“If you build it they will come”, is the theoretical belief in the sports entertainment industry that if a city builds a sports stadium, the visitors it attracts will generate income for the city. What may seem very logical, is actually the quite opposite, in fact most the money earned from games goes to the professional sports league and to the team itself. Previously in my Topic Background post, I explored previous deals cities made with a sports franchises to build a new stadium, but ended with negative consequences. Looking into the stadium deals made between the city of Oakland and the Raiders organization is just one example as to why these deals were flawed. I believe that there needs to be a policy created protecting cities in new stadium agreements between the cities and sports franchises. The teams and leagues should be required to pay for at least three fourths of the new stadium, also a portion of the annual revenue to be given back to the cities.
The problem with the idea of stadiums essentially “pay for themselves” because of the tax revenue will not pay off the annual debt from the new stadium, resulting in the taxpayers to pay out of pocket. One argument against my idea which I analyzed in my Multiple Perspectives post, is that the cities ultimately wanted the teams to come to there. The problem with this argument is that the teams are under the impression of the stadium will eventually pay for itself. This flawed idea traps cities into debt from sports stadiums in which cities like Oakland and St. Louis will take years to pay off the debt.
Why do cities make very little in tax revenue? In an article by Jeffrey Dorfman of Forbes Magazine, he was able to explain the ration of money spent at games to the amount made in tax revenue. He stated that “The hotel stay probably produces $200–250 in tax revenue, the restaurant bills another $20, and the game ticket another $35. That means the over $3000 in spending really amounts to around $300 in tax revenue,”. Thus meaning only 10% of money spent at the games is made in tax revenue, which won’t cover the millions of dollars spent annually to pay back the loan for the stadium. In another article by Clifton B. Parker he quoted Roger Noll of Stanford stating that, ‘”NFL stadiums do not generate significant local economic growth, and the incremental tax revenue is not sufficient to cover any significant financial contribution by the city,”’. If teams are at risk of debt if a franchise folds on a stadium deal, then why should cities be so inclined for a sports franchise to be in the area?
The increased popularity in sports, in this case the NFL, there has been a correlation between the popularity and money gained, but the franchises and the NFL get almost all of the revenue, leaving the city with very little gained in tax revenue. There needs to be a policy in which the cities also see a share of the income from the teams. (520)