Cities should forget sport-subsidy hype and focus on basics
By D. Dowd Muska | August 8, 2025
Three years to go. The opening ceremony for the Games of the XXXIV Olympiad is scheduled for July 14, 2028. And the men and women of the organizing committee are working feverishly to ensure that the event “reflects the values of Los Angeles, uplifting communities and creating economic opportunities across the region.” Really?
The evidence for sports subsidies as potent economic-development tools is weak—and getting weaker. For decades, scholars spanning the ideological spectrum have exposed the defects of “research” touting the blessings of taxpayer-funded stadiums, as well as basketball tournaments, golf championships and similar high-profile athletic competitions. But the facile booster-ism that pushes for government spending on sports shows no sign of abatement. If anything, the problem is getting worse.
Look no further than the 2025 NFL Super Bowl for evidence of how hype bests sober analysis. In June, a “study” (main text: five pages) by Louisiana State University’s E.J. Ourso College of Business found that the game “generated $1.25 billion in total economic activity statewide, more than doubling the impact of the 2013 New Orleans Super Bowl and ranking as the second most financially impactful Super Bowl of all-time, even when compared to much larger host cities.”
Independent analysts beg to differ. “Insane,” “ludicrous,” “silly” and “economic nonsense written for the post-truth world” is how Stefan Szymanski describes such claims. The University of Michigan economist told the Free Cities Center that it’s impossible to respond “in any intellectual way” to the kinds of assertions made by the business school’s document, since its authors “know they can get away with numbers plucked out of thin air because no one will check after the event, and there is no way to prove them wrong.” (Szymanski added that the exclusion of police, fire and emergency-services costs incurred during mega-events is a frequent and egregious omission.)
At least the Super Bowl is confined to one place. That’s won’t be the case with the 2026 FIFA World Cup. Next June and July, 11 U.S. cities—Los Angeles, San Francisco, Seattle, Kansas City, Dallas, Houston, Atlanta, Miami, Philadelphia, New York and Boston—will host matches. The Fédération Internationale de Football Association promises huge dividends. Including the handful of matches to be played in Mexico and Canada, FIFA believes that next year’s World Cup “could help drive up to USD 40.9 billion in Gross Domestic Product … deliver USD 8.28 billion in social benefits and underpin the creation of nearly 824,000 full time equivalent … jobs globally.”
Licking their lips, host-city officials and advocates are offering outlandish calculations about the World Cup-driven economic development sure to arrive next summer. The Free Cities Center showed several estimates to Victor Matheson, who called each “far more of a press release for propaganda purposes than any sort of rational economic analysis.” The Holy Cross professor took particular issue with the Greater Arlington Chamber of Commerce’s expectationof $1.5 billion to $2 billion of “impact.”
Matheson’s response:
Suppose the Dallas metroplex hosts eight games and each game is a sellout with every fan being an out-of-town supporter (even for games like Panama v. Senegal as opposed to Brazil v. Argentina). So 8 x 80,000 seat = 640,000 tickets. To get to $2 billion, that means every fan needs to spend $3,000 each while they are in Dallas. And none of the fans can be local. And the 640,000 fans can’t disrupt any other visitors’ activities in the city. None of this will happen. But the propaganda arm of FIFA wants cities to blindly swallow these estimates in order to justify extracting concessions out of the cities.
For urban hypesters, a slice of the World Cup is nice—but paltry, when compared to hosting an Olympics. Los Angeles secured its bid for the 2028 Summer Games nearly eight years ago. But in May, The New York Times questioned the city’s ability to deliver on its “ambitious promises,” which have been “scaled back, supplanted by obstacles that are threatening to undercut preparations for an event that would test this city’s wits and resources even in the best of times.”
Consider traffic, fires, riots, homelessness and fiscal strife. The truly disturbing news for Los Angeles is that even host cities not plagued by multiple crises often regret the largesse they shower on Olympic athletes. In a 2016 paper published in the Journal of Economic Perspectives, Matheson and his Lake Forest College colleague Robert Bade wrote that while a “the desire for an economic windfall” motivates many bids, “in most cases the Olympics are a money-losing proposition for host cities; they result in positive net benefits only under very specific and unusual circumstances.”
Costs include “general infrastructure to accommodate the anticipated wave of tourists and athletes,” “specialized sports infrastructure,” and “operations including event management, the opening and closing ceremonies and security.” Budget-bursting overruns are the norm. Return on “public investment” is said to be “both a short-run boost from the construction phase preceding the event as well as tourism bumps during the games and the long-run legacy effect.” But “before-the-games predictions are rarely matched by reality when economists look back at the data.” Matheson and Baade’s survey of “academic studies of various Olympic Games” showed “actual economic impacts that are either near-zero or a fraction of that predicted prior to the event.”
The more scholars document the disappointing results and unseen burdens of subsidization schemes, the more cities pursue the Next Great Thing in Sports. It’s an obtuseness that imposes a heavy opportunity cost. The time, attention and revenue that could have been devoted to fundamentals—e.g., pro-mobility transportation policies, effective crime-fighting, reforms that foster affordable housing—are lost. What’s “won” is ample happy-talk media coverage, and a lot of preening and bragging by politicians.
