Sports Stadium Persuasive Essay
Humans have been building stadiums for thousands of years. In fact, many stadiums today are modeled similarly to the Colosseum, which dates back all the way to ancient Rome. Back in ancient Rome, stadiums were not as controversial as today, because many now are funded with the help of taxpayers. The debate over the public financing of sports stadiums has been going on for decades between team owners, fans, local authorities, and taxpayers. While sports teams and their owners argue that new stadiums help spur economic growth, many taxpayers oppose their tax dollars going towards stadiums.
Stadiums are expensive, often costing hundreds of millions of dollars, if not billions. The average cost of an NFL stadium from 1997-2011 was over $525 million. …show more content…
An average of 56% of the cost is provided by the public, and only 44% is paid for from private financing (NFL, 2). Often times, even the billionaire and millionaire owners of teams struggle to pay the hefty costs of building a stadium. Therefore, they often ask for monetary assistance from local governments, and most of the time these requests are granted. For example, the city of Atlanta recently planned to build a new NFL stadium situated right next door to the old one. The total estimated cost of the new project is $1.5 billion, (Tucker). It is also not uncommon for teams to desire a new stadium even if they have a fully functional stadium in their home city. Although it is rare, some owners do elect to build their own stadiums even if their city does not provide funding. For example, “Stan Kroenke, the billionaire who became the majority owner of the [Los Angeles] Rams back in 2010, is privately financing this stadium complex, which is said to cost about $2.66 billion plus the $550 million NFL relocation fee” (Gibbs). Although Kroenke chose to finance his stadium with private money, the location is in one of the largest markets in the country. In contrast to stadiums located in bigger metropolitan markets, it is extremely uncommon for small market teams to finance their stadium without public assistance. Before Stan Kroenke builds his stadium just outside of Los Angeles, every NFL stadium has needed public funding, except for one, Metlife stadium, located just outside of New York City, which is home to two NFL teams, and is the venue for many additional revenue-generating events (NFL). Small market teams, and some big market teams often seek assistance from local governments to finance the cost of new stadiums. Regardless of the market teams play in, or the wealth of the owners, stadiums cost colossal expenses for anyone.
When sports teams want new stadiums, it is often the county or state governments that pay a large percentage of the cost to build the stadiums. In fact, local governments can often give too much money to sports teams in order to help them finance their stadiums. Local governments often take decades to pay for their share of the costs of building new stadiums. For instance, in the late 1990’s, the Cincinnati Bengals threatened to leave the city if they did not receive money for a new stadium. In one of the worst public financing deals ever, Hamilton County, where Cincinnati is located, agreed to finance 94% of the entire project. Hamilton County is still obligated to pay off the stadium costs noting that, “Now, more than 10 years after it opened, stadium costs make up 16.4% of the county budget, with almost no benefit to the surrounding area's economy” (Bennett). In terms of funding deals, this is certainly one that other cities and counties could learn from. This is not the only example of counties taking years to pay off their stadium costs often at high interest rates. For example, a few years ago, Miami-Dade County and the Miami Marlins decided to build a new stadium for the city’s baseball team. The county decided to pay for the stadium through the purchase of $91 million worth of bonds from Wall Street. Altogether, the cost of paying off the bonds “crosses the $500 million mark in 2042, and hits $1.18 billion by the time the last payment is due 2048” (Hanks). Since the county is paying off the stadium decades from now, the interest rates for their stadium bonds are extremely high. So high that, “For every dollar Miami-Dade borrowed in this transaction, it will pay back $13.” (Hanks). When cities or counties agree to help fund new stadiums, it often takes years to pay off these obligations. By the time 2048 comes around, the stadium will not be as grand compared to the newer stadiums. Thirty years is a long time when it comes to stadiums. If a city takes many years to fund its stadium, there is a high likelihood that it will be considered old or dilapidated by the time it is paid for. By that time, many teams would be looking to move to a new city for a better stadium, if their home city did not provide adequate funding for a new one. For example, “The cities of Oakland and St. Louis are still making substantial annual payments on the debts that remain for now-obsolete stadiums that were built to lure the Oakland Raiders and St. Louis Rams away from Los Angeles in the 1990s” (Parker). Within the past year, both teams have filed for relocation, the Oakland Raiders to Las Vegas, and the Rams back to Los Angeles, even with the $550 million NFL relocation fee. Thus, no city can guarantee that their teams will stay, even if the city is still making massive payments on their stadium.
Cities are often left with little choice when it comes to financing stadiums for their local teams.
