Publicly Financed Stadiums Drag Down Local Economies - Research Paper Example

Public Financed Pro Stadiums Introduction The subject matter concerning public funded stadium has become quite a controversial topic in the current scenario. Economists view this concept from positive as well as negative aspect. Minneapolis, one of the biggest cities of Minnesota is duly considered as the 32nd state of the United States as on May 11, 1858. It lay at the extreme north of all the 48 states in the US. It is bounded to the east by Wisconsin state and Lake Superior. North and South Dakota surrounds this land from the west and to the south lies lowa (A&E Television Networks, 2014). Minneapolis has been the center of multiple industries, which serve as a major agricultural expanse (Pearson Education, 2014). With this concern, the research paper intends to discuss about the impact of public financed stadiums in Minneapolis, Minnesota. Moreover, the research paper would also focus upon explaining various benefits along with disadvantages of this aspect and finding out the programs that are lost due to funding the stadiums. Overview of the Public Financed Stadium Prior to discussing about various benefits along with disadvantages of public funded stadiums, it is indispensable to acquire a brief idea about the aspect of public funded stadiums. Conceptually, a public funded stadium basically refers to those manmade sports arenas that are constructed with the support of public and government finance. In certain cases, the construction cost might be shared between government and private parties. These sorts of sporting arenas are funded or subsidized by governments with the intention of enhancing financial conditions and contributing towards economic growth through revenue generation. In this respect, it can be affirmed from a broader understanding that public funded stadiums often concentrate upon uplifting economic conditions and at the same time, these sorts of projects require much attention for their effective implementation (Wilhelm, 2008). Discussion Massive publicly funded stadium projects like the Viking stadium of Minneapolis MN can prove to be a huge asset for the city or may also prove to be a liability. There are multiple factors that might require to be taken into concern while making effective decisions regarding funding stadiums publicly. In this regard, certain pros along with cons of public financed stadiums have been elaborated in the following. Economic Benefits From an economic viewpoint, this sort of project i.e. public financed stadiums can be apparently observed as an opportunity towards providing huge financial benefits in the form of generating massive employment. The project concerning public financed stadiums is often viewed as a revenue earning tool during economic hard times. This can be justified with reference to the fact that during the construction phase itself, projects like Viking Stadium will serve as the earning source for in excess of 1600 workers who will be working day and night for completing the entire project within stipulated time period. Projects like Viking Stadium have proved their potential in binding people together in Minnesota (Minnesota Vikings Football, 2013). Multiple studies of ‘Conventions, Sports & Leisure, International’ (CSL) and ‘Mortenson Construction’ revealed that the project of public financed stadiums would intensify the conduct of immense economic activities in the respective states or regions. For instance, relating to the project of Viking Stadium, it has been projected that during its functioning stage, the project might generate an excess of $26 million as tax proceeds every year. It is also anticipated to generate over $145 million as spending from the fans during Vikings seasons. Also, the Vikings team themselves pay nearly about $20 million every year as local and state tax, which can be regarded as a considerable economic support provided to the state (Minnesota Vikings Football, 2013). With regards to economic benefits, current projections state that once projects like Viking stadium starts operating at its optimal functionality level, it will be supporting around 3400 full time and part time employees, contributing significantly towards economic improvement and well-being. Evidently, the ‘Building & Construction Trades Council’ (BCTC) in the state of Minnesota is experiencing a major unemployment issue. Thus, the conduct of this sort of project would certainly aid in addressing and mitigating this issue by a certain level. Furthermore, the design and fabrication work, which will start during the semi construction stage of the project, will also provide multiple job opportunities. Specially mentioning, University of Minnesota also conducted a study on the Viking matches, which revealed that game fans from outer metro areas spend about $6 million on hotels, restaurants and parking during every Viking game play. The team itself has shown its willingness in paying more than half of construction and maintenance costs. Apart from the yearly matches played by teams like the Vikings, these stadiums can also help in attracting events like ‘Final Four’ and ‘Super Bowl’ in this town. The Final Four matches are