Who Benefits from the Presence of Professional Sports Teams? The Implications for Public Funding of Stadiums and Arenas

Governments have become increasingly responsible for financing arenas and stadiums. It has now become commonplace to use broad-based or special taxes to build or operate these facilities with teams retaining most or all of the revenues. Some communities have invested more than $500 million in such facilities. To justify the use of tax dollars proponents point to economic and intangible benefits. This study reviews the economic benefits from teams and analyzes, for the first time, the intangible benefits. The results indicate that fans, players, and owners are the prime beneficiaries of a team's presence. As a result, investments by the public sector in facilities should rely on a special user tax district that insures that those who benefit from the facilities bear the cost. A financing plan is presented that any city or county could follow to fund an arena or stadium.