How Public Funding Fails Twice
The Infrastructure Mirage of Sport and Silicon
You've seen this one before.
City council debates funding a new stadium. Hell, even Portland isn't immune.
Team threatens to leave. Consultants go head-to-head producing dueling economic impact studies. City caves, calls it economic development, and cuts a huge check.
One county over, another jurisdiction quietly hands hundreds of millions in tax incentives to a data center that will employ 47 people. This one gets celebrated as "smart infrastructure investment." Because now tech sounds better than football.
Same logic. Same failure. Slightly better marketing.
The Stadium Playbook: Fifty Years of Buyers' Remorse
Since 1970, state and local governments havepoured about $33 billion into major-league sports venues across North America. The sales pitch never changes: jobs, economic vitality, civic pride, tax revenue that more than pays back the investment.
And it’s never worked.
The research is unanimousand has more than 130+ studies supporting it.
Stadiums built between 1974 and 2022 found that local economic activity is basically unaffected by sports facilities. The median public contribution between 1970-2020 covered 73% of construction costs. Study after study confirms that those subsidies far exceed any economic benefits the facilities generate.
The reality is your typical NFL team employs 125-175 full-time people and about 2,000 game-day workers—who work only four hours, ten days a year.
Take Houston's NRG Stadium, which generates about $880,000 in annual tax revenue.
Sounds good until you realize that's less than 0.3% of the$310 million in public funds used to build it. The Atlanta Falcons' new stadium cost $2 billion—$700 million from taxpayers. Multiple studies concluded that money would have generated better returnsinvested in 30-year treasury bonds.
The core problem is substitution. Families have entertainment budgets. When they drop $200 at the ballpark, that's $200 not spent at restaurants, theaters, or the bowling alley. You're not creating new economic activity—you'rererouting through the stadium gates.
Where does the revenue go? To players, coaches, and owners pulling down eight-figure incomes who aren't spending it all at the local coffee shop.
Cities defend these deals by pointing to intangible benefits—civic pride. Researchers tested that claim using contingent valuation, asking residents what they would personally pay to host a team.Those "non-use values" average 13–16% of public contributions. That math isn’t mathing.
And the mistake isn’t unique to sports.
It’s a pattern…
The Data Center Delusion: Better Math, Still Bad Investment
Swap jerseys for server racks and you have the same story.
Thirty-six states offer tax incentives for data center development. The cost to state budgets has exploded.
What do states get?
The employment story is depressingly familiar. Construction employs an average of 1,688 workers during the build phase. But once operational, that drops to15-100 permanent positions—an average of 157 jobs. Per dollar of capital investment, data centers might create fewer permanent jobs than stadiums.
The supposed "better returns" don't hold up. AGeorgia evaluation calculated a return exceeding 10:1—driven almost entirely by one-time construction spending. It also relies on assumptions that 90% of data center activity wouldn't happen without the tax break. That "but for" question is doing a lot of heavy lifting.
Virginia's analysis is at least more honest: data centers return $0.48 for every dollar of foregone tax revenue.Better than the $0.17 average for other incentives, butit still doesn't pay for itself.
Texas estimated its program would cost $130 million in FY 2025.
But a mere two years later, they revised that estimate to $1 billion for the same year—nearly an 8x increase. Virginia's methodology update revealed their program cost $411 million in FY 2022, when they'd previously reported $81 million.
These aren't rounding errors. States literally don't know what they're spending.
The "multiplier effect" argument—that each data center job supports six more elsewhere—sounds impressive until you realize that's the same promise stadium boosters have made for fifty years.
Industry-funded studies always produce big multipliers.
The academic research tells a different story.
Why Data Centers Lose Less Money (But Still Lose Money)
Data centers deliver marginally less catastrophic returns than stadiums. Understanding why helps explain why policymakers keep falling for this.
Data centers require continuous equipment upgrades—servers, cooling systems, and power infrastructure. That generates routine construction activity, which shows up very sexy on economic impact studies.
Stadiums experience what researchers call the"novelty effect"—attendance and revenue spike in the first few years, then flatten. Within 20-30 years, teams demand replacements. But construction jobs are temporary by definition. You're arguing for permanent tax breaks to generate temporary employment.
The substitution effect works differently here.
Data centers aren't competing with movie theaters for entertainment dollars.
But they are competing with other infrastructure investments for public capital.
Every dollar in data center subsidies is a dollar not invested in electrical grid upgrades, fiber networks, or basic infrastructure that would benefit all businesses equally instead of just tech giants.
"Export orientation" sounds sophisticated. Data centers serve national and global customers, not just local ones. But if 36 states are all offering competing incentives to capture that demand, you're just in a race to the bottom where everyone loses revenue and no state gains lasting advantage. The companies win. State budgets lose.
