A subsidy can be defined as any financial assistance given in the hope that more than the amount given will be generated as a result, and in most cases comes from the government. In the case of new sports stadium subsidies, the use of government subsidies (public funds) has greatly increased in the past two decades. Two questions then come to mind: Why does the government subsidize new stadium construction and does the local economy actually benefit from this investment of taxpayer money? In short, because money drives policy, and no, new stadiums are generally not wise investments.
In order to be granted a subsidy, team owners must first convince the local government, and then work with them to convince the public that using taxpayer money
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According to the Bloomberg article, government subsidized bonds are used to build the new stadium, and those bonds are backed by city taxes. This in turn leads to an increase in taxes for everyone in, around, or travelling to the city. For the city of Arlington, TX to fund the new Dallas Cowboys football stadium, “voters had to accept a 0.5 percent sales tax increase, a 2 percent hotel levy and a 5 percent rental car tax.” (Kuriloff and Preston) That might not seem like too much of a sacrifice, but Kurioff and Preston go on to summarize that “tax exemptions on interest paid by muni bonds that were issued for sports structures cost the U.S. Treasury $146 million a year” with “$17 billion of exempt debt issued to build stadiums since 1986.” (Kurioff and Preston) That’s $17 billion of taxpayer money not going to maintain infrastructure, fund other local projects, or provide economic relief in unsure times. New stadium construction isn’t the only issue, as existing teams want bigger, better, more modern stadiums. An excerpt from the book Sport and Public Policy states that “between 2000 and 2009, 31 major-league stadiums and arenas opened across urban America at a public cost of approximately $8 billion” and “most of these stadiums were built for already established, financially stable teams to replace stadiums that already existed.” (Santo and
Ultimately, there are three exceptionally important criteria for deciding on good candidate for an expansion team. The first criterion is that the stadium must be controlled or owned by the baseball team. The stadium is a crucial aspect because most of the team’s revenue is generated in relation to the stadium. This stadium revenue comprises of ticket sales, parking, merchandise and concessions. Thus, without a stadium, the team will not be able to generate a stable source of revenue. The second criterion is that local ownership must have strong roots within the community. Without ties to the community, fan attendance could decrease. This is because fans could eventually perceive that the owner(s)’s only goal for the MLB franchise was to be profitable. The third criterion is the city must have long-term political support in the community. It is vital to have political support in order to gain financial support throughout the team’s years of existence, especially in tax payer monies. Particularly, this is significant when the team experiences issues or fights that involve the stadium and the land around the stadium. If there is a lack of political support, the expansion teams will not be able to obtain enough for money for stadium renovations, repairs, or to build new stadiums for the same team within the same city. This circumstance was apparent when the New York Yankees used tax revenue generated by New York City to fund the building of their brand new stadium for the 2009 season. Therefore, expansion committees believe it is necessary to confirm that the prospective cities will have enough political support because this political factor will help stabilize and financially support the prosp...
Economic Theory Labor market theory is one of the most integral economic theories needed to dissect the inefficiencies in professional sports. Looking first at the type of market these leagues function in, one can see that they do not necessarily meet all the criteria that a competitive market requires. The big four sports leagues in the US have a set number of teams, which creates barriers to entry. Only when an expansion is agreed upon by the league, such as NHL has done for the upcoming season, are teams allowed to enter, and even then, it is limited to a maximum of a few teams in recent history. Additionally, the league makes it virtually impossible to exit, as selling a team is the closest they come to exiting the market.
Siegfried, J., & Zimbalist, A. (2000). The economics of sports facilities and their communities. The Journal of Economic Perspectives, , 95-114.
In the last decade, almost all the big cities in the United States, and a few small cities as well, have battled with each other for the right to host big league franchises. Cities spend hundreds of millions of dollars to build new stadiums and offer enticements to private franchise owners. Politicians often push for stadiums and other favors to teams despite not having support from neighborhoods and general opposition across the whole city, especially where these high dollar stadiums would be built.
There seems to be a domino effect through out the U.S., new stadiums are being built, teams are demanding that their city build them a new stadium to play in but it is not necessary to build these stadiums. The most obvious change in new stadiums is coming from baseball. In the last 10-15 years many new baseball stadiums have been built, but who is paying for these stadiums? The teams and the owners that are demanding the stadiums, or the taxpayers? The answer is that taxpayers are picking up a huge amount of the cost to build a new stadium.
Baseball is a part of the past, present and future. Unfortunately for two unlucky teams, the future is as bleak as the cold January mornings in State College. Ever since the “Strike of 1993,” baseball has been financially hurting. What fan wants to go and watch a bunch of greedy, overpaid, crybaby million dollar athletes after they decided not to play as a demonstration of their demands for even more money? However, baseball was soon on the proverbial road to recovery as the...
