Public vs Private Funding Private Stadiums

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INTRODUCTION
The past 20 years have witnessed a massive transformation of professional sports stadiums in North America and the rest of the world. In the United States and Canada alone, by 2012, 125 of the 140 teams in the five largest professional sports leagues, the National Football League (NFL), Major League Baseball (MLB), National Basketball Association (NBA), Major League Soccer (MLS), and National Hockey League (NHL), will play in stadiums constructed or significantly renovated since 1990. This new construction has come at a significant cost, the majority of which has been covered by taxpayers. Construction costs alone for major league professional sports facilities have totaled in excess of $30 billion over the past two decades with over half of the cost being paid by the public.

North America is not alone. South Africa spent $1.3 billion on building and upgrading 10 soccer stadiums for the 2010 World Cup following on the heels of Germany’s 2.4 billion euro investment in stadiums and general infrastructure for the 2006 edition of the event. The Summer Olympic Games require the greatest financial commitment of all the mega-sports events with a typical spending around the neighborhood of $10 billion, but in some instances the sums have far surpassed that amount ( Preuss, 2004). China reportedly incurred costs in excess of $58 billion to host the event in 2008 (Upegui, 2008). Such sums of direct public investment to build infrastructure for private businesses or events are generally rare in other sectors of the economy. For this level of public investment, it is reasonable to ask the extent to which professional sports serve to promote local economic development. Who Gains Benefits from Funding?

When cities, counties, or states agree to help pay for a new stadium, whether via direct financing, tax breaks, or taxes to directly pay for them, all government groups are actively deciding to use their scarce resources to further millionaires at the...
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