadium is the NFL’s Indianapolis Colts, who pay only $250,000 a year for the place. (That amounts to just two thirds of the NFL’s minimum salary for the kind of unused player who stands on the sidelines and holds a clipboard.)

In addition to massive direct costs, local governments in the area have shelled out millions of dollars because of operating costs that weren’t covered in the original plan. (Another tax was added after the fact to cover that.) And financing costs went through the roof during construction because of the collapse of the sub-prime lending market.

When I look at this kind of boondoggle, I’m thankful that voters in the county where I live soundly rejected an insane plan to build a domed stadium in1998. The usual kind of downtown central planners came up with pie-in-the-sky plans that year for a domed stadium and a variety of other things. It was called the Metropolitan Area Projects Strategy (MAPS). It was a virtual wish list of everything that pretty much every local group wanted to build. Supporters of the plan were trying to buy support by spreading the cash around.

The plan was to pay for everything with tax increases, of course. Fortunately, the plan passed by the Legislature required that taxpayers vote on the thing. Despite a very well-funded campaign by all the usual suspects about “investing” for the future of the area, the MAPS tax was defeated very soundly.

I consulted for the anti-MAPS group and produced the only piece of large-scale marketing that was done against the tax — a direct-mail piece that went to every voter household in the county. (The obvious front cover headline: “Doomed Dome.”) By the time of the election, I was on a cruise ship somewhere along the coast of Alaska, but I called that night to find out how we did. I can’t remember exactly how much we won by, but it was substantial. Despite that resounding defeat for the tax-and-spenders, various local politicians have worked hard in the 12 years since then to revive the plan (or a new version of it). For many of them, it seems to be more about civic ego. It certainly can’t be about dollars and cents, because none of these insane projects ever live up to what they were sold as.

One of the worst things about such municipal boondoggles is that taxpayers are stuck paying for them for decades, sometimes long after the facilities are no longer in use. This New York Times story from 2010 outlines how that’s happened in New Jersey, Houston, Seattle, Indianapolis, Pittsburgh, Memphis and Kansas City. For instance, the Kingdome in Seattle was torn down (through implosion) in 2000, but the taxpayers of the area still owed $80 million on the demolished stadium as of late 2010. Sadly, this isn’t an unusual story.

The pitch is always the same. We’re told about how this time it’s going to be different. This project will be the economic engine to drive growth for an entire area. But it never turns out that way, according to academic studies that consistently agree. (Here’s a PDF version of that paper.)

Central planning is a bad idea, and it doesn’t make any more sense when it happens to be building facilities for popular sports teams. If taxpayers are willing to set aside their team loyalties and look at the money that these stadiums are costing them — directly and indirectly — they can force politicians to listen and quit pouring money down a rathole that does nothing other than subsidize people who are already very rich.

Note: Bloomberg has an excellent editorial about this from Friday, so I highly recommend this summary of why these taxpayer-funded stadiums are such a bad idea.