Change is often met with opposition, skepticism, and even euphoria. All three of these feelings have been expressed with the announcement of the Atlanta Braves Major League Baseball team’s search for a new stadium to commence their 2017 season. The Braves current stadium is known as Turner Field, which originally completed construction in 1996 to host the 1996 Summer Olympics, is scheduled for demolition in 2017. The Braves announced that they are pursuing the construction of a new stadium in Cobb County, located in the northeast suburbs outside Atlanta. The new Cobb County stadium location far out weights the inner city location of Turner Field.
There is a nationwide trend in which taxpayers are asked to pay for new stadiums these stadiums benefit a single corporation. A sport construction boom has started, these new stadiums cost a minimum of $200 million to build, but usually cost much more. New stadiums have been built, or are underway, in New York, Pittsburgh, Dallas, Baltimore, Cincinnati, Seattle, Tampa, Washington DC, St. Louis, Jacksonville, and Oakland. This competitive trend replaces old stadiums with high tech flashy stadiums used exclusively for one sport. These stadiums are unnecessary, and not cost efficient. Most of the time new stadiums are not used for multi-purposes, they bring in money exclusively for the professional league and not ...
November 6, 1999 the doors opened for the first time to Pacer fans. Fans roamed the corridors and were able to see how the over-budget, 15 story high, $183 million dollar facility was going to pay off for Indianapolis. Of the $183 million the Pacers are responsible for $57 million. This comes from their pockets of team revenue. The city, through local tax, will cover $79 million. This money will be collected via the tax district, hotel-motel tax, and built in ticket tax. The Tax district is a tax that is placed on the area surrounding the Fieldhouse. Local businesses and Circle Center Mall residents will be taxed for the beneficial increase in customers in the area due to the new facility. The Hotel-Motel tax is placed on existing and new hotels in the area. This tax is added to the cost of nightly stays in the hotels that fans may be using while attending functions at Conseco Fieldhouse.
However they weren't the only ones to benefit greatly. The centerpiece of the games and the location where the opening and closing ceremonies were held was a new $209 million stadium, now called Turner Field and now home to the city's finest baseball team, the Atlanta Braves.
This is a very big milestone for teams in the league to hit, and it was done only last year. Every team is now worth at least 1 billion dollars, and the average team is worth about 1.2 billion. The revenue of all the teams just keeps going up and up. The sport if anything is becoming more popular at the professional level. The teams keep becoming more wealthy, and this is due to the spending of their fans. The profit shown by this study shows that many people are dedicated to watching the sport at the professional level, but there is also a study that shows how the game is still popular at the lower levels. All the professional athletes started out as minors playing in little league, and this is where the future athletes are now. The future of the game is determined by how many children are interested in the sport to continue to play. One way to determine how many kids play the sport is by looking at the wholesale of baseball equipment over a few years. “The statistic depicts the manufacturers (wholesale) sales of baseball and softball equipment in the U.S. from 2007 to 2015. In 2010, wholesale sales of baseball/softball bats amounted to about 181 million U.S. dollars” (Statistica, paragraph 1). Research done by Statistica shows the profit made from selling baseball equipment from 2007 to 2015. The results show that equipment for baseball has made much profit for many companies. Just the baseball bats alone sold for over 180 million dollars, and that is excluding other things like gloves, helmets, and other equipment and accessories. This statistic shows that below the professional level, baseball is still very popular and many children and young adults still play. The money made from them buying this equipment gives the opportunity to have a good idea of how many people play below the professional level. The financial situation of the
With over two hundred countries participating, the Olympic Games is easily considered as one of the largest multisport event known to history. The Olympics are held at a different country, and even more rarely at the same city. For a country to be chosen to host the Olympics, the country’s National Olympic Committee (the country’s representatives for the Olympics) nominates a city (from the country they represent) that they think has potential in hosting the Olympics nine years prior to when they wish to host the Olympics. It is a two year process that consists of: Application Phase, Candidate Phase and the Election of the Host City. The country that wins the election is given seven years to prepare for the Olympics. (International Olympic Committee, n.d., p. xx-xx) The hosting country expends billions of dollars, usually money they don’t have, preparing for the Olympics. Then the question is raised 'why would a country go through so much trouble and spend an outrageous amount of money to host this event?' Throughout this discussion paper it will address all the pros and cons for a country to host the Olympics. It will also see if a smaller sports event can produce the same benefits the Olympic offers with less cost and risk.
Bissinger states in his essay that local high schools these days are spending millions of dollars on things such as elaborate stadiums, gymnasiums and even chartered planes to transport their team to big play-off championship games. In the past, schools would sponsor fundraisers to RAISE the money for these t...
Sports are one of the most profitable industries in the world. Everyone wants to get their hands on a piece of the action. Those individuals and industries that spend hundreds of millions of dollars on these sports teams are hoping to make a profit, but it may be an indirect profit. It could be a profit for the sports club, or it could be a promotion for another organization (i.e. Rupert Murdoch, FOX). The economics involved with sports have drastically changed over the last ten years.
The number one recommendation for American teams is that they should focus on building teams to which players and fans would be loyal to, and then they will build success and gain revenue in the process. This can definitely be a changing factor for sports in America.