Planet Debate 2014
Subsidized Sports Stadiums Update
1
General/Reference ................................................... 2
Massive Subsidies/Financing Now ................................... 3
History of Public Funding ......................................... 4
How Stadiums Are Financed with Public Support ..................... 6
Pilot Tax Exemptions .............................................. 8
Tax Exempt Municipal Bonds ....................................... 10
Pro ................................................................ 12
Sports Stadiums Catalyze Development & Cities .................... 13
Sports Arenas Attract Businesses ................................. 16
Examples of Stadiums That Have Revitalized Cities ................ 17
Teams That are Part of Large Economic Development Initiatives are
Economically Desirable ........................................... 23
Pro Arguments Apply to Minor League Teams ........................ 28
Sports Teams Prestigious ......................................... 30
Revenue/Economic Opportunity ..................................... 31
Civic Pride ...................................................... 32
A2: No Public Purpose ............................................ 33
A2: Teams Won’t Leave ............................................ 36
Con ................................................................ 37
Sports Businesses Profitable ..................................... 38
Hotel and Rental Car Taxes Bad ................................... 39
A2: Teams Will Leave ............................................. 40
Financial Benefits Exaggerated ................................... 41
Financing Stadiums Violates the Public Purpose ................... 44
Neoliberalism Bad K Links ........................................ 48
A2: Improved Quality of Life ..................................... 49
Undermines Education/Public Goods ................................ 50
A2: Public Support ............................................... 51
A2: Reduced Crime ................................................ 52
A2: New Businesses ............................................... 53
A2: Better Players ............................................... 54
A2: Jobs ......................................................... 55
A2: General Economic Benefits .................................... 56
A2: Stadiums Increase Visitors and Benefit the Economy ........... 57
A2: Attracts Corporate Residents ................................. 58
Alternative Finance Mechanisms ................................... 59
Planet Debate 2014
Subsidized Sports Stadiums Update
General/Reference
2
Planet Debate 2014
Subsidized Sports Stadiums Update
3
Massive Subsidies/Financing Now
Massive financing of new stadiums by tax payers now
Martin J. Greenberg & Dennis Hughes, 2011, Jr.** * Martin J. Greenberg is managing member of the
Law Office of Martin J. Greenberg, member of the National Sports Law Institute Board of Advisors,
adjunct professor of law at Marquette University Law School, and has written The Stadium Game, Sports
Law Practice and $ port$ Biz. ** Dennis Hughes, Jr. is a 2010 graduate of Marquette University Law
School and is currently serving a fellowship with Ilya Sheyman's Progressive campaign for U.S. Congress
in Illinois' 10th District., Marquette Sports Law Review, 22 Marq. Sports L. Rev. 91, ARTICLE:
SPORTS.COMM: IT TAKES A VILLAGE TO BUILD A SPORTS FACILITY, p. 91-2
In the past twenty years, over 100 new or renovated sports facilities have been developed in cities across
the United States. n2 In the 1990s, approximately $ 15 billion was spent on major league facilities, with
approximately $ 11 billion of the funding contributed by state and local governments. n3 Since 2003, the
four major sports leagues - Major League Baseball (MLB), the National Football League (NFL), the
National Basketball Association (NBA), and the National Hockey League (NHL) - have seen the
development of twenty-one new facilities, at a cost of over $ 16 billion, n4 nearly equal to the cost of the
sixty-five facilities built the decade before. n5
As stadium costs, not to mention revenues, continue to rise, the American taxpayer continues to be the
largest underwriter of sports facilities for its home teams. For example, in MLB during the 1990s, nine new
stadiums were completed n6 with over eighty percent of the cost of those MLB ballparks [*92] financed
through public resources. n7 From 2000 through the planned construction of the new Miami Marlins
ballpark in 2012, fourteen MLB stadiums have or will be completed. n8 Fifty-four percent of the cost of
those MLB ballparks was financed through public resources. n9 Twenty-three of the thirty MLB teams
received new or renovated stadiums during the period from 1990 to 2010. Therefore, most MLB teams
were able to take advantage of a booming American economy during the 1990s and early 2000s to
convince local taxpayers to help finance their stadiums.
Planet Debate 2014
Subsidized Sports Stadiums Update
4
History of Public Funding
Sports stadiums have been publicly funded for over a century
Williams et all, 2012, Jack F. Williams,* Jessica O'Quin,** and Joshua Stein***, * Professor, Georgia
State University College of Law and Middle East Institute, Graduate Research Assistant. J.D., Georgia
State University 2011.
Associate, Mesirow Financial Consulting, LLC. B.S., University of Georgia 2010Albany Government Law
Review, 5 Alb. Gov't L. Rev. 123, BASEBALL AND THE LAW: AMERICA'S NATIONAL PASTIME:
ARTICLE: PUBLIC FINANCING OF GREEN CATHEDRALS, p. 127
Public financing of sports stadiums is not a recent phenomenon. "Since the nineteenth century, stadiums
have been built with complete public financing, complete private funding, or more typically, by some
combination of both private and public money." n14 Public financing for baseball can be traced back to the
formation of the professional teams themselves. In several situations, local politicians and booster clubs
organized the founding teams, such as the Cincinnati Red Stockings (Red Socks) in 1869 and the Chicago
White Stockings (the Cubs) in 1870. n15 In 1871, the first professional baseball game was played on
municipally owned land that was donated to the city by the federal government with stipulation that it must
be used for non-profit ventures.