While sports teams are wealthy and powerful businesses with loyal customers in their area, “cities have very little bargaining power with an NFL team. As long as there are cities without NFL teams that are willing to subsidize a stadium, cities will have to pay part of the cost of a new stadium” (Parker). If laws are passed that limit, or prohibit teams from using public money to fund their stadiums, it would need to be nationwide to be effective. If only some states decided to prohibit it, their teams would move to other cities for stadium deals. Since North American sports franchises are million and billion dollar companies, however, it should be easy for them to help repay their city or state governments later on with revenues generated by the stadium; however, the tax laws for public projects are complex. In the mid 1980’s, Congress looked to simplify the tax code, passing the 1986 Tax Reform Act, which, “said that no more than 10 percent of the revenue generated by a project built with public money could be repaid with revenues from that project. So a team couldn’t use more than 10 percent of revenues from concessions or tickets to pay for stadiums” (Semuels). That means that if a team receives any money from a city to finance its stadium, the team cannot use more than ten percent of its stadium revenues to pay towards their stadium. Moreover, both teams and cities have little option for funding their
stadiums.
Although stadiums cost local economies enormous sums of money, hosting large events such as the Super Bowl can spur substantial economic growth in the area. Each year, the economies of Super Bowl host cities are expected to experience hundreds of millions of dollars in economic gains. When the 2015 Super Bowl was held at University of Phoenix Stadium, in Glendale, Arizona, the entire state of Arizona was estimated to have experienced a $714 million economic spur (McInerny). While most of the $700 million will go to the tourism industry, there are direct impacts. While estimating the direct tax revenue the city of Houston, Texas, will experience from hosting the 2017 Super Bowl, “City Controller Chris Brown, adds that the city expects up to $11 million in total direct revenue (sales and hotel occupancy taxes) from Super Bowl 51” (Jansen). In addition, hosting any event will bring in more tourism, which would generate more taxes for the local governments. Sharing economies also benefit from the increased tourism that stadiums help create. For example, just last month in February, before the 2017 Super Bowl, people who lived near NRG stadium, where the event was hosted, were renting their houses for between $10,000 and $15,000 on websites such as HomeAway and Airbnb (Jansen). Large events benefit local businesses, and regular citizens who participate in the sharing economy.
When discussing stadium funding deals, taxpayers often argue that they don’t want their tax dollars going towards multimillion dollar projects that they may never use. However, taxpayers often don’t carry the burden of funding their local stadiums. It is common for cities to raise enough money to finance a stadium through taxes on businesses, because after all, they are the main benefactors of the economic growth that the stadiums may create. For instance, the local Atlanta government will finance its stadium “over the next three decades, during which 39.3 percent of a 7-cents-per-dollar tax on Atlanta hotel rooms will go to the stadium each year” (Tucker). Although Atlanta will be paying off their stadium for a long period of time, taxpayers themselves will not pay a penny; rather hotels and motels, who will have to pay just a few cents per hotel room rented out, will bear the cost. Another example of cities not burdening taxpayers for their stadium is the city of Houston. The way they funded their NFL stadium in 2002 was through a, “2% increase in County hotel/motel tax, 5% increase in County auto rental tax, 10% parking tax, $1.00 per ticket surcharge, sales tax rebate on in-stadium spending” (NFL,4). This seems equitable because auto rental companies and hotels and motels disproportionately benefit from new stadiums being built in their areas. The city also chose to help finance their stadium partially through the payment of people who actually use it. These examples demonstrate that there are alternative ways for state and local governments to finance stadiums without unduly burdening taxpayers.
Sports franchises and their owners often argue that large infrastructure projects, like stadiums create economic growth and use this as a basis to request financing assistance from state and local governments. Many economists, however, refute these claims. For example, Stanford economist, Roger Noll argues that “other billion dollar facilities – like a major shopping center or large manufacturing plant – will employ many more people and generate substantially more revenue and taxes” (Parker). Shopping malls and manufacturing plants would employ more people, and would be used everyday, as opposed to just a few days a year. The tourism industry is the main benefactor from the building of new stadiums. However, not many people who work for these hotels or autorental companies benefit because “local hotel desk clerks and room cleaners…don’t see a 300 or 400 percent increase in their wages. It is not the local workers, but instead shareholders back at corporate headquarters who benefit from the event” (Jansen). Although the owners and shareholders of these companies benefit the most from new stadiums, they are the ones paying for the stadiums, but they are really the only people who benefit. Even with the large economic spurs caused by large events, most of the employees of the tourism industry do not benefit at all.
