The deal announced recently to bring a smaller version of Las Vegas’s Sphere to Maryland’s National Harbor in 2030 includes almost $185 million of tax breaks, government-backed loans and incentive programs from the state and Prince George’s County.
But the Las Vegas location, which is about three times bigger, was built without any government subsidies and pays property taxes.
Sphere Entertainment Co., a publicly traded company whose stock has gone up more than 300 percent since last April, has the financial wherewithal to build the entertainment venue without corporate welfare. Its executive chairman and CEO is James Dolan, who is also executive chairman and CEO of Madison Square Garden Sports, which owns the NBA’s Knicks and the NHL’s Rangers.
Maryland’s Wizards and Capitals fans should not be compelled by the state, through the coercive power of taxation, to provide financial support for the billionaire owner of their conference rivals.
The state claims the 6,000-seat venue will generate more than $1 billion of annual economic impact. Sphere claims the project, when operational, will support 4,750 jobs. Such pie-in-the-sky claims are always a red flag. For perspective, Capital One Arena, a 20,000-seat venue, requires only 750 to 1,000 employees to staff an event. The Gaylord Resort & Convention Center in National Harbor employs 2,412 people. It makes no sense to say that a mini-Sphere would generate twice as many jobs as a massive hotel and conference venue.
Research from around the country shows that state-incentivized economic development projects hardly do anything to boost local economies. A 2017 study that focused on Maryland and Virginia concluded that “incentive programs had essentially zero impact on job creation when they are compared to a control group of similar firms.”
The Maryland Center on Economic Policy, a nonpartisan think tank, applauded Gov. Wes Moore (D) last year for his attempts to clean up his state’s wasteful economic development spending. It noted that “tax breaks and spending programs intended to lure businesses into Maryland simply use up resources” that would be better spent on true public services.
Yet Moore negotiated this deal alongside County Executive Aisha N. Braveboy (D) after watching a Kenny Chesney rehearsal at Sphere in Vegas. It will require the approval of $10 million in state financing at a moment when Maryland faces a $1.4 billion budget deficit. The state raised taxes by $1.6 billion last year and still saw its credit rating downgraded by Moody’s. The agreement also forgoes as much as $130 million in future local tax money and requires the country to build a $40 million public parking garage.
The politicians argue that this became necessary after three big blows to Prince George’s economy over the past year. The Trump administration canceled the construction of a new FBI headquarters. Six Flags in Bowie closed in November. And the Commanders finalized plans to abandon Northwest Stadium in Landover to return to the site of the old RFK Stadium. D.C.’s leaders enticed the NFL team with more than $1 billion in taxpayer funds and an additional $1 billion in tax breaks and other incentives. That’s an even worse deal for taxpayers than the Sphere project, but two wrongs don’t make a right.
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