Are Stadiums and Sports Teams Really Worth the Money?

his article was posted during Super Bowl 50, which I have absolutely no desire to watch — but many millions of people have the opposite point of view as they watch the big screen televisions with a smorgasbord of snacks; finger foods; beer and soda while surrounded by a camaraderie of friends who are rooting for their favorite teams — or, at least, enjoying the party.

Professional sports is an enormously lucrative business which has demonstrated to generally be resistant to economic downturns — so lucrative that airlines are willing to pay millions upon millions of dollars for contracts on deals to support big league teams — but with the unfortunate caveat that taxpayers are usually saddled with part or all of the cost of the construction of a new stadium, often with the hopes and almost unrealistically high expectations by their government representatives that there will be a return on that major investment…

Are Stadiums and Sports Teams Really Worth the Money?

…but although the construction of stadiums is sometimes centered around a major mixed-use development, is there really a return on that investment? I have read two articles which suggest that the answer is typically no.

“A good rule of thumb that economists use is to take what stadium boosters are telling you and move that one decimal place to the left, and that’s usually a good estimate of what you’re going to get,” Victor Matheson — a sports economist at College of the Holy Cross — said, according to this article written by Ben Bergman of Marketplace suggests as it focuses on professional football returning to the Los Angeles metropolitan area where government representatives in Inglewood — one of poorest neighborhoods in LA — projects a football stadium would generate more than $800 million worth of economic activity per year.

“One should not anticipate that a team or a facility by itself will either increase employment or raise per capita income in a metropolitan area” is what Andrew Zimbalist of Freakonomics wrote in this article. “Generally, the reason for this is threefold. First, most of the spending at a stadium or arena is from residents of the metro area; as such, it is simply redirected expenditure within the local economy, e.g., from the bowling alley or restaurant to the ballpark. Second, much of the income generated by the team leaks out of the local economy, as owners and players save a substantial portion of their earnings in the world’s money markets or spend their income outside the host city. Third, in the typical case, the city and/or state contributes roughly two-thirds of the financing for the facility’s construction and takes on obligations for additional expenditures over time.”

I posted a loose comparison between two counties in Georgia back on Friday, November 14, 2014 whose government representatives allegedly used questionable methods to lure major projects to their jurisdictions: the proposed expansion of Silver Comet Field at Paulding Northwest Atlanta Airport — which Delta Air Lines and the city of Atlanta have had a history of opposing — and the construction of a new stadium for the Atlanta Braves in Cobb County, which is well under way…

…proving that when it comes to attracting what is perceived as big money, decision makers may be tempted to conduct business by any possible means — often at the expense of “average” taxpaying citizens.

Naming Rights of Stadiums by Airlines

Airlines are not just shelling out significant amounts of funds for sponsorship of professional sports teams. From this article posted back on Sunday, January 18, 2015 is this chart of airlines which have been paying for naming rights of stadiums and arenas for years, as extracted from this list by ESPN:

Stadium Name

Sponsor

Home Teams

Average Dollars Per Year

Year Expires

Air Canada Centre Air Canada Toronto Maple Leafs, Raptors $1.5 million 2019
American Airlines Arena American Airlines Miami Heat $2.1 million 2019
America West Arena America West Phoenix Suns, Coyotes, Mercury $866,667 2019
Continental Airlines Arena Continental Airlines New Jersey Nets, Devils $1.4 million 2011
Delta Center Delta Air Lines Utah Jazz, Starzz $1.3 million 2011
United Center United Airlines Chicago Blackhawks, Bulls $1.8 million 2014

Professional sports is big business which continues to get more and more expensive, as the minimum amount being paid to the New York Yankees alone for the contract extension is eight million dollars — although the undisclosed figure could be as much as $72 million dollars solely for that team…

…and yet taxpayers are still asked to foot part or all of the bill for the construction of new stadiums.

Summary

Let’s face it: airlines would certainly not pay the big bucks to professional sports interests if the deals were not lucrative for them as well.

As I mentioned in this article posted on Sunday, October 11, 2015 pertaining to the construction of the new stadium for the Atlanta Braves to use to play professional baseball starting next year, sports and its competitive nature is important in society in general, in my opinion; but I am not the type who can be a die-hard fan to the point where I will spend substantial amounts of my time and money to support teams which do nothing for me in return — especially if the representation of the host city is little more than by name only, as many players of a professional sports team either come from or live somewhere other than that host city.

I will watch the occasional sports game both on television and in person; but I never did quite understand a general obsession for sports — to the point where sports becomes impervious to economic downturns and governments can be convinced to use taxpayer dollars and take out loans to support an entity which may or may not benefit taxpayers in the future. It can actually be more fun to watch a minor league team or a local matchup between two ersatz teams at a local park. Funny how the removal of big bucks can emphasize a sporting event towards its purest form.

In the meantime, if you watched Super Bowl 50, I hope you enjoyed watching the game; and if you were flying in the air as a passenger aboard an airplane at the time, the pilot of your flight most likely kept you updated with the latest score from the game.

Photograph of construction site of the new stadium for the Atlanta Braves professional baseball team ©2015 by Brian Cohen.

4 thoughts on “Are Stadiums and Sports Teams Really Worth the Money?”

  1. DaninMCI says:

    Just ask the people of St. Louis if the TWA Dome was worth the money to get the Rams there.

    1. Brian Cohen says:

      That question can probably be asked about the majority of stadiums built with taxpayer dollars in the United States, DaninMCI — regardless of sport…

      …and the answer will probably be similar.

  2. VG says:

    I recall reading an academic study a number of years ago that concluded baseball stadiums were a net plus economically but football stadiums were a net loss for the local community. Unfortunately I don’t have the reference citation handy. Note that I personally enjoy football more than baseball.
    As anecdotal evidence, I would point out that the previous Cowboys stadium in Irving, Texas caused a blighted area in the midst of a booming Dallas Ft Worth area for its entire lifetime.
    It does seem wrong that taxpayers pay for the stadium while the team owners rake in the cash.

    1. Brian Cohen says:

      If you do find that citation, please feel free to return and post it here, VG.

      Thank you.

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