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SPORTS ECONOMICS – FINANCING A STADIUM Prologue:
The emerging scenario is very clear. Sports events have become big
business. Today the revenue generation from gate ticket pricing is in a
miniscule proportion. The major areas of
income generation are (a) Television rights, (b) Radio broadcasting
rights, (c) Sponsorship of individual players and franchises by
corporate business houses in order to promote their branded products.
Once there was sportsperson personal loyalties and team loyalties. Today
loyalties have shifted gear towards financial maximization. Decisions
are made by teams and players on the basis of how much they get and not
how loyal they are. Salaries of players have gone up by leaps and
bounds. Players attract salaries from $600,000 to $8,000,000 per annum. Resource
Generation – Options: There
used to be a time when stadiums were built by the state as part of
public works projects. Today, private funding of stadiums is
increasingly taking place. Team owners eagerly come forward to
contribute their might towards the cost of construction of stadiums. Let
us see some new stadiums built during the decade 1990’s.
If a decision has
been made to use tax payers money for a stadium, finance generation is
possible through: (a) Government backed bonds (b) Excise duties (c)
Personal seat licenses (d) State lotteries (e) Tourism taxes (f) Sales
taxes (g) Ticket surcharges (h) General fund revenues, and, (i) Lodging
taxes. The local
population would love to shift the incidence of taxation to the
shoulders of tourists, if the required revenue is generated through
tourism tax, and, or, hotel surcharge.
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