In 1914, San Diego built the first publicly financed stadium. n17 That stadium seated 23,000 people and
was built at the cost of $ 150,000. n18 During the 1920s, several other stadiums were built around the
country, including Pasadena's Rose Bowl in 1922, the Los Angeles Coliseum in 1923, and Chicago's
Soldier Field in 1924. n19 These stadiums were initially not intended for professional sports use, but rather
"to encourage athletics in general and promote the reputation of [the host] cities." n20
The most famous early municipal stadium was the Los Angeles Coliseum, a football stadium. n21 The
Coliseum was constructed by [*128] private developers to help attract the 1923 Olympic Games to Los
Angeles, after which, the stadium reverted to public use. n22 The structural history behind the financing of
the Los Angeles Coliseum is illuminating. Influential boosters formed the Community Development
Association (CDA) to spearhead the stadium plan. n23 Initially, the CDA wanted Los Angeles either to
issue a bond for the stadium or to pay for it directly. n24 While city and county officials were open to the
bond idea, voters turned down the issue in a referendum. n25 In response, the CDA undertook the
development of the park. n26 While the city and county were prevented from providing bonds for the
construction of the stadium, the city gave the CDA seventeen acres in Exposition Park for the new stadium,
underwrote CDA's $ 800,000 note on the stadium, and agreed to pay the building costs through rental fees
of the facility. n27 Eventually, the city and the county paid $ 499,225 in rent towards the construction of
the stadium, gaining joint control of the stadium after the 1932 Olympics. n28
The Cleveland Municipal Stadium, which opened in 1932, was the first publicly financed stadium intended
for MLB use. n29 The financial structure of that stadium is indicative of the modern financial package
offered to sports franchises today.
History of team finance
Zachary A. Phelp, JD, 2004, NOTE: STADIUM CONSTRUCTION FOR PROFESSIONAL SPORTS:
REVERSING THE INEQUITIES THROUGH TAX INCENTIVES, St. John's Journal of Legal
Commentary, Summer, 18 St. John's J.L. Comm. 981p. 984-6
I. History of Stadium Finance
The current trend of using public resources for professional sports stadiums has not always been the norm.
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Subsidized Sports Stadiums Update
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n5 In the early [*983] days of professional sports, publicly financed stadiums were the minority. n6 The
first professional stadium, the Baker Bowl in Philadelphia, was privately constructed and financed in 1897.
n7 Fenway Park and Wrigley Field, two of the most famous sports venues still in use today, were also
privately financed. n8 In fact, prior to 1948, only four of 28 major stadiums were built with any public
funds. n9 The first stadium to be totally publicly financed was the Los Angeles Coliseum in 1923. n10 The
Coliseum, which was built in an unsuccessful attempt to obtain the Olympics, cost [*984] taxpayers just
under one million dollars. n11 However, during this time period the publicly-funded Los Angeles Coliseum
was still in the minority. Public funding did not become the norm until the early 1950's, when stadium
construction began to increase dramatically. n12 From 1953 to 1970, 30 stadiums were built, creating an
average of almost two per year. n13 In contrast, before 1953 only 28 professional sports stadiums total had
been constructed. n14 Of the 30 stadiums constructed between 1953 and 1970, 27 received financial
support from taxpayers. n15 This taxpayer support totaled over $ 450 million, nearly 70% of the total cost
of all 30 stadiums constructed during this time period. n16 As detailed, the use of public funds became the
popular mechanism to finance these projects.
[*985] The large increase in construction, beginning in the early 1950's, was due to the popularity of
sports, its growing audience, and additional teams being fielded. n17 During the 1950's the population was
moving away from the industrial cities. n18 As the country grew, new and upcoming cities wanted to
compete with the more established cities of the east coast. n19 One avenue of competition, and a status
symbol of a major metropolis, was a professional sports team. n20 To lure these teams away from their
eastern roots, the new cities had to create incentives to leave their loyal fan bases. n21 The most popular
and effective incentive was the publicly funded stadium.
One of the most famous exits actually involves two teams. In 1957 New York began the year with three
professional baseball teams.n22 After the season one remained. n23 The Brooklyn Dodgers left for Los
Angeles, and San Francisco lured away the New York Giants. n24 The Dodgers worked out a deal with Los
Angeles where they traded a minor league stadium for a much more valuable piece of real estate. n25 The
city also paid over $ 4 million for construction preparation of the site and road improvements. n26 The
Giants fared even better in the new California market. They received the promise of a brand new stadium.
n27 In 1960, at a cost of $ 32 million to taxpayers, Candlestick Park opened as the new home of the Giants.
n28 This [*987] mass exodus from New York, known for its loyal fans, was the real beginning of the
current competitive atmosphere. n29 It is this atmosphere that has led so many cities to spend large
amounts of public funds to attract a professional franchise.
