Subsidies and Stadia’ Opulence

Abstract

Quirk and Fort’s gold plating hypothesis stipulates that subsidies are partly capitalized into stadia’ opulence. If the gold plating hypothesis is true, it would indicate that subsidies contribute to their own existence, as owners and major league executives argue subsidies are necessary to meet leagues’ increasing facility design standards. This study tests the gold plating hypothesis using a pooled cross section of stadia from the five major leagues. The findings confirm that subsidies increase stadia’ opulence. As evaluated at leagues’ mean stadia acreage, the marginal opulence of an additional US$1 million construction subsidy ranges from US$188,490 to US$501,420 depending on the league.