If someone wants something badly enough, whether it’s a car or a business, they will pay for it. It doesn’t matter if the previous owner lost money on it. Status is part of it, as well as ego. “I know that Air Swirly is losing money now. I’m smarter than the guy who owns it. Under my leadership it will show a profit.”
I get it. But until someone comes up with solid evidence that professional sports franchises in the NFL, NBA, NHL, or MLBA are money losers then I’m going to doubt the veracity of such claims.
I think the whole discussion of whether they are net money-winners is a bit of a red herring.
If it’s a vanity project for billionaires, why am I subsidizing that? Boo hoo to them if they lose money, but it’s a free market.
Getting back to stadiums though, as I say, a case can be made that if the stadium is used for other events, say music concerts, then whoever is going to profit from those events can/should chip in some of the costs. And if the stadium will be used for community events, e.g. educational events…I dunno, then the city might consider it worth also contributing some of the costs.
Otherwise, no, sports teams can pay their own damn costs. Get a sponsor and call it the Hello Kitty Arena.
I think the people who want to build a stadium try to make the case that it will be good for the city and especially for the neighborhood they build in. Bars and restaurants and hotels will bring business to the area. Not to mention jobs such as parking and concessions and whatnot. Therefore, as a benefit to the city, the city should chip in for the cost.
It’s been a while since I read about this but, I believe, people have crunched the numbers and the cost to taxpayers has never paid off in the end. But, billionaires are the ones who donate a lot to politicians so Joe Citizen tends to lose in the end.
That’s a fair point. I think for a completely new development, in an otherwise barren part of a city, it may make sense for local government to cover a small share of the costs.
It brings benefits but it brings costs too. There should be a full accounting of the big picture including future tax revenues.
I guess I was being a bit too extreme in my prior posts but in practice it does seem that stadiums are too often vanity projects for local government as much as for billionaires, with big checks written and tax breaks that make it a bad deal for the community from day one.
Let be fair. After all, won’t someone think of the poor billionaires? In cities where this issue has come up, there is often a lot of popular support to build stadiums for the local sports team. John Oliver (I think) discussed this topic on his show a few years ago, and I remember a clip of an unhinged sports fan berating the city council in her full sports regalia at one of their meetings because there was some debate over whether they should fund a stadium.
I share your opinion that billionaires can pay for them own damn business expenses as I’m not convinced cities see a significant return on investment in such projects. But the pressure to build these stadiums doesn’t just come from up high it comes from down below as well.
The restaurants/local development argument seldom works in real life. In Rochester, neither the downtown hockey arena or the near downtown soccer stadium, both built by the city, have ever supported a satellite ring in the fifty years I’ve been looking at it.
Buffalo’s Highmark stadium is NFL, but while one or two restaurants are local landmarks, a comparative handful of others are within a mile - and that even though there’s a college campus within a mile.
Pittsburgh also has a Highmark Stadium, this one for soccer. But the development didn’t come from the stadium, but vice versa. It’s part of Station Square, an entertainment and landmark complex across a bridge from downtown that attracts three million visitors a year.
Landmarks developed the site in 1976 as a mixed-use historic adaptive reuse development that gave the foundation the opportunity to put its urban planning principles into practice.
Now, shops, offices, restaurants and entertainment anchor the historic riverfront site on the south shore of the Monongahela River, opposite the Golden Triangle (Pittsburgh). It reflects a $100 million investment from all sources, with the lowest public cost and highest taxpayer return of any major renewal project in the Pittsburgh region since the 1950s.
That’s how you do it.
I could see a baseball or basketball arena making money for local businesses more than a (American) football stadium, given the small number of NFL home games (eight, I think). And football stadiums are, I think, the most expensive sports facilities. At least in New York City, the football stadium is shared by two NFL teams.
Eight or nine now, for regular-season games: the NFL moved to a seventeen-game regular season schedule in 2021, and each team hosts a ninth home game every other season. Plus, hosting one or two preseason games each year. So, typically, ten games per year being played at any given NFL stadium (other than the ones in the New York and Los Angeles markets, each of which play host to two teams).
That said, most NFL stadiums now also host other events (mostly concerts), as well, and those, too, could potentially bring in revenue to local businesses. This has, increasingly, brought the stadium operators in conflict with the teams, as there’s a belief that the concerts damage the playing surface.
You mean in East Rutherford, NJ - but at least neither East Rutherford nor NJ paid to build the stadium.
