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Billion dollar stadiums rely heavily on public funding

This is an excerpt from Managing Sport Facilities, Second Edition, by Gil Fried, JD.

Public Financing

In 2002 there were 111 major professional sport franchises in America, and 91.9% (102) had moved into new or significantly renovated stadiums in the 1990s. The total taxpayers’ price tag for stadiums or arenas built from 1995 through 2000 has been estimated at more than $9 billion (Fried, Shapiro, and Deshriver, 2003). That number has increased by billions of dollars, with four stadiums opening in 2009-2010 alone costing more than $1 billion each. Although these stadiums were built using significant private funds, public funds are still the backbone for most major facility construction projects, and the economic downturn of 2008-2009 put significant squeeze on public contributions. Municipalities interested in luring a new team or keeping an existing team argue that tax dollars should help finance facility construction because entertainment dollars are brought in from outside the community, thus infusing “new” money into the local economy.

Teams are also helping to cover the building expenses. The average level of team contribution to a new NFL stadium is 29%, or $82 million of the typical construction cost for a football stadium. Even without any team contributions, some municipalities are willing to foot the entire price of a facility to become a big-league city. Besides increased economic activity and increased sales, income, and employment tax revenues from those attending games and working at the facilities, proponents argue that the facilities help promote community image (Fried, Shapiro, and Deshriver, 2003). Making the “big leagues” can be

expensive and can subject the citizens to paying debt service on bonds for years to come, without the facility’s ever generating a profit. One major study concluded that older arenas with little debt and numerous scheduled events (NBA, NHL, Ice Capades, family shows, circuses) tended to make the highest profit, while new stadiums for outdoor sports were less profitable (Fried, Shapiro, and Deshriver, 2003).

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