Previous to 1953, only one MLB club played in a stadium funded by any government body, and 75 percent of funding for all ballparks came from privately funded businesses. Without government-funded stadiums built to attract the Olympics, professional sports played in facilities that were funded with private money. Meanwhile, financiers have come to estimate that about 20 percent of all professional sports teams are somewhere in the process of building new stadiums, with franchises in all major sports leagues turning to the government at the local and state level for a substantial portion of the costs associated with constructing these facilities (Garrity, 2000).
The problem is particularly acute in that professional sports has become very big business, with the costs of franchises increasing and a corresponding need to position a team in a stadium that is state-of-the-art in terms of size, amenities, and profit maximization via sky box sales and retail venue positioning. At issue is the question of who will pay for these facilities and the equity that will accrue to local and state governments when they play a major role in stadium financing, and the pros and cons of taxpayer financing of such facilities (Garrity, 2000).
Recent polls show that as much as 71 percent of Americans living in regions where new stadiums are proposed oppose the raising of taxes to build these stadiums (Peirce, 1998). The conventional wisdom is that locating a new or improved stadium in a community will generate local economic gains, including a wealth of construction-stage and operational jobs, increased tourism revenues, and retail sales. Studies have demonstrated that most new stadiums and arenas fail to achieve anticipated economic benefits while placing a tax burden or bond debt on the general public; in some instances, research reveals that a community that heavily invests in such facilities may lose money in the long run (Peirce, 1998). Thus, the problem to be explored in this report is centered upon the advantages and disadvantages of using taxpayer money for nonpublic purposes, such as the construction of sporting facilities that will be used by for-profit franchises and organizations.
The problem is significant in that, as Peirce (1998) and others have commented, taxpayers demanding improved educational, transportation, and other infrastructure services from their units of governance are beginning to resist (or at least view askance) the demands of franchise owners for "new, bigger, better" stadia. In 1997, then-Senator Daniel P. Moynihan attempted to schedule a Congressional hearing to address a ban on using tax-exempt bonds to finance professional sports stadiums (Stanton, 1997). Many Americans continue to resent this use of their taxpayer dollars.
Any number of studies have addressed issues relevant to the use of taxpayer funds for nonpublic construction projects, including those that benefit professional sports. Rosentraub, Gultry, and Guli...