As Super Bowl Shows, Build Stadiums for Love and Not Money
Speaking of Super Bowls (today’s the day!), here’s a timely article on building new stadiums to draw such “profitable” events to a city. As one might expect from a well-referenced, objective analysis (such as this opinion piece), it’s a BAD idea financially. There might be other “rah-rah” reasons that voters would approve such projects, but proponents’ bogus economic claims of riches (shades of CA HSR!) should not be among them.
Here’s the comment I posted under the article:
A binding public vote (not just an “advisory” vote) on such boondoggles is essential. But the election spending on such matters is VERY one-sided. Those who profit from a new sports stadium (and not just the team owners) will spend a bundle, whereas there is no “special interest” in opposition. It’s the usual problem of “concentration of benefit, dispersal of cost.”
It should be noted that the media (especially TV and the daily newspaper) have a HUGE vested interest in pro sports. It’s a major draw of local viewers and readers — both the games themselves, and the daily “news” story about some team intrigue or player felony.
Moreover, all such stadium deals are predicated on a well-financed web if lies and “studies.” Follow the money if you want to know the validity of such “analysis.”
I’d love to see a performance bond put on the team — to the extent that the stadium costs go up, or the benefits are less than claimed, the team would be on the hook for half the “unexpected” cost of the overrun or the benefit shortfall.
I think such a logical commitment of “skin in the game” would quickly end any silly push for new taxpayer-financed pro sports stadiums. Now one is more aware of the dishonesty of the stadium projections than the team owners.
As Super Bowl Shows, Build Stadiums for Love and Not Money: View
As you watch the Super Bowl Feb. 5, spare a thought for the taxpayers in the host city of Indianapolis. The stadium in which the game will be played has been financed largely at their expense and, like so many sports venues built with public money, the cost just keeps growing.
Lucas Oil Stadium , where the Colts play eight regular season games per year, has every amenity: a retractable roof, state-of-the-art turf, seven locker rooms, 137 luxury suites, 1,000 flat-screen televisions. And well it should: It cost $720 million to build.
Of this, the Colts paid only $100 million. To cover the rest, local officials raised taxes on hotels, restaurants and rental cars, and issued bonds that soon led to ballooning financing costs.
As Bloomberg News reported Feb. 2, the cost overruns resulted partly from the city’s reliance on auction-rate securities, which became extremely expensive as the market for such bonds collapsed in 2008. Interest rates on some of the stadium bonds reached 15 percent at one point, according to data compiled by Bloomberg.
All told, this led to about $43 million in unexpected financing costs. As projected deficits grew larger, the county board that operates the stadium had to reduce arts and cultural grants, and the city increased taxes on hotels even further.
Threat to Leave
In its outlines, this is a familiar story. With the Colts threatening to leave town in 2006, an economic-impact study done for Indianapolis suggested wondrous civic advantages would soon flow from a new stadium: Along with the expansion of an adjacent convention center,the project would create $2.25 billion in economic benefits over 10 years, 4,200 new permanent jobs and 4,900 construction jobs. And, of course, the team would stay. The stadium duly opened in 2008.
But like many studies of its kind, this one will probably turn out to be fantasy. Public funding for sports stadiums has been found, in dozens of studies over several decades, to fall short of its promised benefits and to cost taxpayers more than expected.
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To read the full article, go to the link: