Financing techniques and stadium subsidies in the United States

Click to increase image sizeClick to decrease image size

Notes

This may be a city, county, state, or other political jurisdiction.

Almost all academic studies of the economic benefits of a ball club, find no impact or a negative impact on the local economy. (See, for example, Austrian and Rosentraub 2002, Baade, Baade and Sanderson 1997a, Baade and Sanderson 1997b, Baade and Dye, Baim, Bast, Hamilton and Kahn, Noll and Zimbalist 1997a, Noll and Zimbalist 1997b, Noll and Zimbalist 1997c, Okner, Quirk and Fort, Rosentraub 1997, Rosentraub and Nunn, Rosentraub et al. Zimmerman).

The focus of this paper is on the stadiums, financial technologies, and subsidies used in the United States. Municipalities in other nations have also used similar strategies. (See, for example, Jones and Johnstone et al.)

Part of the reason for the Dodger's departure from Brooklyn to Los Angeles in 1957 was the conflict between Walter O'Malley, owner of the Dodgers, and Brooklyn over the construction of a new stadium for the Dodgers (Quirk and Fort).

Bast reports that over $7 billion will be spent on professional sports facilities before 2006 and that most of this will be paid for by the public.

Note that a new stadium does not have to increase in seating capacity for it to increase in size. The incorporation of new facilities within ballparks has contributed a great deal to the increasing size of stadiums. In fact, Baade and Sanderson claim that the trend is towards larger stadiums with lower seating capacities.

See Noll and Zimbalist (1997a) for a detailed discussion of the lease arrangements between teams and the state. See Baim for a more quantitative analysis of stadium contracts and subsidies.

Such a lease would not necessarily eliminate the subsidy provided to a club if a stadium was financed (at least partly) with tax-exempt bonds. See the discussion of tax-exempt bonds later in this section.

The group of thirteen investors who purchased the team each had to raise $2 million (Zimbalist).

For a detailed discussion of the role and use of tax-exempt bands (See Zimmerman.)

White not a factor in the growth of jobs, or population, the presence of professional sports teams may have been a positive factor in other ways.