Planet Debate 2014
Subsidized Sports Stadiums Update
6
How Stadiums Are Financed with Public Support
How stadiums are financed with public support
Zachary A. Phelp, JD, 2004, NOTE: STADIUM CONSTRUCTION FOR PROFESSIONAL SPORTS:
REVERSING THE INEQUITIES THROUGH TAX INCENTIVES, St. John's Journal of Legal
Commentary, Summer, 18 St. John's J.L. Comm. 981p. 987II. Using the Federal Tax Code to Finance a Stadium
A. Basic Tax Framework
All stadium construction begins with a financing plan. A key component to many stadium-financing plans
is the use of the tax code. n31 Indirectly, the code is used to provide a subsidy, but to qualify the bond
issuer has to meet certain requirements. n32 These requirements pressure cities and states to take on more
of the debt and promote economically unsound practices.
Internal Revenue Code 103(a) excludes from a bondholder's gross income any interest earned on a
municipal bond. n33 This [*988] incentive for individuals to invest in municipal bonds was created to
help local governments raise capital. n34 A city can easily raise capital because it can offer the bonds at a
lower interest rate than the private market due to the advantageous tax treatment of the interest to
bondholders. n35
One type of bond specifically excluded from 103(a), thereby making the interest taxable income, is a
"private activity bond." n36 Private activity bonds are defined in 141 as any type of bond that meets two
specific tests. n37 The first test is the "private business use test," which is met if, "more than 10% of the
proceeds of the issue are to be used for any private business use." n38 Private business use is defined in
141(b)(6) as "use (directly or indirectly) in a trade or business carried on by any person other than a
governmental unit." n39 In the context of a stadium this test will always be met because private sports
teams are the primary users of the facility. n40 The second, and [*989] more important test for a private
activity bond is the "private security test." n41 To meet the private security test, more than 10% of a bond
issue must directly or indirectly be secured by an interest in property that will be used for a private
business. n42 If both of these tests are met a bond is classified as a private activity bond. Generally, once
the private activity classification attaches, a bond issue cannot obtain tax-exempt status. n43 However, a
private activity bond can fall back into tax-exempt status if it is a "qualified private activity bond" under
141(e). n44 If the bonds are qualified, the interest to the bondholder is excludable even though it is a
private activity bond. n45 The main drawback of being classified as a qualified private activity bond,
instead of a normal municipal bond, is that the bond issuer is subject to a cap. n46 The cap is imposed by
146, which limits the amount of qualified private activity bonds that can be issued. n47 The cap,
determined by using state population, requires the [*990] particular bond issuer to make a choice. n48
Among the various qualified uses in 141(e), a government must choose which types of projects will get taxexempt status. n49
It is helpful to remember that teams and local governments want to fail one of the two private activity tests.
In doing so, the bonds received by the bondholder are not classified as private activity bonds, which in turn
will exclude the bond interest from gross income under 103(a). n50 Because the private business use test is
normally met, the private security test is the main focus. n51 A closer look at the security test shows that to
build a stadium, the stadium itself cannot be used to secure the bond debt. n52 Any revenue from a stadium
cannot be used to finance more than 10% of the debt, meaning that a city or state must secure 90%. n53 By
placing a limitation on stadium revenue that [*991] can be used to pay off the bond debt at 10%,
additional sources of income are necessary. n54
Several cities have levied taxes on alcohol or cigarettes, known as sin taxes, as an alternative form of
revenue.n55 Other cities have used hotel taxes n56 or rental car taxes, n57 which place the burden of
financing the stadium on travelers that will probably never see a game there. This is troubling because not
only are non-resident's taxed for something from which they will never benefit, but they have no
representation in the local legislature to represent their interests before the tax is imposed. n58 This burden
shifting approach allows local politicians to display the stadium as their accomplishment while not having
to raise taxes on his or her constituents. n59
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Subsidized Sports Stadiums Update
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[*992] Some have opted not to tax visitors, but rather tax everyone in a given community. In Milwaukee,
for example, a five county sales tax was imposed to acquire the needed revenue. n60 This approach will
place the burden on the entire community, including those who will never attend a game. This seems to be
more equitable than taxing non-residents, but there are still innocent taxpayers who never receive any
benefit from their direct subsidy of the stadium. n61
Whatever the additional source of revenue, the burden falls on the community, and in some instances,
people who derive little, if any, benefit from the stadium. These drastic and somewhat unfair measures are
undertaken merely to keep the bond interest tax-free. n62 If a city can maneuver around the private activity
bond status, they can build for a lower cost. n63 Various experts in the field have estimated the benefits of
keeping a bond issue tax-free. Some believe it can add an additional 34% to the cost of [*993]
construction to a stadium,n64 while more conservative views are 15-20%. n65 These estimates show how
some stadium construction projects could possibly hinge on the classification of the bonds as private
activity bonds. n66 These cost figures also reveal why a city will go to great lengths and adopt
economically irrational policies to fail one of the private activity bond tests.
