Who Sits in Australia’s Grandstands?

Abstract

Numerous sports stadiums in Australia have been renovated or built from scratch in the past two decades, funded in whole or part by public subsidies. This note focuses on one particular group that benefits from subsidies—those spectators who attend live sporting events. A portion of the benefits from subsidies provided by government are captured as increased consumer surplus by sporting fans. Thus, the income and wealth position of these fans are of interest to those deciding whether to subsidize a facility. On the other side of the equation, the taxes which fund sporting facilities are to a large degree state and local levies, which are mostly regressive, taking a larger portion of the income of lower and middle income than of higher income taxpayers because savings are usually exempt from the relevant taxes. Using data from the Household Expenditure Survey (1988-1989, 2009-2010), we analyze various financial status characteristics of those who pay to attend sporting events in Australia. We find that those who buy tickets to sporting events have higher annual incomes and greater wealth than Australians who do not purchase tickets to sporting events. Hence, while media and policy makers may view such funding as subsidizing “working man’s recreation,” our results suggest that funding of sporting arenas should be assessed through the lens of correcting market failures rather than equity considerations.