How Stadiums are Built

The recent construction of the 16 NFL stadiums has cost the taxpayers more than $3 billion. The New England stadium one of the stadiums that hosted NFL games was constructed with $72 million of tax payers’ money (Brown et al., 2004). The Lucas Oil Stadium was built on the backs of the residents who had no say in the stadium affairs and it is obvious that the taxpayers have little benefitted from the project or they may end up not benefitted from the revenues collected from the stadium. Despite the heavy burden on the taxpayers, the stadium is nothing more than a monument to the residents of the city.

For the construction of Lucas Oil Stadium, there is no perfect accounting for the total costs that were used to construct the stadium, but the $619.6 million is just an estimate of the total amount. The taxpayers’ money may be more than the $619.6 million figure when costs such as indirect support, the loss of stadium-related revenue to the participating teams and property and sales tax exemptions costs are all included. There is an argument that the public sector may be underwriting some costs, while a majority of the accruing benefits normally accrue to the teams only. 

There is a close relationship between the subsidization of stadium, and lower median incomes and higher poverty rates in the city. Some economists have a perception that the Lucas Oil Stadium is not worth its price and that the benefits derived from the stadium does not align with the burden that the taxpayers endured to have the stadium built. For instance, it has been found out that the city, after the construction of the stadium performed worse as compared to other cities that did not build stadiums (Brown et al., 2004).

Since the benefits are not flowing to the taxpayers who were the major funders of the project, then it is absolutely true that the revenue collected may be heading to the NFL owners. The analysis by Bloomberg found out that the stadium has been detrimental in doubling the team’s value since its completion (Baade, 2003). While it may seem that the teams are spending much of their resources to the stadiums, they are doing so with the help of the already collected revenue from the stadiums. The analysis was able to learn that the public sector was underwriting most of the stadium’s risks than the teams themselves.

Though the athletes are the ones benefiting from the revenue collected from the stadiums, they are less involved in the construction. The taxpayers mostly who are middle income individuals and those who are poverty stricken are the ones who endure the burden of funding the stadium from the beginning to the timed of its completion. Even though the private sectors also have been involved in the funding the stadium, they don’t feel a lot of burden as the taxpayers. The private sector funding is normally repaid back by the revenues collected in the stadiums when an event is held in the stadium. This is absolutely the opposite of the case of the taxpayers (Long, 2005). Despite the fact that they are overburdened when the stadiums are built, the revenues and the benefits of the stadiums are refunded back to them. The fact that the revenue at the initial stages is used to refund the private sectors makes the lives of the taxpayers more worse than expected as they will still be required to renovate the stadiums when the need arise.

Although the Lucas Oil Stadium that recently hosted NFL games has the potential benefits, the benefits have not been demonstrated to the public, implying that they have also not been measured in regard to the pressing public needs. The taxpayers’ money used in the construction of the stadium is the amount that the policy makers felt that it was appropriate for the residents (Miller, 2007). However, since the money was not enough to complete the stadium and the participating teams contributed insignificant amount of funds towards the construction of the stadium, money had to be borrowed from the private sectors.

The following are the major funding of the University of Chicago stadium: City sales tax, car rental tax, lodging tax, property tax, utility tax, ticket tax, income tax, food and beverage tax, land contributions, lottery funds, public parking revenue among many other public sources. Summing up all the above public income that was used to construct the Lucas Oil Stadium, it can be concluded that the taxpayers are the major contributors of the stadium funding (Long, 2005). The private stakeholders are only requested to finance the construction of the stadium when the burden is too heavy for the taxpayers. 

Stadium Funding Information

In conclusion, the taxpayers are the major stakeholders of the stadiums in the United States and many other cities all over the world. Despite the fact that the taxpayers are the major contributors of the funds used to construct the stadiums, their welfare is not directly proportional to the revenues collected by the stadiums. The teams are the least contributors, though they tend to benefit more than the taxpayers. This, therefore, implies that the stadiums make the lives of the taxpayers more miserable, which is the opposite of the purpose of constructing the stadiums. The funds from the private sectors though help in relieving the taxpayers, they are normally refunded back to the owners with accumulated interests.

References

Brown, M. T., Nagel, M., McEvoy, C. D., & Rascher, D. A. (2004). Revenue and Wealth Maximization in the National Football League: The Impact of Stadia. Sport Marketing Quarterly , 13 (4).

Baade, R. A. (2003). Evaluating Subsidies for Professional Sports in the United States and Europe: A Public-sector Primer. Oxford Review of Economic Policy , 19 (4), 585-597.

Miller, P. (2007). Private Financing and Sports Franchise Values The Case of Major League Baseball. Journal of Sports Economics , 8 (5), 449-467.

Long, J. G. (2005). Full Count The Real Cost of Public Funding for Major League Sports Facilities. Journal of Sports Economics , 6 (2), 119-143.