Once a bond issue fails either the private business use or the private security test, the bond interest is taxfree to the holder. n67 Tax-free interest is lost revenue to the federal government. n68 If that same
bondholder invested in a private bond or some other type of taxable income producing security, the [*994]
government would receive taxes. n69 The federal government is foregoing money to benefit these stadium
construction projects, which is equivalent to a cash payment. n70 Obviously the federal government has
more pressing issues on its agenda than making sure all of the professional sports teams have new stadiums
to play in. This money could be used to fund any number of cash-deprived programs that would benefit
more people than a few select franchise owners. n71 Even if one agrees with this federal subsidization on
the first cycle, some have argued that it will also create a second subsidy. n72 The second subsidy arises
when cities stop spending for other vital programs, and instead seek federal funds for these programs. n73
Not only is the government subsidizing the bonds themselves, they are also paying for the programs that a
city would be funding if it had not undertaken a stadium construction. n74
[*995] The tax structure currently in effect creates two negative aspects that need to be changed. First, it is
questionable whether the federal government should be supporting tax subsidies for professional sports
owners who arguably, are some of the wealthiest individuals or corporations in the country. n75 Second,
even if one agrees that the subsidization aspect is acceptable, there should not be an incentive to use outside
revenue streams for funding when the stadium itself could generate a large portion of the needed funds.
This promotes cities to adopt fiscally unsound principles to satisfy the federal requirements for tax-exempt
status. n76
Planet Debate 2014
Subsidized Sports Stadiums Update
8
Pilot Tax Exemptions
How PILOT tax exemptions work
Williams et all, 2012, Jack F. Williams,* Jessica O'Quin,** and Joshua Stein***, * Professor, Georgia
State University College of Law and Middle East Institute, Graduate Research Assistant. J.D., Georgia
State University 2011.
Associate, Mesirow Financial Consulting, LLC. B.S., University of Georgia 2010Albany Government Law
Review, 5 Alb. Gov't L. Rev. 123, BASEBALL AND THE LAW: AMERICA'S NATIONAL PASTIME:
ARTICLE: PUBLIC FINANCING OF GREEN CATHEDRALS, p. 132-3
Property Taxes and PILOTs
One of the main revenue-generating tools used by a local government is property tax, which accounts for
nearly one-third of municipal income. n67 State and local governments regularly impose a tax on real
property and have done so to fund local services even before the implementation of the income tax. Most
[*133] states implement some form of ad valorem tax, that is, a tax based on the value of real property
multiplied by some rate, often in the form of a millage. n68 Because of the enormous size and value of
sports stadiums, along with the possibility of the stadiums being located on valuable property, the potential
property tax burden for a team could be financially burdensome. n69
One major tool local governments use in attracting professional sports teams is to allow for an abatement of
these property taxes. n70 These abatements generally last a number of years. n71 Some examples include
New York, where the maximum number of years allowed for an abatement is ten years, and Ohio, where
the maximum is set at twenty years. n72
However, to circumvent the abatement term limits, payments in lieu of taxes (PILOT) bonds were created.
n73 These bonds were created in 2006, when the Internal Revenue Service issued two letter rulings that
allowed the tax-exempt bond financing for two New York stadiums. n74 These rulings allow stadium
related revenue to be used to pay debt service on governmental debt as PILOTs. n75
These bonds allow a private entity, such as a sports team, to make an annual payment for public bonds
being used for their benefit, instead of paying a property tax. Moreover, the local government and the team
usually agree that the payments related to the PILOT bonds will never be greater than the property tax that
would have been assessed on the property. n76
This means that revenues from the stadium that would have gone towards paying taxes are now being used
to pay off the publicly financed PILOT bonds. n77 Additionally, these "payments qualify as generally
applicable taxes and do not count against the 10 percent limitation on using revenue arising from private
business activity to pay debt service," so the stadium can be funded with traditional bonds as well. n78
After the Yankee Stadium project received criticism, the Internal [*134] Revenue Service ("Service")
finalized treasury regulations that required a percentage of taxes to be paid instead of Yankee Stadium's
financing approach of a fixed payment negotiated years in advance. The regulations permitted already
negotiated or completed projects, however, such as Yankee Stadium and Citi Field, to continue according
to pre-regulations plans. n79
Another explanation of PILOTs
Gregory Fox, 2005, B.A., Cornell University; J.D. candidate, 2006, Brooklyn Law School, Public Finance
and the West Side Stadium: The Future of Stadium Subsidies in New York, Brooklyn Law Review,
Planet Debate 2014
Subsidized Sports Stadiums Update
9
February, p. 477-8
C. Payments in Lieu of Taxes as a Form of Local Subsidy
Some states, including New York, use payments in lieu of taxes (PILOTs) as an additional method of
financing stadium construction. n64 PILOTs are, as defined by the laws of New York, "any payment made
to an agency, or affected tax [*488] jurisdiction equal to the amount, or a portion of, real property taxes,
or other taxes, which would have been levied by or on behalf of an affected tax jurisdiction if the project
was not tax exempt by reason of agency involvement." n65 This means that private contributions to the cost
of the stadium may be paid to the municipality in amounts equal to the property taxes that would have been
due to that municipality. PILOTs become a form of local subsidy when a municipality lends capital in the
form of municipal bonds to the private developer in order to cover the private share of the stadium
construction costs. n66 This is because the municipality is forfeiting its right to receive property taxes in
exchange for payments that merely service the debt owed to it by the private entity.
