Americans love professional sports. Whether it’s the NBA, the NHL, Major League Baseball, or the immensely popular National Football League, people flock to stadiums around the country to watch games, cheer on their favorite athletes, and enjoy the food, entertainment, and atmosphere that stadiums provide.
From time to time, however, our professional sports leagues want to expand into new markets by building a new stadium in a new city, creating a new team, and inviting a new group of fans to participate in the thrilling spectacle of professional sports in their home town.
This may seem exciting for fans, after all, who doesn’t love cheering for their home team? The reality is that building a new stadium doesn’t always work out how everyone wants. In this article, we’re looking at the real impact of building a new football stadium in a city. We’ll examine both sides of the coin, unpacking and evaluating arguments from all sides, to assess the pros and cons of building a new football stadium in a city.
Financing a Concern for Governments and Taxpayers
One of the primary concerns when building a new stadium is financing. Constructing a new football stadium is an expensive undertaking and often requires collaboration between multiple stakeholders.
In some cases, rich owners can undertake stadium construction projects with their own money. The new Yankee stadium constructed in the mid-2000s was paid for entirely by the Yankees Baseball organization at the cost of over $1.3 billion.
When team owners find themselves unable to privately fund a stadium construction or improvement project, they may pressure the municipality to contribute financially, citing economic gains for the future as an incentive for cities to help with taxpayer dollars. For example, Rose Garden Arena, which houses the Portland Trailblazers NBA team, was built using a combination of public and private funding. The team’s owner Paul Allen contributed $46 million, $16 million came from bank loans, and $155 million was financed with municipal bonds.
These deals can still fall through; In June of 2008, the Tampa Bay Rays announced that they would postpone their plans for a new $450 million ballpark which depended on $100 million in tourist tax dollars from the county and an additional $75 million from the city of Tampa Bay. Local governments felt they were “being rushed to commit millions of public dollars for the controversial project.”
Infrastructure Upgrades a Requirement
To make a stadium construction project successful requires some level of municipal cooperation. A city must build and improve infrastructure that supports large crowds moving to or from the stadium for games. It must establish and enhance transportation routes that shuttle people to events from around the city, expand bus routes, enhance police presence and security during games, expand roadways and sidewalks, and ensure adequate fire prevention arrangements.
The new Yankee Stadium, completed in 2009, required an investment of $220 million from the city of New York to upgrade infrastructure. The City of Portland similarly invested $34.5 million in updating infrastructure when the Rose Garden was built. For each such example of team owners and cities working together, however, we can find a deal that falls through because the municipality is unwilling to invest.
Stadiums May Not Grow Local Economies
While it seems a stretch to say that stadiums do not benefit the economy at all, there is significant data and compelling reasoning which suggests that stadiums do not generate significant local economic growth. NFL stadiums host just eight regular season games per year, a couple of pre-season events, and perhaps a playoff game or three, and will have to play host to many other events throughout the year to drive revenue.
Arenas that are used more frequently work out better for cities in terms of the tax revenue they bring in, and it may be the case that shopping malls and manufacturing plants would employ far more people and generate more tax revenue.
Constructing a new football stadium will undoubtedly bring tax and tourism revenue into city coffers, but whether that’s a good thing depends on the level of investment contributed by the municipality, how the stadium is used, how funding and financing are decided, and other factors. Team owners have recently faced significant resistance from cities who don’t want to foot the bill for stadium construction projects that have little prospect of bringing big returns.
New stadiums in the future will likely be embedded in high-value residential and commercial properties, creating integrated spaces that generate revenues year-round and ensure a return on the municipal dollars that get invested into the project. Building a new stadium is an exciting and rewarding endeavor, but it’s important that the numbers make sense for the cities, owners, and other stakeholders at the table.