Makes sense because the NYC market is so big that there are going to be multiple professional sporting teams there regardless of subsidy. A Dodgers can leave, but then the Mets come in.
In smaller markets, threats to take away, and keep away, local professional sports entertainment are more plausible. And that entertainment provides some benefit even if doesn’t help other local businesses. So I can see why a city and state would find it in their interest to pay a subsidy.
My problem here is that one medium sized city is implicitly betting against others, just as they do when companies get subsidies for a new corporate headquarters or factory. This is a problem causing state and local taxes to be higher everywhere without any average net benefit. The solution is to outlaw these kinds of subsidies, and not just for sporting facilities.
Yes, but none of those are for-profit, private enterprises.
Like I said, the team owners should not get sweetheart deals. They would just be renters same as with concerts.
Kansas and Missouri are fighting over the Chiefs. Jackson county (home of ArrowHead) didn’t pass a tax increase for renovation and Kansas has something called STAR Bonds for “any significant development or attraction that would bring tourism from outside the area”. Let the bidding begin…
One big gimmick (I don’t know a better word) is that when a sports franchise is purchased, the cost can be allocated to different things. If the stadium is included that can be one thing. This can be depreciated over time as an expense. When the franchise is sold, there would be a capital gain, but there’s no requirement that the amount of the purchase price the seller assigns to the stadium is the same that the buyer does. In any case that portion of the profit is taxed a a capital gain.
Surprisingly, the value of the players’ contracts can also be depreciated. This is true even though the the salaries themselves can still be expensed. Bill Veck is the one who came up with this “trick” in the 40s or 50s.
Similar things are true in Hollywood expenses. Movies we all “know” made a lot of money might in fact lose money by clever accounting.
It also redirects entertainment spending AWAY from such businesses. During the 1994 baseball strike, many restaurants and other small entertainment businesses here in Toronto said business had never been better. Yes, there weren’t Blue Jays games to bring traffic around downtown, but that meant people weren’t spending money on tickets and refreshments inside the stadium, and in some cases were spending their entertainment dollars OUTSIDE the stadium.
Talk about whether or not Corporate Name Park brings business to adjoining bars is kind of irrelevant, really. If the government spends $500 million of taxpayer money on the stadium, that is absolutely a deadweight loss. You can say all you want that Joe Sixpack is going to spend more time at a bar next to the park, but even if that’s true, the money spent there did not magically arise from nowhere. It’s just being funnelled away from a bar elsewhere, or some other pursuit; maybe Joe would have spent it taking his kids to an amusement park, or on hi model train hobby, both of which would have earned that money without a huge infusion of taxpayer bucks.
This is ENTIRELY an issue of opportunity cost. The opportunity cost in constructing stadiums totally consumes the expense. There’s zero doubt at this point.
I will grant that the taxpayer might be angry about losing a team, and it’s hard to put a dollar figure on that emotional thing. Seattle fans are still angry about the Supersonics leaving. But Seattle is not economically worse off for refusing to pay a ghastly amount of money to upgrade their arena.
The cost-benefit analysis for all of those things is hugely positive.
I really don’t understand when teams “threaten” to move from a city to a nearby suburb. It seems to me that that’s a win-win situation for the city: The people of the city still get to go to sporting and other events (concerts, etc.) nearby, everyone still gets to root for “their local team”, but the city doesn’t have to pay anything for it.
That’s the team owner’s playbook - use the fans’ emotional attachment to the team as leverage when negotiating a deal with the city/county. It was played that way in San Diego (Chargers) and Oakland (A’s, Warriors, Raiders) where that strategy did not work, so the owner found another sap/city to build them a new facility. I know it’s difficult for some to imagine, but people get really attached to their teams, and the owners know this and wield that idea every chance they get (for their enrichment).
I don’t remember which city it was, but a bar or restaurant owner was saying the nearby stadium didn’t help his business. On game day, people who weren’t fans avoided the area because of course they would. Traffic is horrible. And fans tended to bypass local businesses and go straight do the stadium.
Seeing super fans lose their…cool at local government meetings when these issues come up can be quite enlightening. For many of these fans, it doesn’t matter whether the team is economically a net gain or a net loss for the city as a whole. They love their team and don’t want to see them leave. I’m pretty sure I mentioned it earlier in this thread, but arguably there is a cultural importance to sports teams. I’m on the side of making these for profit businesses pay for their own stadiums.
Particularly annoying given that most teams are owned by multibillionaires.