Stephen Karlson notes that a community college in Illinois is using a creative means of financing a new athletic facility. Richard Vedder thinks this is a terrible idea:

First, community colleges should concentrate on low cost education, not speculative investments with funds borrowed via tax-exempt bonds. Second, in this case, another group of totally private persons in the same county has been trying to do the same thing (respecting minor league baseball), so this is an attempt by a government entity (a college) to preempt a private effort financed without any public subsidies. Third, for higher ed officials to want to devote their major new effort to promoting professional sports rather than improving existing programs or offering new ones shows a shocking disdain for the basic purposes of higher education. Fourth, and actually almost irrelevant, it is a dumb idea on economic grounds, since even if a team came in the stadium would likely be a money loser unless subsidized by taxpayers.

The crowding-out of private investors by the community college is a loss. Government is able to take advantage of its tax-preferred status to deny private investors an opportunity to make money. While the school says it will make up the difference between what the baseball team will pay and the cost of the facilities on rental of the other facilities to traveling teams, the taxpayer is still the residual claimant and bears the risk if the plan fails. Stephen notes that the move is perhaps spurred by gridlock over higher education funding in the Illinois legislature and the executive office. If so, they'll like this risk-shift even less.

As to the use of higher-education funding for sports stadia, one might wish to think about the University of Phoenix Stadium. But that's a private, for-profit concern, and it uses the stadium as advertising (on any given Sunday during football season.) I'm less worried about the mixing of higher education with commercial enterprises than I am the use of a state higher educational institution to crowd out private investment.

Labels: higher education, sports