By Logan Shewmaker
U.S. Major League Soccer (MLS) is pushing to expand into Florida. Between 2008 and 2013, the average MLS franchise’s market capitaliztion grew 175 percent. The average attendance for MLS games exceeds 18,000, higher than the NBA. “The beautiful game” is growing in the United States, but does MLS growth justify public subsidies?
In 2013, Orlando City Soccer Club joined the MLS as an expansion team. The club will hold matches beginning in the 2015 season and compete as the Orlando City Lions. To become a franchise, the MLS prefers teams play in soccer-specific stadiums. Construction costs are significant. Orlando City is currently designing a new stadium in downtown Orlando that is expected to cost $110 million in total.
But who’s going to pay for it? The franchise itself will contribute $30 million, plus an additional $675,000 annually for 25 years. Twenty million dollars would be subsidized by taxpayers from the tourist development tax fund, along with another $20 million directly from the City of Orlando. The Lions have also requested $2 million dollars in subsidies from the State of Florida, and the proposal is pending before the state legislature.
Despite these large outlays, the return to taxpayers is minimal. According to a study from the Office of Economic and Demographic Research (OEDR), sports stadiums typically have a return on investment (ROI) of just 0.30, well below 1, meaning that for every $1 invested only $0.30 is gained in added revenue. Research conducted by Assistant Professor of Economics at FSU Chris Clapp concluded that team owners ultimately receive the profits from these subsidies. As a recent op-ed by DeVoe Moore Center Director Samuel Staley points out, sports stadiums may be profitable to stadium owners, but they are a net loss in terms of public investment.
This begs the question: Is a new stadium in Orlando necessary?
A study published in the Journal of Venue and Event Management found that soccer-specific stadiums usually increase attendance, but that proximity to downtown and a good marketing plan are crucial to success. For instance, the Seattle Sounders are by far the most financially successful MLS team, yet they play in an NFL stadium. The Sounders’ “March to the Match” parades on game days have also proved an energizing part of their marketing plan.
The Orlando City Lions have already sold 11,000 season tickets for the first season, which will be played in the Citrus Bowl. The Citrus Bowl has undergone countless renovations, most recently in 2014. Since this shared arrangement is working well, the case for another taxpayer subsidized MLS stadium seems weak based on team performance alone.
Construction on the new MLS stadium has already begun, but a new venue may not be necessary for the Lions soccer team. Orlando City Soccer’s “Fill the Bowl” marketing campaign is intended to pack 65,000 fans into the Citrus Bowl for the season’s first game, and given the advanced ticket sales and publicity surrounding it, they may be successful.
MLS is growing, but Florida’s taxpayers should not have to foot the bill for their new stadiums, especially when evidence shows such projects have a low return on investment. When the time for expansion is right, willing private investors will be better suited to fund stadium construction. Tax dollars would be better spent on education, infrastructure, or a host of other projects and services before sports stadiums.