Stadium and Arena Funding.edited

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1 Stadium and Arena Funding Student's Name Institutional-Affiliation Course Instructor Due Date

2 Stadium and Arena Funding Building sports facilities around the United States is at an all-time high. More than a dozen big states have built or are building new sports facilities that cost at least $200 million. To help their hometown teams build new stadiums, municipal and state governments have been using taxpayer money for decades. These stadiums are generally marketed as important economic drivers for their communities. There are two scenarios in which public funds used for a stadium or arena can generate new revenue for the city: when the funds generate new spending by people from outside the area who otherwise would not have come to town, and when the funds cause area residents to spend money locally that would have been utilized. All residents of a specific community are affected by the decisions made on how public taxes in that town are levied and how they are spent. Funding for stadiums might come in tax-free municipal bonds, payments in cash, long- term tax breaks, infrastructure upgrades, or operating cost subsidies. State and local governments and the public are divided on whether or not to provide subsidies for stadium construction and maintenance. A long tradition of public monies to build stadiums may be traced back to the earliest sporting facilities. However, as the demand for contemporary amenities increases, taxpayers are stuck footing the bill for more money, sometimes years after the project is completed. To build a new stadium or arena, sports teams work with the state and local governments to establish how they will be financed. Tax increases and bond issues are common ways to raise money, but they are not always enough to cover the costs. Surcharges on parking and ticket costs are another source of financing. For the study, I conducted a topic search in the SPORTDiscus (EBSCO) database and Google scholar for articles and publications regarding the nature of stadium construction and

3 funding. Sports, physical fitness, and physical education are covered in SPORTDiscus (EBSCO). Each of the four major professional sports leagues in North America has a database on its existing and planned stadiums and information on how they were paid for. Most works on sports studies can be found in the GV department (recreation). I utilized search phrases, such as “Funding of Sports Stadiums,” “Ownership of Stadiums,” “investments in professional sports stadiums,” and “operation of new stadiums.” Various articles and journals advanced the study through a literature review approach. Categorically, the research focuses on the role of the community members and sports organizations in the contribution of funding based on the expected returns from the construction of stadiums. Literature review According to Johnson and Hall (2019), more than $8.7 billion was spent refurbishing or building 55 stadiums and arenas in the United States between 1987 and 1999. An estimated $5 billion of the $8.7 billion in direct costs came from taxpayers, making up around 57%. Other stadiums have been built or are in the works since 1999, and the government has subsidized a large portion of the cost. In the survey, Johnson and Hall (2019) established that slower income growth had been seen in cities and metro areas that have invested a great deal in sports stadiums and arenas. As a result, cities are going out of their way to provide modern facilities for sports teams. A government entity now owns most facilities instead of a private owner. Even though public financing of stadiums has become increasingly popular in recent years, some of the older, more well-known stadiums were financed by local governments in the past. The Los Angeles Coliseum and Soldier Field are two instances of government-owned stadiums from the past that are still in operation today. The original Comiskey Park in Chicago, Fenway Park, and Ebbets Field in Boston were all privately funded and owned.

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4 A review by Sroka (2020) pointed out that to fund multibillion-dollar stadium constructions, owners of professional sports clubs tap into the enthusiasm and dedication of the community. Further, affluent sports team owners frequently relocate their teams to other cities that are more ready to foot the bill if the local community is reluctant or unable to pay the millions of dollars demanded by the club. Similarly, the study by Buckman & Pemberton (2021) suggests that if the economic benefits to the places doing it can be proven to outweigh the costs of the stadium and any other incentives given to the club, then it should be done. However, through a cross-sectional model, Buckman & Pemberton (2021) theorize that such an approach has to compete with other projects that may also bring significant financial returns. Sadly, many municipalities are willing to spend money on stadiums rather than schools, trains, or hospitals. On the other hand, whether the city, county, or state pays for the stadium, construction employment will be produced. Dinces' (2020) reflection on stadium projects indicates that several employment opportunities are created in the foodservice and security industries after the building is completed. In addition, parking fees and property taxes should contribute to the local government's coffers. For example, the National Football League (NFL) is a non-profit organization run by billionaires. According to Dinces’ (2020) study, the creation of jobs and economic development are frequently cited by elected politicians, but it is difficult to quantify these effects and assign them to a specific investment. Major league professional sports clubs (at least in the United States) frequently utilize the "financial hardship" allegation to convince towns to foot the bill for these outings. Besides, the research conducted by Mayer & Cocco (2021) proves that taxpayers and normal middle-class taxpayers end up financing millionaire players' salaries and billionaire owners' profits as the primary problem with stadium finance. In the longitudinal study, Mayer &

