AEIdeas
May 21, 2025
A recent Greater Greater Washington article makes a bold claim about the agreement to build a new Washington Commanders stadium in the District of Columbia at the site of the RFK Stadium. The authors allege that the deal will cost DC taxpayers not $856 million in public subsidies—a considerable sum in and of itself—but six billion dollars.
Fortunately for DC taxpayers, their calculations rely on faulty logic. Over half of the $6 billion, $3.3 billion, comes from the imputed opportunity cost of not building 10,000 more units of housing at the site instead of the new stadium, in addition to the 5,000 units planned under the mayor’s deal with the team. That is of course not the most reasonable counterfactual. A more reasonable counterfactual is one in which the stadium remained in disuse or was demolished, and the federal government preserved control of the land—the status quo before enactment earlier this year of the D.C. Robert F. Kennedy Memorial Stadium Campus Revitalization Act. It was in fact not a coincidence, for example, that Commanders owner Josh Harris was present when President Biden signed the bill in January.
(On a side note, in all the years I have seen Greater Greater Washington make arguments in favor of “inclusionary zoning” rules and other forms of price controls, I have never seen them make the associated opportunity costs explicit or claim that the lost tax revenue represents a cost to taxpayers. Which it does, of course—and in those situations it is typically well within DC’s power to simply let people build market rate housing, so that counterfactual is actually reasonable.)
The same faulty logic underlies the claim that DC taxpayers are losing $600 million because the city could have simply sold the land instead of letting the Commanders develop most of it. Of course, in the counterfactual the land would remain under the control of the federal government. In fact, even today the District does not own the land outright—it only has administrative jurisdiction—so it could certainly not sell it to a third party.
That is $3.9 billion from relying on a faulty counterfactual.
Not content with that enormous sum, the GGWash authors then add an additional $729 million derived from a comparison to a different counterfactual. They claim that the city is waiving $429 million in property tax revenue, by exempting the stadium and garages from real-property tax, and $300 million in sales tax revenue, from directing toward future stadium maintenance and upgrades. Of course in the counterfactual the authors relied on earlier, where the stadium and the parking garages were not built at all and instead the city built 10,000 units of housing, none of that tax revenue would have been generated. It is entirely inconsistent to claim that we are both losing money because the stadium is being built instead of housing and because we are waiving some of the tax revenue generated by that stadium.
That is $4.6 billion from faulty counterfactuals.
The next move the authors make is a different form of double-counting. Part of the money the District will actually be spending on subsidizing the stadium and its associated parking garages will be borrowed—some $675 million. The cost of those subsidies is $675 million in today’s dollars, whether the city borrows the funds or not. The authors claim that this is false and we should add to this number the total interest paid on muni bonds issued to finance the subsidies. That is incorrect. By borrowing the money, we are not taxing ourselves today. The interest payments we will make reflect the time value of money and proper discounting should tell us that whether we borrow or tax, the present discounted cost of the subsidy is $675 million. Think of it this way: The authors want you to believe we would be saving taxpayers money if we carried out the inverse transaction: raising taxes today to pay down the city’s outstanding bonds.
That is $5.3 million billion from faulty counterfactuals and double-counting. And with that, we are back to the $850 million in subsidies the article refers to as only “the tip of the iceberg.” Turns out it’s the whole iceberg.
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