The NYSCC proposal called for the issuance of at least $ 600 million in tax-exempt bonds and the use of
PILOTs by the Jets. n67 The next part will describe what that massive investment would have went
towards if the West Side Stadium had been built.
Planet Debate 2014
Subsidized Sports Stadiums Update
10
Tax Exempt Municipal Bonds
Stadiums are usually financed through tax exempt bonds
Gregory Fox, 2005, B.A., Cornell University; J.D. candidate, 2006, Brooklyn Law School, Public Finance
and the West Side Stadium: The Future of Stadium Subsidies in New York, Brooklyn Law Review,
February, p. 477
The predominant method for financing stadiums today is through the issuance of tax-exempt bonds. n32
The proposal for [*484] the NYSCC was no exception. n33 This type of financing involves the issuance
of tax-exempt bonds by a municipality or state that will in turn be repaid using taxpayer dollars. State and
local governments prefer this method because it allows them to pay below-market interest rates, which
bondholders are willing to accept because the interest on these bonds is exempt from federal taxation. n34
This means that when a state or municipality issues a bond to fund the construction of a stadium, not only
are the taxpayers of that state or municipality subsidizing the cost of construction by assuming the debt, but
the federal government is subsidizing it as well by forfeiting tax revenues. n35 Many proponents of
publicly financed stadiums justify the policy of indirect subsidization by the federal government by
claiming that the "'benefits of [public capital facilities] extend beyond the jurisdiction that provides them,'
and will therefore, without the subsidy, be provided at less than the optimum level." n36 Many economists,
however, claim that the economic benefits of stadiums to the jurisdiction are highly exaggerated, thus
rendering the local and state subsidy justifications weak and the federal justification even weaker. n37
The federal government has attempted to curtail the indirect federal subsidy of professional sports facilities
on several occasions, but the practice is occurring with as much frequency, if not more, than ever. n38 One
such attempt was the Tax Reform Act of 1986, which deemed a bond to be a "private activity bond," and
thus taxable, if more than ten percent of the bond proceeds are used by a nongovernmental entity and more
[*485] than ten percent of the debt service is secured by property used in a private business. n39 This law
has been interpreted to mean that a government bond issue may exceed "one but not both of the 10 percent
bond tests." n40 Owners of recently constructed stadiums have circumvented the requirements of the
second ten percent test by servicing at least ninety percent of the debt using non-stadium revenues. n41 By
repaying their debts in this manner, less than ten percent of the bonds are secured by the private business
that is occupying the stadium and the bond cannot be considered a private activity bond for tax purposes.
n42
So called "stadium authorities" are another way for municipalities to avoid "private activity bond" status
and maintain federal tax exemptions. n43 This is possible because a tax is not considered to be stadium
related if it is "generally applicable." n44 By establishing an authority as a separate unit of the state
government that manages several stadiums, the taxes on event tickets are generally applicable as long as
they are applied to all events equally. This allows stadium authorities to circumvent the ten percent of
stadium debt service requirement of the Internal Revenue Code by servicing their debts with tax proceeds
from ticket sales that are not considered to be stadium related. n45
How tax exempt municipal bonds work
Williams et all, 2012, Jack F. Williams,* Jessica O'Quin,** and Joshua Stein***, * Professor, Georgia
State University College of Law and Middle East Institute, Graduate Research Assistant. J.D., Georgia
State University 2011.