expected to generate a sum total of over $55 million and that of Super Bowl matches to be about $250 million, resulting in enhancing the financial conditions of the state at large (Minnesota Vikings Football, 2013). Intangible Benefits Apart from just proving to be a major provider of economic benefits, the projects concerning public financed stadiums also aim towards offering benefits to the state in terms of intangible aspects. These stadiums are supposed to be offering a state-of-the-art venue for an array of sports, leisure opportunities and community events as well. Moreover, these facilities will also help in continuously benefiting multiple community groups along with several non-profit organizations from the subsistence of teams like the Vikings and the NFL (Metropolitan Sports Facilities Commission, 2009). Even during non-Viking seasons, these stadiums will help in promoting various other activities such as high school sport events, baseball sports, trading events, motor junky shows and soccer games as well. All these non –revenue generating activities will indirectly help in converting these facilities as significant community assets (Metropolitan Sports Facilities Commission, 2009). Indirect Benefits Apart from economic and intangible benefits, new publicly funded stadiums will also help in generating multiple sideway benefits as well. For instance, huge spending of the teams like Vikings during their pre-season training camps drops significant impact on both the state and the region. Local television channels, radio stations and advertisement companies generate huge amount of revenues through broadcasting seasoned matches. Multiple geographic areas are also expected to withdraw significant benefits for their support towards NFL franchises. Multiple surveys also project that about 3 million viewers address Viking matches every Sunday on TV and radios (Metropolitan Sports Facilities Commission, 2009). Apart from the above-discussed benefits, it is also strongly believed that projects like the Vikings Stadium may sound as a bad deal for taxpayers and fans, proving those to have several disadvantages. In this regard, various disadvantages of public financed stadiums have been elaborated hereunder. Squeezing Out tax Payers It has been witnessed that projects of public financed stadiums may result in increasing tax rates and prices as well. The stadium construction cost of projects like Viking Stadium may be above $975 million on paper, ignoring the variable factors that might result in hiking of budget. Out of these budget estimates, one part of the entire amount will be supplied through public funding. The second part will be provided by the state and the third half from the populaces belonging to Minneapolis through the imposition of several taxes upon them. But, as far as the return part is concerned, these stadiums are expected to provide to the government an annual amount of less than the aforementioned amount as revenue. This might appear as a non-profitable deal towards the people (National Center for Policy Analysis, 2000). Negative Study Projections Intense studies conducted on over 12 stadium or arenas during 1958 to 1987 revealed that proficient sports do not pay significant contribution in pushing up economic growth. Various researches projected that cities supporting repudiated league teams often grew more slowly as compared to others. Adding to that, stadiums do not create wealth. These just redistribute and manage previously existing wealth from one entertainment form to other (National Center for Policy Analysis, 2000). Tax Liability Existing records project that taxpayers have to continue serving debt even on old abandoned stadiums, which is a terrible loss to the economy. For instance, the liability amount of $110 million, which New Jersey still bears for the old Meadowlands sporting complex can be taken into concern in this regard. Same with the case of Seattle’s King County, bearing a liability of $80 million to the Kingdom can also be traced. It would be vital to mention that a majority of the publicly funded stadiums tend to boost up the economy through generating substantial revenues from conducting various sorts of sporting events. However, multiple studies reveal that decrease in per capita income affects such construction plans and the economy as well. Evidently, for supporting league teams, the respective government has to invest significant amount of funds as subsidies. A majority of contractors of such projects believe that instead of investing in such an event, which does not guarantee to be profitable enough, the government should provide fund support in those factors that ensure in making business more productive (National Center for Policy Analysis, 2000). Tax Payers Make Players Rich From the above studies, a simple question arises that “why public money should be used to fill up the pockets to the players?” This question still remains unanswered. Utilizing public subsidies for construction of private stadiums does not provide much benefit to the economy. According to the conduct of recent studies, it can be apparently observed that the construction of new stadiums raises team profitability by an average of $11 