Construction phase multipliers are real. Data center construction involves specialized systems that command higher wages. But so does literally any infrastructure project that isn't a corporate giveaway. Building a data center with public subsidies generates construction jobs. So does building a water treatment plant, upgrading the electrical grid, or modernizing a school—except those serve the public rather than a private company's balance sheet.
Virginia's analysis: these incentives"do not pay for themselves." When tax breaks don't pay for themselves, you get reduced public services or higher taxes for everyone else. No third option.
The Real Return on Investment: Political Theater in Two Acts
Neither investment pays for itself.
So why do governments keep writing checks?
For stadiums, the answer is simple.
No elected official wants to be the mayor who lost the team. The threat is real—Seattlerefused to pay for a basketball stadium and watched the SuperSonics become the Oklahoma City Thunder. Voter dissatisfaction is immediate, tangible, and career-threatening.
Economic analysis loses every time to fear of that headline.
Data centers offer the same political payoff with better branding.
Landing major tech infrastructure carries prestige in a way stadiums simply don’t. It can be framed as “investing in the digital economy” or “21st century infrastructure.”
Billion-dollar capital investments make for compelling ribbon-cutting ceremonies. Operational employment barely matters when the governor is standing in front of a massive building announcing a $2 billion “investment in our state’s future.”
Data centers don’t have angry fans showing up to city council meetings. When Amazon or Google comes calling, there’s no organized constituency of taxpayers who understand what’s being given away.
With stadiums, at least the debate is visible. Data center subsidies are negotiated in relative obscurity, often by economic development agencies with minimal public input.
Both are racing to the bottom.
Once neighboring states offer incentives, not offering them means losing by default. No state gains a lasting advantage; all sacrifice revenue.Good Jobs First calls this "endangering state budgets." Classic collective action failure.
Stadium subsidies have become unpopular enough that voters sometimes revolt. But data center subsidies still carry the aura of "smart policy"—tech companies instead of sports franchises.
Same economics, better PR.
Reading the Conditions
Both stadiums and data centers sell the same dream: large capital investments create lasting economic transformation.
Half a century of research on stadiums says it's false.
A decade of data on data centers says it's equally false, just with bigger numbers and better branding.
The differential tells us this: Data centers perform "better" than stadiums, the way losing $500 is "better" than losing $1,000. You're still losing money. Virginia getting back 48 cents on the dollar instead of 17 cents doesn't make it a good investment—it makes it a less terrible one.
No competent CFO would accept that standard in the private sector. It shouldn't be acceptable in the public sector either.
We get fooled by presentation. Stadiums have become politically toxic enough that voters sometimes revolt—74% of Seattle voters demanded accountability. But data centers still carry the aura of "smart infrastructure investment" because they involve tech companies rather than sports franchises.
Same wealth transfer mechanism. Same failure to generate positive fiscal returns. Same race-to-the-bottom interstate competition. Different packaging.
The question isn’t whether to invest public money. It’s whether the return justifies the tradeoff.
Real infrastructure investments—the unglamorous kind without ribbon cuttings or naming rights—consistently outperform both.
Bridge repairs
Water system upgrades
Electrical grid modernization
Broadband expansion to underserved areas
These serve the entire economy rather than individual corporations.
They generate measurable returns that actually exceed costs.
They don't require questionable assumptions about "but for" causation.
They build long-term capacity rather than temporary construction jobs.
Sometimes the best return on investment is the investment you refuse to make. Especially when tech giants and sports franchises are asking you to write the check.
The economic case against publicly funding stadiums is ironclad. The economic case against publicly funding data centers is nearly identical. One just has better marketing.
Neither clears the bar a disciplined capital allocator would use in any other context.
Stop subsidizing profitable businesses.
That’s the point.
It’s about how decisions get framed, how risk gets priced, and how capital gets deployed when no one wants to be the person who said no.
Capital Has Memory
Large commitments don’t disappear.
They compound.
Sometimes they compound returns.
Sometimes they compound mistakes.
Stadiums and data centers are just visible examples of the same underlying problem: decisions framed around narrative instead of cash flow, prestige instead of durability.
That pattern shows up in far more places than municipal subsidies.
Big Left is a management consulting practice focused on organizational strategy and infrastructure economics. We work with leadership teams facing decisions that can materially reshape their exposure — capital commitments, structural transitions, long-horizon bets.
Decisions made from within an organization are rarely neutral.
Bias. Internal politics. History. Fear. Career preservation. Sunk costs. Vendor relationships. Ego. Nepotism even.
All of these aspects are cords pulling at internal decisions before they are even made.
We step in with a fresh, experienced, educated, zoomed-out view to say what no one internally is positioned to say.
James Ellis is the founder of Big Left, a management consulting practice focused on organizational strategy and infrastructure economics. He is a licensed Professional Engineer and holds an MPA with concentrations in public finance and infrastructure policy. Views expressed are fucking correct.