The debate about whether local governments should provide grants to local sports franchises is still a complex topic. While local taxpayers and workers argue that hundreds of millions of dollars should not be awarded to billion dollar companies, which they say only benefits a handful of people, team owners argue that these such projects help economic growth. However, there is no clear cut solution that would benefit local economies the most.
Stadiums are expensive, often costing hundreds of millions of dollars, if not billions. The average cost of an NFL stadium from 1997-2011 was over $525 million. …show more content…
An average of 56% of the cost is provided by the public, and only 44% is paid for from private financing (NFL, 2). Often times, even the billionaire and millionaire owners of teams struggle to pay the hefty costs of building a stadium. Therefore, they often ask for monetary assistance from local governments, and most of the time these requests are granted. For example, the city of Atlanta recently planned to build a new NFL stadium situated right next door to the old one. The total estimated cost of the new project is $1.5 billion, (Tucker). It is also not uncommon for teams to desire a new stadium even if they have a fully functional stadium in their home city. Although it is rare, some owners do elect to build their own stadiums even if their city does not provide funding. For example, “Stan Kroenke, the billionaire who became the majority owner of the [Los Angeles] Rams back in 2010, is privately financing this stadium complex, which is said to cost about $2.66 billion plus the $550 million NFL relocation fee” (Gibbs). Although Kroenke chose to finance his stadium with private money, the location is in one of the largest markets in the country. In contrast to stadiums located in bigger metropolitan markets, it is extremely uncommon for small market teams to finance their stadium without public assistance. Before Stan Kroenke builds his stadium just outside of Los Angeles, every NFL stadium has needed public funding, except for one, Metlife stadium, located just outside of New York City, which is home to two NFL teams, and is the venue for many additional revenue-generating events (NFL). Small market teams, and some big market teams often seek assistance from local governments to finance the cost of new stadiums. Regardless of the market teams play in, or the wealth of the owners, stadiums cost colossal expenses for anyone.
When sports teams want new stadiums, it is often the county or state governments that pay a large percentage of the cost to build the stadiums. In fact, local governments can often give too much money to sports teams in order to help them finance their stadiums. Local governments often take decades to pay for their share of the costs of building new stadiums. For instance, in the late 1990’s, the Cincinnati Bengals threatened to leave the city if they did not receive money for a new stadium. In one of the worst public financing deals ever, Hamilton County, where Cincinnati is located, agreed to finance 94% of the entire project. Hamilton County is still obligated to pay off the stadium costs noting that, “Now, more than 10 years after it opened, stadium costs make up 16.4% of the county budget, with almost no benefit to the surrounding area's economy” (Bennett). In terms of funding deals, this is certainly one that other cities and counties could learn from. This is not the only example of counties taking years to pay off their stadium costs often at high interest rates. For example, a few years ago, Miami-Dade County and the Miami Marlins decided to build a new stadium for the city’s baseball team. The county decided to pay for the stadium through the purchase of $91 million worth of bonds from Wall Street. Altogether, the cost of paying off the bonds “crosses the $500 million mark in 2042, and hits $1.18 billion by the time the last payment is due 2048” (Hanks). Since the county is paying off the stadium decades from now, the interest rates for their stadium bonds are extremely high. So high that, “For every dollar Miami-Dade borrowed in this transaction, it will pay back $13.” (Hanks). When cities or counties agree to help fund new stadiums, it often takes years to pay off these obligations. By the time 2048 comes around, the stadium will not be as grand compared to the newer stadiums. Thirty years is a long time when it comes to stadiums. If a city takes many years to fund its stadium, there is a high likelihood that it will be considered old or dilapidated by the time it is paid for. By that time, many teams would be looking to move to a new city for a better stadium, if their home city did not provide adequate funding for a new one. For example, “The cities of Oakland and St. Louis are still making substantial annual payments on the debts that remain for now-obsolete stadiums that were built to lure the Oakland Raiders and St. Louis Rams away from Los Angeles in the 1990s” (Parker). Within the past year, both teams have filed for relocation, the Oakland Raiders to Las Vegas, and the Rams back to Los Angeles, even with the $550 million NFL relocation fee. Thus, no city can guarantee that their teams will stay, even if the city is still making massive payments on their stadium.
Cities are often left with little choice when it comes to financing stadiums for their local teams.
