(The Center Square) – The Virginia Legislature won’t be committing public funds to a new Washington Commanders Stadium in Woodbridge this year.
The House and Senate had passed separate versions of the bill and would have needed agreement in the conference committee. But Democratic Virginia Senate Majority Leader Richard Saslaw announced Thursday that the bill would not move forward this year.
“I concur with Senator Saslaw’s decision,” Del. Barry Knight, R-Virginia Beach. “When we began this process, it was with one thing in mind – will this be good for the taxpayers of the commonwealth? After evaluating both my bill and the senator’s bill, it’s clear that this project fails that test.”
Virginia was one of several areas vying to be the future home of the Commanders, including near the site of the team’s current stadium at FedEx Field in Landover, Maryland.
At issue was how much Virginia taxpayer money would go toward the project. The legislation would have created a stadium authority to build and develop the stadium complex using funds from sales tax collected at the site, similar to a deal in the works for a new Tennessee Titans stadium in Nashville.
The Senate version of the bill did not cap how much sales tax could be collected and kept by the Commanders.
Michael Farren, a Senior Research Fellow at George Mason’s Mercatus Center who has followed the deal closely, said that estimates of how much that sales tax incentive would ultimately be worth from lawmakers were never verified or proven, starting with an estimate from Saslaw of $1 billion before The Washington Post later reported that the incentive would be capped at $350 million for the estimated $3 billion project.
“They are intentionally non-transparent so that the public doesn’t know what is going on,” Farren said. “That happens every time a stadium subsidy is considered.”
The legislation also wasn’t clear whether the tax deal would apply to just the stadium or also to the district including commercial, residential, and retail built surrounding a potential new stadium.
“There is a clear problem in that the taxes from the campus outside of the stadium complex could be funneled to the stadium complex because there is no dividing line between where the stadium complex ends and where the campus begins,” Farren said.
In late May, part of a team-sponsored economic impact report was leaked to Virginia media claiming that the project would yield $24.7 billion in direct economic impact while bringing 2,246 jobs to the area by 2033.
Economist J.C. Bradbury of Kennesaw State in Georgia has called these team-sponsored economic impact reports “predatory” because they are not peer-reviewed and are paid for by teams looking for highly inflated numbers that never occur.
Economists have shown that stadium deals have consistently not brought the promised economic activity to an area to justify large public subsidies.
Bradbury has explained that using sales tax collected at a stadium or stadium district is no different than using general fund dollars because it will have the same impact on a public entity’s budget.
Rather than increasing spending in an area, like the team-sponsored study’s claim that $3.04 billion in tax revenue would come in the stadium and development’s first 30 years, new stadiums and district have shown to divert spending in an area away from other existing businesses. New stadiums and surrounding districts have not been shown to increase spending in a state, city or region over time.
“It’s really just sloshing money around like sloshing water in a bucket,” Bradbury explained. “One side becomes deeper, one side shallower.”
Farren said that there is a clear consensus amongst economists that there is no a fiscal or economic growth reason to publicly subsidize sports stadiums.
“Subsidizing a stadium for a professional sports team is essentially taking away spending dollars from small concert venues and other entertainment options in the area,” Farren said.
The Commanders, however, did not seem deterred by Thursday’s development in a statement from the team.
“Given the complexity of this endeavor, coupled with the remarkable economic development opportunity that we believe our new venue project represents, we support the decision of stakeholders in the House of Delegates and the State Senate to more deeply examine the issue,” the statement read. “We look forward to continued engagement and open dialogue with stakeholders across the commonwealth to share our vision and hear directly from communities on their economic development objectives and how we can be a trusted, reliable partner to realize those outcomes.”