A new pro sports stadium is good for team owners, but it's not always so good for the local taxpayer.
The Atlanta Braves are the latest team to announce plans for a new stadium funded in part by the public. The team will move to a new ballpark in neighboring Cobb County in 2017, and taxpayers will put up $450 million to cover the cost.
New stadiums can spur excitement among fans and provide the potential for long-term economic development, but some recent projects have yielded mixed results — with price tags that have sometimes exceeded what was originally promised.
For the third time in four years, homeowners in Hamilton County, Ohio, will pay more in property taxes than what they were told it would cost them to build two stadiums, The Cincinnati Enquirer reported. Although homeowners will still see their tax bill drop, the tax break they're getting is less than what they were supposed to get.
In 2010, 121 professional sports facilities in use for all five major sports leagues required $43 billion in investments in new construction or major renovations. About half of that investment came from the public, according to research by Harvard urban planning professor Judith Grant Long.
But over the life of these stadiums, taxpayers will have to pay an additional $10 billion of what Long calls "obscured costs" that were not initially factored into the public's share, Long said. That means instead of taking on about half the cost of stadium construction and improvements, the public is now taking on about 75% of the cost, she said.
"These hidden or obscured costs add to the total cost ... and most of these hidden costs are public costs," Long said.
Extra costs to taxpayers add up from a variety of sources: subsidies for the land, ongoing operational costs, capital improvements, city services and lost revenue from stadiums exempt from paying property taxes, Long said.
Timing is important, too. A bad economy can affect how much revenue is raised from sales taxes earmarked for the stadium.
"It's just a clear risk that any city or any government faces when they're paying for a stadium with a dedicated tax stream," said Victor Matheson, economic professor at College of Holy Cross. "That tax stream can vary quite a bit, but once you have issued the bond, those bond payments are fixed."
The economy also can affect turnout to the stadium.
"You open into a recession and nobody's buying luxury boxes," said Robert Boland, professor of sports management at New York University Tisch Center. "Or you open when the team is bad."
Payoff for public?
Nearly every professional stadium has received public funding, Matheson said.
"Most of the time, you can't make any money directly from the stadium or stadium owners would've done it themselves," Matheson said.
Stadiums offer the possibility of becoming an anchor for local economic development, such as in San Diego and Denver, Matheson said.
"But with every great success story, you have a Minneapolis, a Chicago White Sox or a Washington Nationals," he said. Matheson said a new stadium "almost never" creates city-wide economic benefits and sometimes not even neighborhood effects.
Even without a clear promise that the economics will work out for a city or county, often the team has the upper hand in financing.
What a pro sports team does provide, said Boland, is "tremendous psychic power for a city."
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