Associate, Mesirow Financial Consulting, LLC. B.S., University of Georgia 2010Albany Government Law
Review, 5 Alb. Gov't L. Rev. 123, BASEBALL AND THE LAW: AMERICA'S NATIONAL PASTIME:
ARTICLE: PUBLIC FINANCING OF GREEN CATHEDRALS, p. 130-1
Municipalities may issue bonds that are exempt from federal income tax. n46 The exemption from federal
Planet Debate 2014
Subsidized Sports Stadiums Update
11
income tax (and often state income tax as well) is designed to allow municipalities to issue bonds at a lower
price, compared to corporate public debt, because of the after-tax return investors would experience by
investing in such tax-exempt instruments. This exemption allowed municipalities to use bonds to fund the
construction of sports stadiums through what is commonly known as an industrial development bond
(IDB). n47 "Prior to 1968, the [Internal Revenue] Code did not constrain state and local officials from
issuing tax-exempt debt and using the proceeds to finance investment projects for individuals and privately
owned businesses." n48 In 1968, the Expenditure Control Act (ECA) was drafted to curb the use of taxexempt debt issued for private purposes, due in large part to concerns that the widespread use of these "taxexempt revenue bonds were driving up interest rates [*131] for general obligation tax-exempt debt," were
creating a loss of tax revenue, and allowing state and local officials too much control over government
funds. n49
The ECA defined an IDB as having two requirements: "First, more than 25 percent of the bond proceeds
[were] used by a nongovernmental entity. Second, more than 25 percent of debt service payments [were]
paid directly or indirectly by property used in a trade or business." n50 The thought behind this financing
structure was that only users of the stadium would pay for its services, thus saving general tax revenues
from being used. n51 However, the ECA was undermined by exempting stadiums as "inherently quasipublic in nature" from the twenty-five percent requirements. n52
Over time, the IDB restrictions "proved to be too weak and the volume of tax-exempt debt issued for
private purposes continued to grow until the Tax Reform Act of 1986 ... ." n53 Senator Daniel Patrick
Moynihan, a staunch opponent of public financing of sports stadiums, said the goal of the 1986 Act was to
"eliminate tax-exempt financing of professional sports facilities [altogether]." n54 The 1986 Act replaced
the IDB language in the ECA with the term "private-activity" and reduced the percentage requirements
from twenty-five percent to ten percent, for both the "use of proceeds" and "securities interests" tests
identified above. n55 Additionally, stadiums were removed from the list of activities eligible to use taxexempt, private-activity bonds. n56
With the introduction of the 1986 Act, section 141 of the Internal Revenue Code provided that a bond
would be considered a taxable "private-activity bond ... if more than 10% of the bond proceeds [were] used
by a nongovernmental entity and more than 10% of the debt service [was] secured by property used directly
or indirectly by a nongovernmental entity." n57 The congressional intent was that if stadiums were nonexempt and the bonds available to finance stadiums were taxable, the use of these governmental bonds
would be less attractive to investors, who [*132] would then find private means of financing the stadium.
n58 However, the continued demand for limited sports teams encouraged cities to compete with one
another by offering stadium deals to teams. n59 To be eligible for governmental bonds, as opposed to the
private-activity bonds, the bonds only had to pass one of the ten percent tests. n60 Since a sports franchise
is bound to use more than ten percent of the stadium services, thus failing the use test, "no more than 10%
of the debt service on the bonds [could] be secured directly or indirectly by any private business." n61 This
results in no more than ten percent of the stadium-related revenues being used to finance the debt services.
n62 Meanwhile, a loophole was created that allowed payments to be made with general municipal revenues
(i.e., tax revenue).
The practical result of the 1986 Act was to change the method of debt repayment. Municipal officials and
stadium owners structured their debt repayment so that revenue streams from the actual stadium accounted
for less than 10% of the total repayment, while the public was responsible for the remaining 90%. n64
This was done generally through increases in sales tax, tourist tax, sin tax, and taxes on lottery proceeds.
n65 Additionally, the requirement that no more than "ten percent [of] funding from a private entity [should]
fund [a] stadium financed with state or local bonds, [caused the] city to also provide a favorable lease" to
the owners of the sports team.
12
Planet Debate 2014
Subsidized Sports Stadiums Update
Pro
Planet Debate 2014
Subsidized Sports Stadiums Update
13
Sports Stadiums Catalyze Development & Cities
A sports venue is a catalyst for urban transformation and revitalization –
economic, civic pride and environmental benefits
Martin J. Greenberg & Dennis Hughes, 2011, Jr.** * Martin J. Greenberg is managing member of the
Law Office of Martin J. Greenberg, member of the National Sports Law Institute Board of Advisors,
adjunct professor of law at Marquette University Law School, and has written The Stadium Game, Sports
Law Practice and $ port$ Biz. ** Dennis Hughes, Jr. is a 2010 graduate of Marquette University Law
School and is currently serving a fellowship with Ilya Sheyman's Progressive campaign for U.S. Congress
in Illinois' 10th District., Marquette Sports Law Review, 22 Marq. Sports L. Rev. 91, ARTICLE:
SPORTS.COMM: IT TAKES A VILLAGE TO BUILD A SPORTS FACILITY, p. 93
In the modern context, a sports facility is more than a place to view a sporting event. Sports venues have
become a catalyst for urban transformation or revitalization. A sports facility is a destination place, an
entertainment district, a bundling stimulus, a real estate development, and a place where people can work,
eat, watch, congregate, buy, and socialize. Sports facility development is nothing more than real estate
development. If constructed thoughtfully, a sports facility could convert the image of a league or team
owner from a tax vulture into a long-term leader and visionary for a community. Moreover, a newly
constructed or renovated venue can bring complete renewal and revitalization to blighted areas,
environmentally hazardous sites, aged communities, or near-downtown areas. Real estate development has
become a central component of sports facility development, and the results thereof - urban revitalization
and transformation - may be as important as the building of the sports facility itself.
