sports stadiums and money

The Cost of Keeping a Team

by Elaine Schwartz    •    Aug 10, 2011    •    623 Views

To keep a team, sometimes the stadium makes the difference. The problem, though, is who is going to pay. For the San Diego Chargers, the price tag would be an $800 million sports facility with the city absorbing 65% of the total. On a November 2012 ballot, the voters will be able to approve or reject the project.

Meanwhile, hoping to fill the void created by the departure of the Raiders and the Rams, a privately owned sports conglomerate says it will raise $1.2 trillion for a new Los Angeles sports arena.  Then, the Chargers could decide to move to LA.

Privately financed stadiums. A free lunch for the taxpayer? Not really.

One Harvard urban planning scholar tells us that even when a stadium is privately paid for like the NJ Meadowlands (where the Jets and the Giants play), Gillette Stadium (home of the New England Patriots) or FEdEx Field (the Washington Redskins), still we pay. Usually, a municipality inexpensively provides the land for as little as $1, develops transportation arteries to the new facility, gives tax breaks, and even agrees to subsidize ticket revenue if it falls beneath a certain total. Adding up all the extras, a “free” stadium might cost us many millions in outlays and forgone taxes.

In a past post, here, we looked at several unaffordable publicly financed sport facility projects.

The Economic Lesson

The tragedy of the commons relates to financing sports facilities. When the project is approved, no one individually bears the cost–except perhaps the politician who might not be re-elected if he/she votes no. So, the pool is abused, overused, and later all of us pay.

However, will the psychosocial benefit of having a local sports team outweigh all other costs?

An Economic Question: What are the non-money costs and benefits of a local sports team franchise?

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