Sports franchises know that they need proper facilities to succeed. A modern stadium or arena needs comfortable seats, tasty concessions, and adequate space for the media to truly succeed. Gone are the days when fans would pack a big, old barn with poor sight-lines just to see their team play. Today’s stadiums need luxury boxes, corporate partnerships, and excellent sight-lines to succeed. The question then becomes who will pay for them.
In the past, municipal bonds have been a popular way to finance the construction of stadiums. However, in recent years this has become controversial. Tax-funded stadium construction for the Miami Marlins ended in an SEC investigation. There are strong suspicions that the municipal bond funds were misused.
There’s also a growing feeling that these leagues and teams should not need taxpayer assistance. They make billions. They should be willing to invest in their future and their city, rather than asking working people to invest in them via tax dollars. Since the 1990s, the average new NFL stadium has received over $200 million in taxpayer money. There are debates about whether this actually benefits communities.
Tax money for stadiums is also controversial because it’s not clear how much cities benefit from these projects. Even where cities have enacted special taxes to attract teams, it often doesn’t work in the long run. For example, St. Louis raised millions to open a stadium for the Rams in 1995. Today, the Rams have moved to Los Angeles. The city is still paying $6 million per year on the stadium.
The Rams ownership in Los Angeles, meanwhile, is paying for the construction of a new stadium. Critics of taxpayer money for stadiums often point to this example. If a team owner can finance construction in one of the most expensive cities in the US, how can other team owners continue to ask for public money with a straight face? Job creation is often touted as a benefit of stadium openings. But construction jobs are temporary. Most arena jobs are part-time and low-paying, with no benefits. So taxpayers are creating value for team owners, with arguably few measurable benefits in return for local people. In the current public climate, where the public can’t even attend sporting events due to Covid-19, taxpayers are likely to become less willing to accept this trade-off.