Public transit usage and cell phone location data show that although the amount of people in cities still lags during the workweek, after-hours and weekend activity in these areas is spiking throughout the country—even sometimes surpassing prepandemic levels. Nearly a third of downtowns saw more activity during weekends and weeknights in 2024 than they did before the COVID-19 pandemic, according to a University of Toronto study of 66 cities. And in almost every city studied, after-hours recovery rates are surpassing workday numbers. The “YOLO economy” (or, “you only live once”) has been characterized by a shift in spending post-pandemic, where consumers now prioritize experiences over saving money.
This shift comes as states and cities are investing in a swath of new stadium construction to create more enticing entertainment venues that attract both local and visitor dollars. The renewed focus on stadiums stretches from Nevada to Tennessee, but perhaps nowhere is the activity more concentrated than in Kansas City.
The hometown rivalry between Missouri and Kansas was reignited in June, when Kansas Governor Laura Kelly (D) signed a bill expanding the state tax incentive program in an effort to lure the NFL’s Kansas City Chiefs and MLB’s Royals just over the state line. Kansas tax incentives will now cover up to 70 percent of stadium bond financing (estimated at $700 million), a plan the governor lauded as a driver of economic growth for the state, citing “robust, revenue-generating entertainment districts surrounding them [and] providing new jobs, new visitors, and new revenues that boost the Kansas economy."
Stadiums carry the valuable currency of not only housing local sports teams but also hosting visiting megastars—and the economic boost that accompanies them. Taylor Swift’s Eras tour visited 23 stadiums across 21 states over the course of 2023 and 2024. In Glendale, Arizona, the first stop of the tour in 2023, local businesses saw a higher profit bump during Swift’s visit than they did when the city hosted the Super Bowl just one month earlier. The U.S. Travel Association estimated that the first U.S. leg of the tour resulted in a total economic impact of over $10 billion, including $5 billion in direct spending by her fans.
Although it’s too soon to measure the full impact of the final U.S. leg of the tour, Miami is already estimating that the city saw an $80 million boost from Swift’s visit, and New Orleans an eye-watering $500 million (for comparison, the city brings in about $900 million over the course of Mardi Gras). However, the Eras tour was likely a once-in-a-generation event—unlike regular sporting events, states can’t bank on Taylor Swift as a recurring source of revenue.
Jackson County Legislator Sean Smith (R), whose Missouri district houses both the Chiefs and the Royals, says that the potential return on investment comes not just from sales and entertainment taxes but also from Kansas City’s payroll tax. At Arrowhead Stadium, not only does every away team football player who plays in the stadium pay this tax, but all visiting performers do too (Swift played there in 2023). “When Taylor Swift does a concert at Arrowhead, 1 percent of what she and everyone she tours with makes goes to the city,” said Smith.
In addition to the local Kansas City tax, Missouri’s “nonresident entertainer” tax charges 2 percent of what a performer is compensated if they’re from out of state. Smith said the nonresident entertainer tax brings in approximately $40 million a year for the state.
The Chiefs say they have an economic impact of $993 million in the region, but Smith is a little more skeptical of the less concrete numbers. “I really think there’s some pseudoscience [for measuring indirect economic activity],” he said. “How do you measure how many people stayed in a hotel because of a baseball game?”
In Kansas, not everyone thinks that bringing the Chiefs or the Royals over the state line will result in a surge of new money. State Representative Paul Waggoner (R), who has spoken out against the measure, told The Pew Charitable Trusts that he was skeptical.
Waggoner estimated $300-400 million of the cost to finance the new facility would come from the state’s existing tax base. “Why is the public being asked to fork over money for this? It's a profit-making enterprise,” he said.
Representatives Waggoner and Smith aren’t the only ones skeptical—Pew’s research has found that without a regular, substantive evaluation process for economic development incentives, states risk paying way more than what they’re actually getting in return. In February of this year, Kansas passed a bill repealing the requirement to periodically evaluate economic development incentive programs. Economists also tend to balk at such spending. J.C. Bradbury—a professor of economics, finance, and quantitative analysis at Kennesaw State University—spoke to the Associated Press on the topic: “When you ask economists should we fund sports stadiums, they can’t say ‘no’ fast enough. Yet when you ask a politician, they can’t say ‘yes’ fast enough.”
Kansas is far from the only state looking to spend on subsidies for stadiums. Taxpayers have spent almost $30 billion on stadium subsidies over the past 34 years, but this year the efforts to expand and build stadiums feel increasingly frenetic.
Tennessee is joining in on a broader trend towards domed stadiums and investing in a new home for the Tennessee Titans to the tune of $500 million in state funding and $760 million from Nashville’s Metropolitan Sports Authority. The Titans are covering the remaining $975.6 million. Cost-sharing with teams can help states and cities ease some of the financial burden for upgrading stadiums, especially when long-term leases require capital maintenance. However, doing so doesn’t make it a painless process for taxpayers. Nashville’s city council and the state authorized a new 1 percent hotel tax to help pay for the stadium—for which state and local spending reflect the highest public subsidy for a stadium in NFL history.
Cities are also hyperaware of the need to draw residents to downtown areas that have lost offices and retail occupants following pandemic-related shifts. In Washington, D.C., Mayor Muriel Bowser (D) proposed legislation to purchase Capital One Arena, home to the NHL’s Washington Capitals and NBA’s Wizards, as well as being a popular concert venue. The city would pay $87.5 million for the nearly 30-year-old building and lease the arena back to the teams’ owner.
The push comes after the city almost lost the teams to a Virginia suburb. In a statement, Bowser doubled down on the purchase’s perceived benefits for the city: “We know that when our downtown does well, our city does well. This catalytic investment is an investment in our residents and businesses in all eight wards.” And in cities like Washington with large public transportation systems, centrally-located stadiums and arenas can also provide a valuable boost to ridership. Washington’s Navy Yard station, the closest Metro stop to the city’s baseball stadium, saw its highest ridership since 2019 in July after a Nationals game was followed there by a Carly Rae Jepsen concert.
Some places are reaching potential deals with teams without forking over their own dollars to cover the cost of a new stadium. New Jersey tried to lure the Philadelphia 76ers to Camden with the promise of $800 million in tax credits, including a new arena for the basketball team on state-owned property, but the deal temporarily stalled after Philadelphia Mayor Cherelle Parker (D) stepped in. She negotiated an agreement with the basketball team to build a brand new arena in Center City, with an unprecedented funding mechanism: a 30-year lease and no city funds being used to pay for the project. Instead, the Sixers will foot the $1.3 billion bill if the stadium proposal passes the city council.
Final Thoughts
Stadium incentives have been a longstanding and controversial topic among public finance professionals. The recent shift in spending habits and renewed focus on experiences following the height of the pandemic will likely continue to drive city economies, which in turn are often major hubs of tax revenue for states. Cities can no longer bank on the five-day work week to boost foot traffic, so it makes sense that they’re investing in facilities they know will bring crowds. However, without a strong evaluation system or substantial private buy-in, state officials and residents might feel like taxpayer dollars are just being thrown at a very, very lucrative form of entertainment—no matter how eager they are to get out of the house.
This article was first published by The Pew Charitable Trusts. Read the original article.
