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Out of the Ballpark
Watchdog organizations can perform many important functions, including watching over the interests of taxpayers. The Cato Institute recently released a study, "Caught Stealing: Debunking the Economic Case for D.C. Baseball," which states that, "Our conclusion, and that of nearly all academic economists studying this issue, is that professional sports generally have little, if any, positive effect on a city's economy."

The real issue is not whether Washington should be the have a major league baseball team but whether the city should pay upwards of a half-billion dollars to build a stadium. As the Cato report notes, "Major league sports teams are certainly not mom-and-pop operations and can pay entirely for the construction of their own stadiums."

Building a stadium would be an expensive venture, one in which city, i.e., the taxpayers, assume virtually all of the financial risk for uncertain benefits. As Sally Jenkins explained in The Washington Post, "The city would pay the new team for lost profits if the stadium is not done by March 2008. The city would assume not just the cost of building, but all expenses if there are unforeseen overruns. The city doesn't participate financially in the team's profits, just the cost." No wonder polls show that almost 70% of city residents are opposed to public funding of the stadium even though most of them support baseball in D.C.

Although Winston doesn't usually focus on municipal decisions, the proposed baseball stadium involves the same issues that are important in developing federal regulatory policies: proper use of government authority, careful use of taxpayer dollars, and the need to ensure the quality of government-disseminated analyses.

Data quality is one of the key issues that should be carefully examined in any decision regarding the proposed stadium. Serious questions have been raised regarding the accuracy of the city's cost estimates. The city's official cost estimate is $440 million. The city's CFO placed the ballpark's cost as being up to $530 million while an independent analysis prepared by The Washington Post estimated that the stadium could cost be as much high as $614 million. In another sign of the importance of data quality to evaluating the proposed stadium, the Cato Institute study quotes a city government report that states that the team and ballpark would "create 360 jobs earning an annual total of $94 million." Cato notes, "That amounts to an astounding $266,111 per job." Winston didn't realize that selling beer and peanuts was such a lucrative business.

Winston also notes that the proposed stadium raises another issue that is sure to be significant at the federal level in the upcoming years corporate taxes. Part of the planned stadium financing would come from a "ballpark fee," i.e., a new tax, on city's largest business. On one hand, some prominent large businesses in the city are enthusiastic supporters of proposed stadium plan. On the other hand, the Cato study states that "Corporations do not pay taxes, people do." Thus, "this tax increase will touch D.C. residents in some way."

Winston has long memory and remembers when the Senators left for Texas. He is sympathetic to the many local residents waiting and waiting for baseball to return to the area. However, he does have to question any government spending hundreds and hundreds of millions of dollars of the public's money to subsidize an entertainment venture even if it does provide lobbyists a new place to use their cell phones.

  • Click to read study.

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