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Thread: Public Stadium Funding - Yay or Nay?

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    Public Stadium Funding - Yay or Nay?

    So the mention of shit attendance for Detroit Red Wings games in the brand new stadium in the NHL thread got me thinking about this. I don't think its a topic we've really discussed around here, at least not recently.

    New sports stadiums. Public money. Good or bad?

    There are lots of forms of funding, whether its direct or indirect. But given the cost of new stadiums, even a partial subsidy from the city can be hundreds of millions of dollars.

    The leverage that teams use is moving the team. Its happened dozens of times in the past and multiple times just in the past few years. We have the Chargers and Rams in LA now, and the Raiders moving to Vegas. This is primarily down to the North American sports leagues being set up on a franchise system, which allows for such movement. And league ownerships rarely seems to be against such moves.

    There are more and more cities that do seem to be against providing such funding. The reason the three NFL teams moved is because their current cities weren't willing to pay up. In some cases, its the public themselves voting down proposals rather than politicians having the balls to stand up to pressure from the franchise owners.

    Full disclosure - I'm quite against the idea in general, and its become something that frustrates me more and more in recent years. Despite this, I live in a city that just spent $300m on a new 33,000 seat football stadium and I wasn't against it. About $150m of that came from public money. Its a publicly-owned team, not a privately owned one, which makes the situation a bit different.

    So what are people's thoughts on here? Should entire communities be put into situations hundreds of millions in public money goes toward building these new stadiums? Or some communities that are refusing to give in taking the right approach?

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    Re: Public Stadium Funding - Yay or Nay?

    Would be cool if they spent that money funding free post secondary education. That is to say, id rather fund something else. That is also to say, Im sure those owners can fund it themselves. Unless its treated like an investment and the public makes money back on funding it then nayyyy

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    Re: Public Stadium Funding - Yay or Nay?

    While I'd normally never side with the owners it's important to remember that, at least in the initial planning stages, they need to determine public interest in order to see whether it's even viable to build a new stadium in the first place. Asking them for funding is certainly a way of doing so that will give a much more realistic answer than simply putting a poll in the local newspaper. That doesn't mean they should be asking the city and its taxpayers to be ponying up all the dough for the new building mind you, but if the fans aren't even willing to invest a little it's hard for the owners to justify doing so on a much larger scale.

    That being said, the only time the public should be paying for the entire building is if they're going to be part owners and can profit off of the concessions, naming rights and licensing. At the same time, if the city and its taxpayers are willing to vote to cover a certain amount of the costs, they should see some form of return on that investment in the form of funding for city programs, beautification or other things that would be beneficial to them. Obviously that's a long shot given how tight most owners are and a lot of that is for good reason when you consider how many sports teams operate on a net loss each year.


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    Re: Public Stadium Funding - Yay or Nay?

    I can actually see some validity in the public (the city, the state, etc) investing something in the project. I think it’s simply the scale that concerns me, rather than the fact it happens at all. Just read a stat that 79% of funding for new NFL stadiums is public money. Bearing in mind that football stadiums are similar to baseball stadiums in that they are generally less useful for other events, compared to basketball/hockey arenas, and that’s kind of astounding. Where it gets really painful is reading about some of the arrangements that these teams have leveraged – getting money from concessions, parking, other events at the stadium/arena. So the areas where the community/city should be seeing profit…. sometimes that actually goes to the team as well. There are apparently some teams that only pay rent if the team profits over a certain margin. These are franchises that are often given sweetheart deals by these cities, and yet is that necessary? In the case of the NFL, this is a league that will top 14 billion dollars in revenues this year.

    $14,000,000,000.

    Always been a bit skeptical of the “teams operate at a loss” claims. I’m sure a few franchises do. But claims that the majority of the league lose money in the NHL, for example…. That seems like creative accounting to me. It benefits ownership groups to present that as truth, whether it’s for taxation, CBA purposes, or pursuit of a new stadium. But a lot of the “losses” are things like stadium depreciation and it seems like a lot of these teams are still very “cash flow rich”. I just don’t buy that franchises with assessed values (not actual sales values, but assessed values) in the high hundreds of millions, sometimes billions, are somehow all bleeding money.

    An interesting aspect of naming rights to these stadiums…. It seems like a lot of revenues from these deals go to the team, not the community that owns the stadium. In the NFL at least, those revenues – like most team-specific sponsorships – are not shared revenues but individual to the team.

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    Re: Public Stadium Funding - Yay or Nay?

    Oh I'm sure there's some creative accounting going on but it's important to remember the vast amount of expenses a sports team has. Aside from just paying the players exorbitant salaries, they've got to pay lawyers, marketers, PR reps, doctors, trainers, coaching staff, stadium employees, call center staff, ticket agents and a myriad of others as well. I'm not saying they don't still manage to turn some form of profit but it's always seemed to be a pretty crappy business to be in unless you have an absolute passion for the team/game and can afford to hemorrhage money, at least in the short term.

    I think certain teams appreciate in value over time but as far as I'm concerned, owning a pro sports team is one of the best examples of the greater fool theory. You can always justify buying something exorbitantly expensive IF you firmly believe you can find someone dumber than you to pay more for it down the road.


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    Re: Public Stadium Funding - Yay or Nay?

    Quote Originally Posted by Fuji Vice View Post
    Oh I'm sure there's some creative accounting going on but it's important to remember the vast amount of expenses a sports team has. Aside from just paying the players exorbitant salaries, they've got to pay lawyers, marketers, PR reps, doctors, trainers, coaching staff, stadium employees, call center staff, ticket agents and a myriad of others as well. I'm not saying they don't still manage to turn some form of profit but it's always seemed to be a pretty crappy business to be in unless you have an absolute passion for the team/game and can afford to hemorrhage money, at least in the short term.

    I think certain teams appreciate in value over time but as far as I'm concerned, owning a pro sports team is one of the best examples of the greater fool theory. You can always justify buying something exorbitantly expensive IF you firmly believe you can find someone dumber than you to pay more for it down the road.
    Oh, running a sports franchise is big business for a reason. Its not just vast incomes - its a huge amount of expenses. Several hundred staff, some with very specialized skillsets. The cost of players, which is rather massive. The cost of players is a unique dynamic, because they rise at a pretty even level to revenues, which is rarely the base in most business models.

    Owning a sports team is basically the ultimate rich boy's (or girl's) toy. In North America, it puts one in a pretty exclusive club.

    Pretty much all teams appreciate in value. Looking at the Forbes list for the NHL... In 2010, the average NHL franchise was worth $228m and the highest two were the Leafs at $505m and the Rangers at $461m. In 2016, the average franchise is valued at $505m and the top two are the Rangers at $1.2b and the Canadians at $1.18b. The Leafs are also valued at over $1b. That's doubling in value in six years. Revenue increased 8% from 2015 to 2016. That's pretty massive growth. And this is the smallest of the big four sports.

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    Re: Public Stadium Funding - Yay or Nay?

    I have a mixed opinion on the matter. I think it does depend on how much the team means to the city, and I also think it should have to be approved by voters before anything can be done. Pro sports teams do a lot for a city/area. They bring in attention, they bring in money in the form of ticket sales, merchandise sales, TV revenue, and they bring people from out of town into the city to spend money.

    I live in Cincinnati, and here in the late 1990's voters approved a 1/2 cent sales tax increase to build two new stadiums for the Reds and Bengals, two teams that bring a lot of money and notariety to the city. Now there is talk about using existing county funds to build a soccer stadium, while I believe that the soccer hype will die down in a few years and not many people will go to the games.
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