Minute Maid Park: Should it be publicly funded?

This weekend I had the great opportunity to visit Minute Maid Park in Houston, Texas, the city’s baseball stadium. The stadium, which is essentially owned by the city, offers a number of amenities – including a decorative train full of oranges. The stadium was built in 2000 and cost approximately $250 million. About $180 million of that was publicly financed through a 2% hotel tax and 5% rental car tax, $33 million came from a private, interest-free loan, and $52 million came from the Astros owners (see this lease agreement). $180 million dollars is quite the public investment, and a number of our Public Choice friends (and increasingly, the public) would likely say it was unnecessary. While consumption of a baseball game is certainly non-rivalrous (well maybe not “certainly” – the Astros fan behind me affected my consumption with his raucous cheers and spilled beverage), I think Mr. Buchanan would agree that a baseball game at such a highly restricted and secure stadium is indeed excludable. Under this understanding, Mr. Friedman would probably posit that Minute Maid Park should receive no public funding – a private organization, i.e., the Astros, should pay for, maintain, and operate it – just like a large national park. And perhaps he is right, as there is some evidence to suggest that the Astros organization could afford it. Between 2000 and 2050, they will have paid a total of about $223 million in leasing fees to the city for the right to use Minute Maid Park.

So we know what Milton would say. But, as always, we must ask ourselves: WWRD? (What would Ronald do?) Mr. Coase would ask about the positive externalities of Minute Maid Park. I don’t mean the economic impacts, which have been found to be inconclusive at best. I would argue that sports teams have an intangible positive impact on the morale of a city, if you will. In Philadelphia (“the city of brotherly love”) I absolutely think cheering on the Eagles and the Phillies fosters this sense of brotherly love. Maybe the city got involved here because it felt that private actors couldn’t overcome the free-rider or assignment problems necessary to find a Coasian solution. But, the total of $275 million paid by the Astros, plus the $33 million loaned by private investors suggests that a Coasian solution to this externality isn’t impossible! If the government hadn’t gotten involved, the Astros, with the help of some private citizens, could just pay for the park (perhaps through a mortgage of sorts). So the Coasian line of thought then seems to back up Friedman’s intuition in the financing of such excludable, non-rivalrous goods. This Coasian lesson should be taken to heart by cities considering new sports complexes, just as my Philadelphia is right now!