Bloomberg News

Stadiums Cost Taxpayers Extra $10 Billion, Harvard’s Long Finds

November 06, 2012

Stadiums Cost Taxpayers Extra $10 Billion, Harvard’s Long Finds

The Lucas Oil Stadium stands in Indianapolis, Indiana. Photographer: Victor J. Blue/Bloomberg

Taxpayers in the U.S. spent about $10 billion more on stadiums and arenas for professional sports teams than they forecast, according to a new book by Harvard University urban planning professor Judith Grant Long.

The costs of land, infrastructure, operations and lost property taxes add 25 percent to the taxpayer bill for the 121 sports facilities in use during 2010, increasing the average public cost by $89 million to $259 million, up from $170 million commonly reported by the sports industry and media, she writes in the book “Public/Private Partnerships for Major League Sports Facilities.”

The book, released last month by Routledge, aims to help governments and taxpayers to reduce hidden subsidies to team owners by allowing them to compare stadium deals for their cities against those elsewhere. The average public-private partnership worked out to cost cities 78 percent and the teams 22 percent, she wrote.

“Given that popular reports set expectations of more or less equal partnerships between host cities and teams, these estimates of public cost indicate that the public/private partnerships underlying these deals are in fact highly uneven,” wrote Long, who is an associate professor at Harvard’s graduate school of design.

Long’s analysis added costs such as those for land, infrastructure and lost tax revenue, while subtracting money that flows back to states or cities from revenue or rent payments.

“Professional sports stadiums are as close as you can get to a controlled experiment in urban design,” she said in a telephone interview.

Highest Cost

The highest-cost deals include Indianapolis’s Lucas Oil Stadium, where the National Football League’s Colts play; Paul Brown Stadium in Cincinnati, home of the Bengals; and the Milwaukee Brewers’ Miller Park in baseball. In those cases, the public share of costs, once ongoing expenses are included, exceeds 100 percent of the building’s original price tag.

The stadiums with the highest public cost in 2010 dollars tend to be built for football and baseball, at about $480 million each, in part because those are more expensive buildings than basketball or hockey arenas, which cost about $170 million, Long writes.

The deals with the lowest total public cost include Columbus, Ohio’s stadium for the Crew Major League Soccer team, along with Toronto’s Air Canada Centre and Ottawa’s Scotiabank Place. None in this group cost more than $30 million or has a public share greater than 63 percent.

Public Disadvantage

The public is at a disadvantage in negotiating those deals with sports teams and leagues, which have a monopoly on the supply of franchises and opaque finances, Long writes. The total cost of sport facilities has received little attention from researchers in part “because most economic analyses demonstrate that sports facilities produce very few or no net new economic benefits relative to construction costs alone, and so, in this sense, more accurate cost estimates would only serve to reinforce a case already made.”

Public officials shouldn’t spend any more than necessary to secure the participation of the local team, she writes. Small cities tend to fare worse than larger ones, because they either have to offer more money to keep an existing franchise from moving to a larger market, or they have to put up more to compensate a team moving from a larger market.

Long concludes that, regardless of profit-sharing or rent, “public partners should avoid paying building costs.”

“Land and infrastructure you help with,” she said in a telephone interview. “The building? Let them go it alone.”

To contact the reporter on this story: Aaron Kuriloff in New York at akuriloff@bloomberg.net.

To contact the editor responsible for this story: Michael Sillup at msillup@bloomberg.net.


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