I just want to reiterate this, because there are far too many people who think that they know about stadium economics based on personal experience and confirmation bias.
“Well, they built a new stadium in my city, and it revitalized a dead part of downtown!” or “The bars around the stadium are always packed on gameday,” or some other similar observation.
The problem is that such comments are nothing but observational, and take no account of things like the cost of subsidies, the distribution of the benefits, and other issues like the substitution effect.
I don’t know if this was an intentionally ironic or humorous statement, but it actually demonstrates one of the problems with public subsidies. Publicly-funded or subsidized stadiums can indeed be massively profitable for the team owners. and this is precisely because they often involve the transfer of hundreds of millions of dollars of public money to the pockets of private owners. No-one is denying that stadiums can be profitable; the point is that they might be profitable for the owner while not actually adding economic value to the city or county that foots part of the bill.
Is “the stadium organization” a public entity, and where do they get the money to pay back the bonds? Who gets the money from ticket sales, luxury boxes, concessions, TV and radio broadcast rights, and stadium naming rights? Who’s on the hook if the stadium doesn’t attract enough events to cover its costs, if there are cost overruns during construction, for maintenance or upgrades?
The government may not be writing a check payable to the team owner, but that doesn’t mean those owners aren’t getting a sweetheart deal.
If you think that tax-exempt bonds are the only way that stadiums are subsidized by government, then you haven’t read the literature on stadium financing.
Assume 60,000 seats (high assumption), or a little over 5 million a game, times 8 home games a year. They split that with the visiting team, but they also get paid from the ticket sales when they are the visiting team, so that averages out close to the same as the 8 game total.
Obviously, there’s a ton of money coming in from other places, and I really wonder how much of that is from the taxpayer’s pocket.
ETA to add, salary cap. 2015
Total Cap Number: $150,025,266 (Top 51: $132,991,149)
Offense: $78,376,545 Defense: $55,737,587 Special: $7,466,666
There’s money coming from somewhere other than tickets.
If it’s such a great investment, then let the city own it (I do actually think it would be a good investment for the City of LA if it did own it). But why should my government put up money and loan guarantees and tax subsidies and probably land to fund an extremely profitable private business?
On top of that, what if a team decides to move after we’ve put in all this funding? At a certain point, we wouldn’t be able to contractually keep the team here – it’ll be written into the contract, and if it isn’t, there’s always a way to get out of indefinite contracts eventually. How many times should we have to pony up money to have a football team here?
Field of Schemes is a good website where you can track your favorite, money-grubbing sports stadium project.
My local one is the new Kings basketball stadium in downtown Sacramento, where a current court case is trying to shine a light on the shady financing deal the team got on the facility in order to keep the team from fleeing to Seattle.
These always end up being good deals for the team owners and bad deals for the local taxpayers.
I grew up in San Diego watching the Hadl-Bambi Chargers. I’m not really a fan anymore–they have great seasons but never get the job done in the end. If they want to move to LA, or Carson, or wherever, I wish them well. Maybe they could tear Qualcomm down and make it an open space park instead. (or, more realistically, another mega condo/shopping complex)
Fuck that noise. Los Angeles has managed to avoid sliding into the Pacific without having an NFL team for twenty years now. We don’t NEED an NFL franchise; I think I speak for all of us when I say we don’t WANT an NFL franchise, and anyone who disagrees needs to STFU (they like football, so their opinions aren’t worth much).
Anyway, if the Chargers really are adamant that they play in a taxpayer-funded facility, Los Angeles is right out.
One of the most disgraceful abuses of power in modern American society is the de-jure monopolistic power Major League Baseball and the de-facto power the NFL has in the United States, and how both leagues take advantage of their fans to extract bad deals from cities across the United States to build stadiums with taxpayer dollars, only to turn around and then over charge fans for tickets, food, and even more disgraceful “personal seat licenses”. The selling point is that they will bring jobs and income to the host city has been proven time and time again to be pure bullshit.
I recognize there are some franchise owners such as Jerry Jones and some of the LA NFL proposals are privately funded and I applaud those; and I can’t blame a franchise owner for trying to extort the best deal possible. But publicly funded professional sports stadiums is wrong, unless the Federal Government is willing to retract MLB anti-trust exemption, and force the NFL to stop acting as a de-factor monopoly, and allow fans a choice as to teams they root for in the marketplace.
I’m sure JERRY JONES is making lots of money off the stadium. It’s a great investment for the team owner, because someone else is picking up a portion of the tab.
Getting taxpayers to build them new stadiums is a major part of the business plan of most pro sports franchises. You don’t think Jerry paid for that big stadium himself, do you? The good people of Arlington are paying big bucks for that place; every household in Arlington paid $3000 for the initial subsidy. Their taxes are still higher. The Cowboys pay rent of about $2 million per year, which means, by my calculations, that they will pay back that $325 million… never, given the future value of money. The naming rights sold to AT&T cover that for ten years (of course, the Cowboys get all that money.) Yeah, it’s a great investment for Jerry.
