Recently Nevada has received $750 millionto build a stadium for the Raiders. Fox sports (2016) calculate in the past twodecades over $12 billion of tax payer’s money has gone to stadiums of thatseven has gone to NFL stadiums in some way. This then institutes a massivetransfer of money from everyday people to owners and players involved in thesports franchises. Generally, the main people who benefit from the stadiums arethe owners, players, fans, and construction companies. Some of the stadiumssuch as football and baseball are worse off because of the size of the arenasand not being able to utilize them for much else more than the games. Publicsubsidies for sports facilities is a great option for those involved except forthe pubic itself. When building new stadiums there are a few generalslogans that are used to get the mayors or cities on board with the idea.
Thefive things include, creating jobs, construction money goes back to the city,attracts business, will bring media attention, and positive psychic and socialbenefits (Coakley, 2015). Studies by sports economist have been done to try toprove or disprove the claims stated above., such as research done by Baade(1994).His research was to use economic theory and empirical techniques to assess thecontribution of professional sports to metropolitan area economic developmentin the United States (Baade, 1994).
The findings in this study suggested thatthere wasn’t much relationship between teams and income growth, but the citiespride was affected in a good way. In a book Sports,Jobs, and Taxes economic development was studied from all possible avenues.From their studies the results seemed to be the same every time. The sportstadium offers small benefits in the economics and providing jobs.
Not manystadiums have reached an amount of money that would be able to return to thepublic what was taken. It is possible for sports to lead to economic growth fromstadiums, but the correct steps would have to be taken (Delany & Eckstein,2007). Stadiums do get money from licensing and media, but it is not equivalentto the money that is being put out to build them. When a new stadium is builtthe attendance, rate goes to because everyone wants to see all of the newimprovements. Gradually the numbers will go back down. The first point is that stadiums create jobs.
Althoughthe building of many new facilities in downtown areas has attracted millions ofvisitors to areas previously avoided by most residents, there is no evidencethat these facilities have significantly changed employment or residentiallocation patterns. The jobs that they are given are generally low income orpart time jobs (Delaney & Eckstein,2007). Some jobs that were successful were hoteljobs. For jobs to be created more money must be put in.
When it comes to construction most of it is done throughcontractors and materials and other products used are typically bought outsideof the city they are building in. Swindell and Rosentraub (1998)went over the five main points stated above and if they were true. They did so by conducting surveys ofthe sports teams and other civic assets that were in the city of Indianapolis.The research was conducted by calling 1,5000 randomly selected residents overthe phone asking five different questions about their city; civic pride,national reputation, others mention, visitor see, and loss hurts reputation.From the findings it showed that the only benefits that were received were thatof pride for living in a city with a team and media support. Most people agreedthat the team was doing a public good by being there and that its presence wasenjoyed by all those living in it. As for media, they have a large roll in howthe public view stadiums. When Delaney and Eckstein (2007) studied Cincinnatiand other cities they found that media on all accounts was supportive of thestadium, by reinforcing that the stadium will be good for the community, butthis shows that there can be bias in the media.
It can be said that when otherteams come to the home stadium there will be more media coverage, but theexpenses are basically evened out when the team goes away for a game and theirgames must be covered as well. (Siegfried & Zimbalist, 2000)The stadiumcould bring business to areas around the stadiums, but it could also drive themaway. The types of business that is normally created are restaurants, bars,hotels and other form of entertainment for after games (Coakley, 2015). Theproblem with these are they are generally not located near the actual stadium,so people must drive to either a different part of town or another city toenjoy the businesses. Unless the clustering effect is used which is when publictransportation is easily accessible to the stadium along with other businessventures, not just the stadium in the middle of the city or edge(“Clustering”,2009). With building of the stadiums space is needed to somebusiness may be bought out to have space for the upcoming stadium. In sports leagues there are things called monopolies.Which are the exclusive possession or control of the supply or trade in acommodity or service given the definition from Oxford dictionary.
The monopolypower of leagues is at the root of essentially every problem that plagues proteam sports, from competitive balance to out-of-sight player salaries to theblackmailing of cities,” says Washington State University Professor RodneyFort. The monopoly sport leagues and those involved operate in many ways. Theseleagues can increase members profits by keeping the number of sports franchiselow for the number of cities that want or can afford to have teams. To get ateam, the cities must go through a process known as bidding wars (Swindell &Rosentraub, 1998). The bidding war is not for the amount it takes to make ateam but the amount a city is willing to pay to show how much they want theteam. The teams have been able to lure the state and governmentinto a frenzy of who wants it more and that is how they have learned to receive the fundsfor the stadiums (Siegfried & Zimbalist, 2000).Monopolies control all premier sports. They have the power to create new teamswhich gives them power of the placement of the franchise to get subsidies fromcommunities that are willing to give the amount of money if it will help givepride to their city or state (Siegfried & Zimbalist, 2000).