Stadiums jump-start economic recovery
Martin J. Greenberg & Dennis Hughes, 2011, Jr.** * Martin J. Greenberg is managing member of the
Law Office of Martin J. Greenberg, member of the National Sports Law Institute Board of Advisors,
adjunct professor of law at Marquette University Law School, and has written The Stadium Game, Sports
Law Practice and $ port$ Biz. ** Dennis Hughes, Jr. is a 2010 graduate of Marquette University Law
School and is currently serving a fellowship with Ilya Sheyman's Progressive campaign for U.S. Congress
in Illinois' 10th District., Marquette Sports Law Review, 22 Marq. Sports L. Rev. 91, ARTICLE:
SPORTS.COMM: IT TAKES A VILLAGE TO BUILD A SPORTS FACILITY, p. 93-4
Sports facilities have long been a staple of the economic recovery tool kit and are intended to jump-start the
recovery of dilapidated or vacant urban districts. n13 A major shift in the focus of economic development
and rationale used to justify these investments has occurred in the past decade. While previous decades saw
stadium proponents emphasize the indirect economic benefits of a new facility using terms such as "spinoffs," "multipliers," and [*94] "job creation," the current economic development rationale for almost all of
these projects rests upon the idea of district redevelopment; that is: the facility is a catalyst for physical
redevelopment of a portion of the city's core.
Special Activity Generator (SAG) is a strategy for downtown redevelopment centered on the idea that large
facilities that generate special activity within a district can anchor redevelopment within that district by
drawing visitors and suburbanites to downtown for events. n14 This influx of people can provide the
critical mass necessary to support other commercial activities in the district. In addition, these large projects
can galvanize other investments in the district by the public sector in the form of new infrastructure or
urban design improvements which help to establish and sustain a revitalized district.
Sports stadiums provide strong economic activity and catalyze development
Martin J. Greenberg & Dennis Hughes, 2011, Jr.** * Martin J. Greenberg is managing member of the
Planet Debate 2014
Subsidized Sports Stadiums Update
14
Law Office of Martin J. Greenberg, member of the National Sports Law Institute Board of Advisors,
adjunct professor of law at Marquette University Law School, and has written The Stadium Game, Sports
Law Practice and $ port$ Biz. ** Dennis Hughes, Jr. is a 2010 graduate of Marquette University Law
School and is currently serving a fellowship with Ilya Sheyman's Progressive campaign for U.S. Congress
in Illinois' 10th District., Marquette Sports Law Review, 22 Marq. Sports L. Rev. 91, ARTICLE:
SPORTS.COMM: IT TAKES A VILLAGE TO BUILD A SPORTS FACILITY
p. 94
The SAG strategy has three central objectives: (1) to generate spillover spending benefits for the
surrounding district, (2) to produce new construction within a district, and (3) to rejuvenate a blighted area.
Based on these broad objectives, three indicators of successful urban redevelopment can be derived,
including reuse of existing buildings or spaces, new construction within the surrounding district, and
emergence of a new entertainment or sports district. As a result of the growing use of sports facilities as
economic generators, team owners and cities have begun to focus their stadium financing proposals on the
venue's ability to catalyze redevelopment utilizing the objectives and indicators mentioned above. This
trend has led to the creation of a new type of sports venue that combines the needs of a sports franchise
with the needs of a community to create a regional sports and entertainment destination, or sports.comm.
Ballparks lead to the revitalization of downtown areas in the 1990s
Martin J. Greenberg & Dennis Hughes, 2011, Jr.** * Martin J. Greenberg is managing member of the
Law Office of Martin J. Greenberg, member of the National Sports Law Institute Board of Advisors,
adjunct professor of law at Marquette University Law School, and has written The Stadium Game, Sports
Law Practice and $ port$ Biz. ** Dennis Hughes, Jr. is a 2010 graduate of Marquette University Law
School and is currently serving a fellowship with Ilya Sheyman's Progressive campaign for U.S. Congress
in Illinois' 10th District., Marquette Sports Law Review, 22 Marq. Sports L. Rev. 91, ARTICLE:
SPORTS.COMM: IT TAKES A VILLAGE TO BUILD A SPORTS FACILITY, p. 101-2
In the 1990s, we witnessed the redevelopment of downtown or near-downtown blighted areas with the
construction of new state-of-the-art ballparks. The new stadiums that have been built in downtown or neardowntown areas have not only increased team revenue but have contributed to the economic growth of the
surrounding neighborhoods. Sports facilities provide a greater economic impact when located in an urban
area, which is more likely to be in need of infrastructure improvement and attract crowds due to the
concentration of people in a central business district. n50 These impressions have led to the use of new
sports and entertainment facilities as the main centerpieces for urban redevelopment. In many communities,
the construction or renovation of a sports venue has created happenstance real estate and economic
development surrounding the venue. The sports facility stimulates concentric circles of development
surrounding the sports venue.
