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INVESTMENT ON NEW STADIUMS – IS IT WORTH?

Prologue: Public investments should always be made after considering many tangible and intangible economic criteria. Stadiums are mostly built as a public work project. The economic determinants, such as stadium lease, money generation, job creation and community benefits, play a vital role in the crucial decision of investment. Let us consider these economic determinants individually. 

Lease: It has always been the practice, not only in the USA, but throughout the world, for the state to build stadiums and, as a corollary, retain the right to keep the generated revenue with the obvious reason to offset whatever costs incurred in building the stadium. However, this traditional approach of the states is being consciously replaced by the playing teams negotiating most successfully with the states for the team to keep the revenues while the tax paying public still pay for the cost of construction. For instance, the Ballpark at Arlington cost US $196 million of which the public financed 71%. Texas Rangers put in the balance, but retained the right to receipts. They, of course, bear all expenses relating to the maintenance of the stadium! 

Money Generation: Do stadiums create money? It depends on the team. If the team is a superior one with top-drawer stars in its payroll, it is possible that money may pour in from fans coming from other states. Generally, the thinking is, that the stadiums attract only local population. 

Job Creation: The construction of stadiums and other sports related activities are traditionally thought to be a trigger for further economic development. Construction requires personnel.  Maintaining a stadium requires personnel. The Franchises require personnel. And, a green field stadium acts as a booster for real estate activities in the neighborhood, which require personnel. There is a definite trend towards job creation!