One way monopoliescan control the cities are by the mayors and threats. Most of the time thepeople who propose the idea of a new stadium to the people is the mayor (Siegfried& Zimbalist , 2000). This person generally believes that the points given; createjobs, money back into the community, attracts business, media attention, andpublic pride are true. They are willing to willing give the money. The money used to pay for stadiums is generally in theform of subsidies, which could be public, favorable leases, direct cashpayments, tax-exempt bonds, and private money (Weiner, 2004). The Government hasbeen involved in the building of stadiums sense after World War II.
With publiclyconstructed structure the public generally pay for the construction and up keepof the stadium (Weiner, 2004). Favorable leases are when the team and the statesign a lease agreement, but it is hard for the public to judge if said lease isfavorable because they are normally keep under the radar. With these types of leases,it seems like it would be alight because there is algal document between thetwo, but turns out in the end the government generally gets the short in of thestick in the situation (Weiner, 2004). Another form of subsidy is direct cashpayments, this is when the city or state government directly gives money to theteam to either stay or come to the city (Weiner, 2004). It seems like this formof subsidy is not used as much with teams because it returns generally thecities receive nothing back because the money is viewed as a gift and whenpeople gives gifts you don’t always have to return one. Though local governmentssuch as mayors should not have all the blame as the federal government as wellbecause they are responsible for tax-exempt bonds. These bonds are used to payfor some expenses of construction that have a lower interest rate than per seprivate bonds (Weiner, 2004). Over the years stadiums have gotten more expensivecausing team to lean on the tax payers’ dollars more.
The last formof money used is private funding which it seems like most stadiums are beginningto implement into their proposals. This form of funding doesn’t have muchresearch done about it, but what has been said thus far is that private fundingis better for the community somewhat because there is less money taken fromthem and how the teams pay the fund back is through raising the prices oftickets, naming rights, and other things. The model of private funding generallyworks okay if some public funding is added which as well make the increase ofprice not as drastic along with being able to use the stadium for more thanjust one specific event. The amount of money given from different privateinvestors may also not be a sufficient amount hence forth why the public maystill have to be asked. When just private funding is used the motive to pay backthe money is higher, and this leads to higher ticket prices. An example is Levi stadium in San Franciscowhere they have lost a decent number of longtime fans due to the extremeincrease in prices and not having a well thought out stadium design which leadto extra monies being spent on renovations (“Levi’s Stadium is a model forprivately financed venues”, 2016).
Over the pastdecade the government has tried to puta sop to large sums of public subsidiesgoing to stadiums such as 1986 tax reform and in 2016 president Obama proposedgetting rid to tax free bonds (Povich, 2016). The tax reform was that teamswill be denied federal if not using taxable not tax-free dollars when no morethan 10 % should be covered by accumulated revenue, but team owners found waysaround the bill. What Obama tried to do was do away with the subsidies becauseabout $146 million of U.S money is used to pay for stadiums a year. But theidea was not followed though due to other members of the government turningdown the proposal. Both ideaswere a great start but go no where if they are not backed up. More regulations mustbe given to team owners to try to change the way stadiums are built so that theymay be able to benefit teams and the community.
Something that could possiblychange how the monopoly system works is by not allowing teams to move aftercertain amounts of time or without paying their loans back. Where as they can’tuse the tactic of relocation to scare cities into giving them more money. The public opinion must be heard when talking about theirmoney. Coates (2007) recorded that about 80% of the stadiums that were builtthe public said they did not want to sponsor but they were built any ways. Ifmore voting was used, they could use to analyze what the people would like tosee more of and capitalize from that. Generally, they would take a littleremission then bring the proposal back again changing a few words here andthere hoping it would change the people minds and after a few attempts it does.It will take people to really stand up for what they want change to occur andthat is what has happened in a few of the more recent stadiums, but also theremust still be support of the teams or else money will be lost. Something thatmay also help is doing more research on the cities that stadiums are in orbeing built in.
The metaphor of buying a house was used by Coates (2007) whendescribing how to think of the area of the stadium. When looking to buy a housenormally people look up the demographics of the neighborhood, geography, historyof the house, estimates on how much the house will sell for in the future,crime rates, so forth and so on. When doing a thorough consideration of how itseems the stadium may do then it should be decided if that stadium is builtthere. The last thing that could be doneis looking at taxation. In the revenue that is acquired by sports areas intocity a decent part is taxation for things such as hotels and cars (Baade,1994). Overall,it may be said that yes sports stadium do have some effect on economy but in avery intangible manner such as positive views towards your city and mediacoverage but no tangible economic effects such as money. The 5 major claims or goals that are normallystated have been limited to be factual. Even though they are not true they willcontinue to prevail due to the monopoly system, government assistance, and thepublic not being heard or considered.
Theycan be profit and better on the public if joined with private funds and theproper research is done on the area. If public money is used for building stadiumsthere will always be research done on the topic, but there are so many avenuesthat have yet to be explored on how the issue could be resolved. The privateand public funding is a good start to ways in which stress could be taken fromthe public.