Finally, all this new spending has a “multiplier effect” as increased local income causes still more new spending and job creation. Third, a team attracts tourists and companies to the host city, further increasing local spending and jobs. Second, people who attend games or work for the team generate new spending in the community, expanding local employment. First, building the facility creates construction jobs. The economic rationale for cities’ willingness to subsidize sports facilities is revealed in the campaign slogan for a new stadium for the San Francisco 49ers: “Build the Stadium-Create the Jobs!” Proponents claim that sports facilities improve the local economy in four ways. But a city need not be among the nation’s biggest to win a national competition for a team, as shown by the NBA’s Utah Jazz’s Delta Center in Salt Lake City and the NFL’s Houston Oilers’ new football stadium in Nashville. Most large cities are willing to spend big to attract or keep a major league franchise. Renovations aren’t cheap either: the net cost to local government for refurbishing the Oakland Coliseum for the Raiders was about $70 million. Perhaps the most successful new baseball stadium, Oriole Park at Camden Yards, costs Maryland residents $14 million a year. Sports facilities now typically cost the host city more than $10 million a year. State and local governments pay even larger subsidies than Washington. Ten facilities built in the 1970s and 1980s, including the Superdome in New Orleans, the Silverdome in Pontiac, the now-obsolete Kingdome in Seattle, and Giants Stadium in the New Jersey Meadowlands, each cause an annual federal tax loss exceeding $1 million. Assuming a differential of 3 percentage points, the discounted present value loss in federal taxes for a $225 million stadium is about $70 million, or more than $2 million a year over a useful life of 30 years.
Since 1975, the interest rate reduction has varied between 2.4 and 4.5 percentage points. Tax exemption lowers interest on debt and so reduces the amount that cities and teams must pay for a stadium. The subsidy starts with the federal government, which allows state and local governments to issue tax-exempt bonds to help finance sports facilities.
Most of this $7 billion will come from public sources.
#Pro player stadium renovation professional#
Industry experts estimate that more than $7 billion will be spent on new facilities for professional sports teams before 2006. Major stadium renovations have been undertaken in Jacksonville and Oakland. Louis, Seattle, Tampa, and Washington, D.C., and are in the planning stages in Boston, Dallas, Minneapolis, New York, and Pittsburgh. New sports facilities costing at least $200 million each have been completed or are under way in Baltimore, Charlotte, Chicago, Cincinnati, Cleveland, Milwaukee, Nashville, San Francisco, St. To find out more, see Roger Noll and Andrew Zimbalist’s edited book, Sports, Jobs, and Taxes: The Economic Impact of Sports Teams and Stadiums.Īmerica is in the midst of a sports construction boom.
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