Sports Stadiums: Turning Public Money into Private Profit Essay

They saw advertisement as an income. And the franchises have increased revenues by using new stadiums and increasing prices for premium seating since 2002. New stadiums have new clubs, restaurants, stores and museums that can be served as new sources of revenues. They made profits by selling merchandise. Also, new stadiums improved the attendance of fans.

Money may be spent on the local economy during sporting events, but it doesn’t always wind up back in the hands of the residents (Baade, Baumann, Matheson, 2008, p. 797). The worst part of leakages is that the money given to build those additions and stadiums through taxes isn’t always reciprocated back to the people and the community (Zirin, 2011). The tax money is instead morphed into private profits that escape from the people who originally gave up the money in the first place (Zirin, 2011). The income multiplier for sporting events is considered to be much lower then normal systems of expenditures because of the specialized leakage effect in professional sports (Baade, Baumann, Matheson, 2008, p. 797). This specialized leakage effect stems from the majority of profit that is made goes to athletes and owners, but athletes and owners don’t necessarily live in the immediate city they play for (Zaretsky, 2001). If we replaced assets from an NFL team to a large manufacturing plant we could see that the profits would now go to the thousands of workers who most likely live in the city they work in and can directly put money back into the economy in larger

The rise in popularity of professional sports over the last century has brought financial gain and stability to many facets of the economy. Whether it is a new franchise, stadium, or the signing of a big-name player, these activities bring attention to a region or group and influence often comes as a result of that attention. Money brought into an area from ticket revenue, hotel bookings, merchandise sales, and other businesses are impacted financially when a stadium is built. The economic influence a stadium brings to a local economy is a positive one. Many factors come into play when anticipating the construction of a new stadium.

I am going to discuss the topic of National Football League stadiums and their public funding. The purpose of the study is to find out if funding of NFL stadiums is “bad business,” The research I will look at the impacts that a stadium has on the economy in the city. Cities’ like to have attractions that they can draw from and be proud of. Most cities have some form of sport arena, and more are being built or are planned to be built. As with any business there are positives and negatives when hosting a sports team. Cities pay multimillions to help fund and build sport stadiums for teams. I hadn’t researched or looked into this topic before, so I was very intrigued by this. At the end of this paper I will give my own personal opinion.

Stadium subsidies are used to fiancé new stadiums. The government provides financial support to franchises that allows them to build their new stadiums. These subsidies are costing tax payers millions and do not seem to be in the best interest of the city the stadium is in. Those in favor of using tax payer dollars to build stadiums argue that the economic impact a professional franchise has on a city is great and a new stadium will help generate revenue. Research has shown this is not the case. Most stadiums cost the city and never produce enough revenue to make up for those costs (Bast, 1990).

Mt. Vernon does have other things to look forward to in the town so they would never spend 5.6 million on a stadium. The booster club is only willing to buy jerseys for the team every four years, and those are varsity only jerseys. That means the freshman are wearing jerseys up to ten years old. In fact the school did its first major improvement to the field in decades. The school put in brand new bleachers into the side of a hill because they don 't want to spend the money to make a real stadium. The money for these bleachers didn 't come from the town directly either. It came from hard work of fundraising and the players and players parents doing most of the work. Bryce Cox, a Mt. Vernon lineman, drew a picture that sold for five hundred dollars. It is all going to the football program because the program is doing anything to get money for better gear and more opportunities on the football field.

Some people might say that building an indoor baseball, softball, and football field is a waste of money and it would be too expensive. Each day people would have to pay a certain amount of money per hour they are there, or they could get a membership. If there are tournaments, the teams have to pay to enter them. Also Eldred could have fundraisers to earn money for the fields.