5 Cocco (2021) establish that when it comes to sports fanaticism, teams and leagues have honed their ability to exploit this intensity and turn it into a belief that they cannot live without their teams, no matter the cost. Organizations scream about their plight, place unreasonable demands on local authorities, and play cities off against one another before threatening to leave. When a team is relocated, the pain reverberates through the generations. According to the public financing of stadiums, there is a view that new stadiums will have a long-term influence on their local communities by creating jobs and boosting tourism in the short term. According to Kellison and Mills's (2021) review, many sports organizations cater to new stadiums, and if it were a smart business move for them, they could adopt an economic model. Based on the survey conducted by Kellison and Mills (2021), the government will issue bonds/subsidies to fund the development of the facility. This approach is a tax-exempt bond that will be paid back over time. Public tax money is used to fund such bonds. The study conducted by Baker (2018) indicates that a worthy project will not receive the full funds they deserve due to the stadium. Direct taxation is a common method for local governments and states to supplement their budgets. Baker (2018) demonstrated that local hotels and motels may be subject to additional taxes in his research. Since the stadium will be a major source of revenue for the team owners, they are being requested to contribute more to the project. Personal opinion As a result of their fortune, sports franchise owners should fund their stadiums. Newly constructed subsidized stadiums reveal that they have a limited and potentially even negative local impact from an economic standpoint. They have been constructed. An owner of a prominent sports franchise might expect to have a fortune in the billions. However, when a new stadium is built, or upgrades are needed, the taxpayers are often responsible for a significant

6 percentage of the cost. As a result of the opportunity cost, there is expenditure of much money on a stadium, rather than on local infrastructure or other projects. There is a long-term benefit to investing public funds in sectors, such as education and housing, leading to long-term increases in the standard of life and economic growth in the long run. Ultimately, there is a dispute about whether or not the money spent on stadiums is worth it in the long term. A federal exemption reveals the disparity in cost and benefit across the country. Regardless of whether or not taxpayers can use the stadium to which they contributed, they are still responsible for the subsidies. Citizens are responsible for any new arena, even if they do not use it themselves. Since sports are primarily a stage production, this dynamic differs from public goods, such as education, infrastructure, and health care.

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7 References Baker, N. (2018). Playing a Man Down: Professional Sports and Stadium Finance-How Leagues and Franchises Extract Favorable Terms from American Cities. SPORTDiscus (EBSCO) BCL Rev. , 59 , 281. Buckman, S., & Pemberton, A. (2021). Suicide squeeze: How minor league cities chase economic development with big-league stadium schemes. Journal of Urban Affairs , 1-17. Dinces, S. (2020). Beginning with the Braves: Milwaukee and Stadium Development in the Postwar American City. Reviews in American History , 48 (2), 305-310. Johnson, C., & Hall, J. (2019). The public choice of public stadium financing: Evidence from San Diego referenda. SPORTDiscus (EBSCO). Economies , 7 (1), 22. Kellison, T., & Mills, B. M. (2021). Voter intentions and political implications of legislated stadium subsidies. Sport Management Review , 24 (2), 181-203. Mayer, M., & Cocco, A. R. (2021). Pandemic and Sport: The Challenges and Implications of Publicly Financed Sporting Venues in an Era of No Fans. SPORTDiscus (EBSCO). Public Works Management & Policy , 26 (1), 26-33. Sroka, R. (2020). Convergence and Divergence in Stadium Ownership Structures. SPORTDiscus (EBSCO). DePaul J. Sports L. , 16 , i.

Stadium and Arena Funding.edited

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