On the Outs: Using Taxpayer Funds to Build Stadiums | Sports Destination Management

On the Outs: Using Taxpayer Funds to Build Stadiums

Feb 10, 2016 | By: Tracey Schelmetic
Spurred on by Complaints of Residents, More Cities are Turning to Other Funding Models

When the news that the NFL has decided the St. Louis Rams would move to the Los Angeles suburb of Inglewood, city residents likely braced themselves to be handed the invoice. California, however, has been leaning toward a trend of using no public money for sports-related projects. In fact, city officials made it clear that no taxpayer funds would be used for the planned $1.9 billion stadium that will provide a home for the Rams, according to the Wall Street Journal.

“Similar attitudes have affected deals for numerous projects in the state,” wrote the WSJ’s Eliot Brown, Jim Carlton and Matthew Futterman. “In Northern California, the Golden State Warriors are planning a $1 billion basketball arena without public funding, while the 49ers’ new stadium in Santa Clara had relatively little public aid.”

In Oakland, California, which is hoping to hold onto The Raiders, Mayor Libby Schaaf is blunt about the reality at the heart of sports stadium funding.

“There is not support from my residents to subsidize stadium construction,” she said.

In a different economic climate, it was politically risky for a mayor to “lose” a popular hometown team to another state or another city. In 2016, the risk of being seen as profligate with tax money during a time of middle-class hardship may seem greater, at least in California. In other parts of the country, city and state residents are still being asked to open their wallets to keep the teams at home.

“Stadiums and arenas with hundreds of millions of dollars of public aid are planned or rising in Minneapolis, suburban Atlanta and Milwaukee and others, typically after pro teams threatened to move to another state or nearby city,” wrote Brown, Carlton and Futterman.

Putting fan reactions and political posturing aside, the trend in California toward private funding comes at a time when research suggests that stadium deals are not as economically beneficial for cities, counties and states as has been assumed in the past. Studies have found that in the absence of a professional sports team, residents and fans spend money at other entertainment forums. Only very rarely do new stadiums bring about real estate investments that would otherwise have not happened. High-profile expensive sports project failures are in evidence all around the country (the Barclays Center arena in Brooklyn, New York, which is now valued at less than it cost to build just three years ago, is a prime example).

“Pro teams often say that they can’t afford the full cost of stadiums on their own, and that public aid is justifiable given that teams are part of a city’s identity,” according to Broown, Carlton and Futterman.

If the prices to keep the team spirit alive keep going through the roof, however, many sports teams may find even die-hard fans reluctant to kick in toward the exorbitant costs for very little return.

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