Thus we can see why public money is eagerly donated. The full costs of a stadium and the damage it does to communities are often years in the future, long after the politician is known for being the hero that save our local team and has moved on to bigger and better things, now with the campaign funding of the very teams that they built homes for and the fans who continue to pay. Team owners can choose new cities but cities can’t choose new teams thanks to the leagues government-sanctioned monopolies over franchise placement, mayors for example, feel they must offer owners anything they want. “Politicians continue

Sports teams are a symbol of a cities pride. Take for example the Chicago Cubs. They create a sense of loyalty toward that city. However, none of that would happen without a stadium. Stadiums and teams can play a very important role in a cities economy, or they could also be irrelevant. To decide whether or not they are useful or not you must first understand each side of the argument. So first, let’s examine the pros of having a stadium within your city. Then, we will discuss the harms of having one. And finally, decide which side is more beneficial for the economy.

To aid Cowboys owner and general manager Jerry Jones, whom is stated in Forbes Magazine as being “worth 3.1 billion dollars himself,” (Page 1), in paying the construction costs of the new stadium, Arlington voters approved the increase of the city's sales tax by 0.5 percent, the hotel occupancy tax by 2 percent, and car rental tax by 5 percent. The City of Arlington provided over $325 million (including interest) in bonds as funding, and Jones covered any cost overruns. Also, the NFL provided the Cowboys with an additional $150 million loan, following its policy for facilitating financing for the construction of new stadiums,” (Page 1).

     In every move there are two sides to the politics. There are the teams themselves and there are the cities that fight to keep them. In May 1991, Sharon Pratt Dixon, Mayor of Washington, D.C. said, “We’re going to do whatever it takes to keep the Redskins here. Sports has become an industry, and to the extent that we can guarantee jobs for the District residents, we will do whatever it takes, including building the stadium ourselves” (Euchner 1), this is one view of how a city official fights for a team. The other viewpoint is from the side of the team owner, Al Davis, managing general partner of the Raiders said, “just build it” (Euchner 1). These viewpoints are why sports teams move and cities fight to keep

This directly impacts the projected NPV of the project as almost 95% of the cash flows are derived from this boost in sales. In addition to the financial support, remodeling the Stadium location also fits well with their business strategy. Some of the key supporting evidence includes a high percentage of the target market in the trade area at 42% of college educated adults, and a population with the highest median income of the group at $65,931. Most important to Target however, would be the maintenance of their brand. As a company that places a high value on the image of their brand, revitalizing a lagging store would both keep their presence in the local area and potentially draw more customers to an upgraded location. The final decision would be to accept the project under no budget constraints, but not issue new debt or equity to achieve it.

Sports Stadiums are an iconic staple of American tradition. However not everything about these venues is positive. Team owners take advantage of laws and fans to meet their own goals. Citizens and city officials from various locations have taken up their grievances with the NFL in the past. And it has gotten to the point where even political parties join together to bring to light issues with the organization. NFL stadiums are not good for cities because they take advantage of tax payers, hurt citizens on an economic level and cost them billions in subsidies.

In the United States, new sports stadiums are commonly seen as a vital part of the redevelopment of a city having a great economic growth with the production of jobs and a positive income builder. After this, the owners of the pro sports teams with millions and millions of dollars of subsidies for the construction of new stadiums and arenas and expect these facilities to generate economic benefits exceeding these subsidies by large margins. However, a growing body of fact indicates that professional sports facilities, and the franchises they are home to, may not be engines of economic benefit anywhere claims Sachse, “. In reality, sports franchises typically account for a very small proportion of the total economic output of the cities in which they reside.” Some economical studies on the amount of income and employment in US cities find no evidence of positive economic benefits associated with past sports facility construction and some studies find that professional sports facilities and teams have a net negative economic impact on income and employment. It just shows that these results suggest that at best, professional sports teams and facilities provide non-pecuniary benefits like civic pride, and a greater sense of community, along with consumption benefits to those attending games and following the local team in the media; at worst, residents

Unfortunately, these arguments contain bad economic reasoning that leads to overstatement of the benefits of stadiums. Economic growth takes place when a community's resources--people, capital investments, and natural resources like land--become more productive. Increased productivity can arise in two ways: from economically beneficial specialization by the community for the purpose of trading with other regions or from local value added that is higher than other uses of local workers, land, and investments. Building a stadium is good for the local economy only if a stadium is the most productive way to make capital investments and use its workers.