While sports teams are wealthy and powerful businesses with loyal customers in their area, “cities have very little bargaining power with an NFL team. As long as there are cities without NFL teams that are willing to subsidize a stadium, cities will have to pay part of the cost of a new stadium” (Parker). If laws are passed that limit, or prohibit teams from using public money to fund their stadiums, it would need to be nationwide to be effective. If only some states decided to prohibit it, their teams would move to other cities for stadium deals. Since North American sports franchises are million and billion dollar companies, however, it should be easy for them to help repay their city or state governments later on with revenues generated by the stadium; however, the tax laws for public projects are complex. In the mid 1980’s, Congress looked to simplify the tax code, passing the 1986 Tax Reform Act, which, “said that no more than 10 percent of the revenue generated by a project built with public money could be repaid with revenues from that project. So a team couldn’t use more than 10 percent of revenues from concessions or tickets to pay for stadiums” (Semuels). That means that if a team receives any money from a city to finance its stadium, the team cannot use more than ten percent of its stadium revenues to pay towards their stadium. Moreover, both teams and cities have little option for funding their
stadiums.
Although stadiums cost local economies enormous sums of money, hosting large events such as the Super Bowl can spur substantial economic growth in the area. Each year, the economies of Super Bowl host cities are expected to experience hundreds of millions of dollars in economic gains. When the 2015 Super Bowl was held at University of Phoenix Stadium, in Glendale, Arizona, the entire state of Arizona was estimated to have experienced a $714 million economic spur (McInerny). While most of the $700 million will go to the tourism industry, there are direct impacts. While estimating the direct tax revenue the city of Houston, Texas, will experience from hosting the 2017 Super Bowl, “City Controller Chris Brown, adds that the city expects up to $11 million in total direct revenue (sales and hotel occupancy taxes) from Super Bowl 51” (Jansen). In addition, hosting any event will bring in more tourism, which would generate more taxes for the local governments. Sharing economies also benefit from the increased tourism that stadiums help create. For example, just last month in February, before the 2017 Super Bowl, people who lived near NRG stadium, where the event was hosted, were renting their houses for between $10,000 and $15,000 on websites such as HomeAway and Airbnb (Jansen). Large events benefit local businesses, and regular citizens who participate in the sharing economy.
When discussing stadium funding deals, taxpayers often argue that they don’t want their tax dollars going towards multimillion dollar projects that they may never use. However, taxpayers often don’t carry the burden of funding their local stadiums. It is common for cities to raise enough money to finance a stadium through taxes on businesses, because after all, they are the main benefactors of the economic growth that the stadiums may create. For instance, the local Atlanta government will finance its stadium “over the next three decades, during which 39.3 percent of a 7-cents-per-dollar tax on Atlanta hotel rooms will go to the stadium each year” (Tucker). Although Atlanta will be paying off their stadium for a long period of time, taxpayers themselves will not pay a penny; rather hotels and motels, who will have to pay just a few cents per hotel room rented out, will bear the cost. Another example of cities not burdening taxpayers for their stadium is the city of Houston. The way they funded their NFL stadium in 2002 was through a, “2% increase in County hotel/motel tax, 5% increase in County auto rental tax, 10% parking tax, $1.00 per ticket surcharge, sales tax rebate on in-stadium spending” (NFL,4). This seems equitable because auto rental companies and hotels and motels disproportionately benefit from new stadiums being built in their areas. The city also chose to help finance their stadium partially through the payment of people who actually use it. These examples demonstrate that there are alternative ways for state and local governments to finance stadiums without unduly burdening taxpayers.
Sports franchises and their owners often argue that large infrastructure projects, like stadiums create economic growth and use this as a basis to request financing assistance from state and local governments. Many economists, however, refute these claims. For example, Stanford economist, Roger Noll argues that “other billion dollar facilities – like a major shopping center or large manufacturing plant – will employ many more people and generate substantially more revenue and taxes” (Parker). Shopping malls and manufacturing plants would employ more people, and would be used everyday, as opposed to just a few days a year. The tourism industry is the main benefactor from the building of new stadiums. However, not many people who work for these hotels or autorental companies benefit because “local hotel desk clerks and room cleaners…don’t see a 300 or 400 percent increase in their wages. It is not the local workers, but instead shareholders back at corporate headquarters who benefit from the event” (Jansen). Although the owners and shareholders of these companies benefit the most from new stadiums, they are the ones paying for the stadiums, but they are really the only people who benefit. Even with the large economic spurs caused by large events, most of the employees of the tourism industry do not benefit at all.
The debate about whether local governments should provide grants to local sports franchises is still a complex topic. While local taxpayers and workers argue that hundreds of millions of dollars should not be awarded to billion dollar companies, which they say only benefits a handful of people, team owners argue that these such projects help economic growth. However, there is no clear cut solution that would benefit local economies the most.