million every year. It also results in increasing payroll by $14 million, which might further increase the booking value of the teams (Taxpayers League of Minnesota, n. d.). Costs Outweigh the Benefits Another reason for discouraging public subsidy investment in stadiums is short entertainment cost up the taxpayers much more than the amount they earn over a long time. Taking the instance from a recent study, it can be apparently observed that a baseball game may cost taxpayers up to $188 million, out of which even the generation of only $40 million would take a very long time. Stadium protestors often consider both the facility along with the teams that perform in such facilities as of no importance to the economic growth process. They also state that the jobs created by such sporting facilities would provide minimal wages and therefore, might prove to be unfavorable for the unemployed populaces (Taxpayers League of Minnesota, n. d.). Construction through Private Funding Based upon the analysis of multiple reports regarding proficient sports arena projects, it can be found that a majority of the new stadiums are capable of recovering up their entire construction expenses, even if they are built through private funding. For instance, The ‘Atlanta Braves' Turner Field’ and the ‘San Francisco Giants' SBC Park’ were built completely through private funding (Taxpayers League of Minnesota, n. d.). Insignificant Improvement in Team Performance Studies conducted upon measuring the impact of new stadiums on performance of teams revealed that there lay less statistical facts for supporting the argument concerning improvement show by the teams in their performance after they are availed with a new stadium. In fact, on close observation, it was even found that the winning percentages in sports like football, hockey and basketball actually tends to decrease on an average when these are performed in a new built stadium (Taxpayers League of Minnesota, n. d.). Importance of Settlement Area Location of the stadiums or arenas can also play a decisive role in determining the level of impact that these impose on the economy. In this similar context, a proper settlement location denotes adequate availability of stadium crowd, which further influences the revenue generation level at large (Taxpayers League of Minnesota, n. d.). Programs Lost Due To Funding the Stadium Often, it can be apparently observed that during such massive constructions, the economy of that respective state passes on through a hard period. These sorts of construction projects require heavy funding and subsidy offers on raw materials, which in turn significantly affects the revenue generation rate of the government. Several essential projects such as construction of schools and government hospitals are hampered due to such massive projects. Moreover, for acquiring such heavy funds, the government takes the initiative of raising tax levels, thus further pressurizing the common populaces. In addition, multiple public welfare initiatives on behalf of the government also gets hampered in the entire process. Also, it takes considerable amount of time for the government to recover up that invested sum of money, which in certain cases turns out to be making loss, thus pushing the economy to a more unstable condition (Wilhelm, 2008). Conclusion As per the above analysis and discussion, it can be affirmed that constructing projects like the Viking Stadium in the state can have both positive impacts and negative consequences. The entire discussion has been made based on one particular factor i.e. the use of public funding in the construction process. It would be vital to mention that public financed stadiums provide significant benefits to the state and supports the economy in the form of generating substantial revenues along with generating massive employment. On the other hand, these sorts of projects often impose unfavorable impact upon the states as well as the economies through promoting tax liability and increased level of costs among others. Thus, it can be concluded that public funded stadiums might play a decisive role in enhancing the financial conditions of the states and also imposing unfavorable impact upon the essential financial activities. References A&E Television Networks. (2014). MINNESOTA. Retrieved from http://www.history.com/topics/us-states/minnesota Minnesota Vikings Football. (2013). New Vikings Stadium. Retrieved from http://www.vikings.com/stadium/new-stadium/economic-impact.html Metropolitan Sports Facilities Commission. (2009). Economic and jobs impact of Metrodome new multipurpose facility. Summary of Economic Impacts, pp. 2-B1. National Center for Policy Analysis. (2000). Publicly financed stadiums actually drag down local economies. Retrieved from http://www.ncpa.org/sub/dpd/index.php?Article_ID=9210 Pearson Education. (2014). Minneapolis, Minn. Retrieved from http://www.infoplease.com/ipa/A0108561.html Taxpayers League of Minnesota. (n.d.). 8 reasons to reject publicly financed stadiums for professional sports teams. Retrieved from http://dontmesswithtaxes.typepad.com/No_Public_Money_for_Stadia.pdf Wilhelm, S. (2008). Public funding of sports stadiums. Policy In-depth, 1-11. Read More