Budget Crunch Sidelines New Super Stadium Construction
Do cities benefit from sports teams?
Financial Benefits of Sports Teams
The pubic funding issue raises a central question: Is having a pro franchise worth the cost of public financing? Experts are clearly divided.
Marc Edelman, a professor at the Barry University School of Law in Orlando, Florida, who has studied sports teams and their economic impact, says no.
"For the most part, very few cities get a financial benefit from having the teams," Edelman argues. "The jobs and revenues that are promised don't turn up. People go home after games and if they didn't spend their money there, they'd spend it someplace else. Cities that have given tax benefits or leasing deals end up short changed. It's mostly the happiness of the fans."
Edelman adds that high-priced stadiums only benefit the upper echelons of society.
"An NFL game costs well over $250 for four people. Costs for most sports tickets have skyrocketed in part because of the new stadiums. They're only benefiting the rich," concludes Edelman.
Other analysts say the benefits go far beyond the fan base.
Much depends on the market and what any city can afford to spend, says Dan Grigsby, chair of the national sports law group at Mangels Butler & Mitchell, who's represented teams like the NBA's Los Angeles Lakers in stadium negotiations.
"But games bring in millions of dollars to the surrounding areas," Grigsby adds. "Places near the stadiums really see the benefit on game days. New stadiums also create jobs even if temporary. The loss of a team would have significant economic impact."
Politicians in the Crosshairs
All this leaves local politicians in a no-win position. If they don't help fund the stadiums they can lose the team—and votes of irate fans.
If they approve stadium funding, they can still lose at the polls, as was the case with those in Seattle, Washington who OK'd public funds to help construct Qwest Stadium in 2002 for the pro football Seahawks.
Carl Wimmer, a Republican state representative in Utah, voted against a bill in 2007 to use public funds to help build a stadium for the professional soccer team, the Salt Lake City Real. The bill just narrowly passed, but not before tempers flared.
"The outcry against using public funds was tremendous," says Wimmer. "I expect it to get even louder now across the county. You see a lot of rosy projections used to sell these type of things but more often than not, they fall quite short."
As for the NFL's Vikings and Falcons, their new stadiums are still on the drawing boards; the Minnesota legislature voting down the most recent proposal, while the Falcons are stuck in the Georgia Dome until the bonds used to finance its construction are paid off.
Los Angeles officials have just OK'd a commission to look into building a football facility—with no guarantees of any money. (The city just announced a naming rights deal for the proposed stadium with Farmers Insurance worth $700 million.Officials continue to say "not a dime of taxpayer money" will be used for the project.)
While no one is predicting the end of public funds for building stadiums, experts say a new playbook has to be drawn up.
"Governments and private business need to be more creative," says Lee Walko, a lawyer at Brennan, Manna & Diamond whose focus includes real estate and corporate management.
"One way is more use of corporate naming rights," says Walko. "The private sector has to come up with more money in these times. For their part, governments can look at long term leases for land to be used as a training facility or other uses at favorable terms. There's also multi-use stadiums instead of just single teams as tenants."
"You probably won't see many bond issues for buildings or huge tax benefits being giving away," Harley Lance Kaplan, an economist and certified financial planner at Beta Industries in Sherborne, Massachusetts.
In the end, however, there's more involved in the equation than money.
"It's like the movies in the 1920's and 30's during the Depression," says Kaplan. "People loved to go to them to escape. As long as sports does that too, you will have stadiums built."