Is It Time For the Public To Stop Paying For Stadiums?

We all cherish and revere our favorite sports teams. A lot of our favorite teams are probably worshiped by us as a result of regional allegiances and convictions. But in the greater interest of the public good, it is time for the fans and spectators to refuse to subsidize the voracious demands of multi-billionaire sports franchise owners.

From the 1960s through the early 2000s, professional sports venues affiliated with North America’s “Big Four” professional sports leagues (the NFL, NHL, MLB and NBA) are estimated to have costed $24 billion, with 64% ($15.36 billion) of the funding coming from taxpayer dollars. In fact, according to a study published by the Brookings Institute, by 2006, $7 billion in public money was allocated to new stadiums and facilities.

The primary means of acquiring public subsidies are derived from bonds, hard taxes or soft taxes. Bonds can be either general obligation or non-guaranteed. General obligation bonds are repaid with a compatible sum of the property taxes of the area, and require voter approval.

These tax dollars can come from soft taxes (taxes on car rentals, taxis, hotels, restaurants, “sin” taxes, and taxes imposed on visiting professional athletes). Generally, these forms of taxes are far less burdensome on the public.

Hard taxes include taxes on local income, real estate, personal property, and sales. The use of hard taxes in subsidizing stadiums requires team owners and city officials to coalesce due to the public’s funding of the project.

Non-guaranteed bonds, on the other hand, are sold on the premise of repayment from primary facility-based revenue streams such as concessions, sponsorships, naming rights deals, parking revenue, PSLs, and so forth. Despite the fact that non-guaranteed bonds do not require voter approval, the interest rates on said bonds are significantly higher, and therefore can be a potential deterrent for owners looking to build a new stadium.

So why exactly do cities assist billionaire team owners in constructing new stadiums in the first place? Most of the reasons are based on short-term gains and illogical reasoning.

The primary reasoning comes from the creation of hundreds (if not thousands) of new jobs, primarily construction. The manpower required to build behemoth stadiums means that many different people will get new jobs, albeit tentative and temporary.

Secondly, city officials often concur with the argument that stadium events correlate to residual financial gain for the rest of the city, despite the fact that no recent facility has earned anything remotely close to a reasonable return on investment. In fact, no recent facilities have been self-financing in regards to impact on tax revenues.

In keeping with the secondary line of reasoning, the aforementioned Brookings Institute study goes on to elucidate the fact that new sports facilities have minuscule (if not negative) effects on community employment and economic activity.

Thirdly, “civic pride” and community confidence. Cities love to see their teams win. But at what cost? This includes tourism and new spending in communities. Stadiums and the majority of spectators at games are within the local area, nullifying that line of thinking. Economic growth only occurs when the resources of a community are more productive, which happens when a community engages in trade with other regions, or when local value added is greater than other uses of resources such as workers, land, and investments.

Citizen opposition has had little success in the grand scheme of things. Sports are ingrained in our culture, and often, team owners will threaten to relocate, thereby forcing the hand of the community. Loopholes in leases pertaining to escape and out clauses have allowed teams to abscond with relocation.

Cities and municipalities must put an end to being doorsteps to parsimonious team owners and executives. The cost of not having or losing a professional sports team far outweighs the cost of footing the bill for teams that cry poor despite the fact that the average value of NFL, MLB, NBA and NHL teams are $2.5 billion, $1.645 billion, 1.65 billion, and $594 million, respectively.

A day must come when the public has enough of giving tax breaks and social assistance to these teams looking for new stadiums, and be against funding something that will just become a white elephant in under a generation’s time. That day may never come, and the cycle will continue to repeat itself. After all, mistakes are often repeated.



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