Team owners and real estate developers realize the potential benefits of constructing a new facility and
from developing the surrounding land. Because of developed and redeveloped sports facilities, blighted and
inner city areas have turned into attractive gathering places for tourists and local citizens alike. A sports
facility is created, and over time, the area around the facility develops into a popular destination place and
entertainment district. These sports facilities become a staple of economic recovery, as the new facilities
represent progress in dilapidated inner cities. n52 The stadiums draw attention to the cities as areas of
commerce and culture. n53 Therefore, sports facilities [*102] have become the most popular tool for
urban revitalization. n54 The concept of concentric circles starts when the only real estate that is planned is
the sports facility itself. Because of the number of people that come into the area, both on a permanent and
nonpermanent basis, it only makes sense to develop support-type real estate, which may include housing,
service-type establishments to support the housing, offices, other types of entertainment activities such as
restaurants, movies and, of course, shopping.
Sports stadiums have revitalized deteriorating inner cities
Planet Debate 2014
Subsidized Sports Stadiums Update
15
Martin J. Greenberg & Dennis Hughes, 2011, Jr.** * Martin J. Greenberg is managing member of the
Law Office of Martin J. Greenberg, member of the National Sports Law Institute Board of Advisors,
adjunct professor of law at Marquette University Law School, and has written The Stadium Game, Sports
Law Practice and $ port$ Biz. ** Dennis Hughes, Jr. is a 2010 graduate of Marquette University Law
School and is currently serving a fellowship with Ilya Sheyman's Progressive campaign for U.S. Congress
in Illinois' 10th District., Marquette Sports Law Review, 22 Marq. Sports L. Rev. 91, ARTICLE:
SPORTS.COMM: IT TAKES A VILLAGE TO BUILD A SPORTS FACILITY, p. 103
Some of America's deteriorating inner cities have provided the perfect testing ground. This has been
especially true in cities with baseball stadiums. Three baseball stadiums in particular, opened in the 1990s,
are properly considered to have spurred the trend of neighborhood economic development and
revitalization through the development of a sports venue, namely: Camden Yards, home of the Baltimore
Orioles (now known as Oriole Park at Camden [*103] Yards), opened in 1992; Jacobs Field, Home of the
Cleveland Indians (now known as Progressive Field), opened in 1994; and Coors Field, home of the
Colorado Rockies, opened in 1995. The concept was extended beyond baseball stadiums in 1999 with the
development of the Staples Center, home of the Los Angeles Lakers and Los Angeles Clippers NBA
franchises.
Planet Debate 2014
Subsidized Sports Stadiums Update
16
Sports Arenas Attract Businesses
Sports areas attract businesses to the local area
Martin J. Greenberg & Dennis Hughes, 2011, Jr.** * Martin J. Greenberg is managing member of the
Law Office of Martin J. Greenberg, member of the National Sports Law Institute Board of Advisors,
adjunct professor of law at Marquette University Law School, and has written The Stadium Game, Sports
Law Practice and $ port$ Biz. ** Dennis Hughes, Jr. is a 2010 graduate of Marquette University Law
School and is currently serving a fellowship with Ilya Sheyman's Progressive campaign for U.S. Congress
in Illinois' 10th District., Marquette Sports Law Review, 22 Marq. Sports L. Rev. 91, ARTICLE:
SPORTS.COMM: IT TAKES A VILLAGE TO BUILD A SPORTS FACILITY, p. 102
The concept of concentric circles works because new sports facilities attract businesses to the
neighborhoods surrounding the sports facility, which creates additional jobs and consumer spending.
Additionally, sports facilities bring new crowds to a district and require upgraded physical investments
such as widened roads and interchanges, pedestrian pathways, and parking garages. n55 These factors
create an incentive for new hotels, restaurants, and businesses to move to a city, which serves to revitalize a
city by creating more economic activity, even out of season. n56 The downtown areas then generate higher
hotel occupancy, restaurant patronage, retail jobs, and city revenues as the fans can walk from the stadium
to restaurants and bars to celebrate. n57 The districts themselves have become as much of an attraction as
the events and facilities in the cities.
A downtown or near-downtown stadium, where the surrounding area is developed, benefits both the owner
and the taxpayer. The use of a new sports facility specifically designed as the centerpiece for economic
development makes the public funding of these facilities easier to swallow. When asked to help fund a new
stadium, the taxpayers and public officials want something for their financial assistance. A stadium
specifically designed to take advantage of the concentric circle effect can satisfy investors and taxpayers
alike by attracting new businesses that will create additional jobs and consumer spending for the benefit of
the community.
Planet Debate 2014
Subsidized Sports Stadiums Update
17
Examples of Stadiums That Have Revitalized Cities
Camden yards revitalized Baltimore
Martin J. Greenberg & Dennis Hughes, 2011, Jr.** * Martin J. Greenberg is managing member of the
Law Office of Martin J. Greenberg, member of the National Sports Law Institute Board of Advisors,
adjunct professor of law at Marquette University Law School, and has written The Stadium Game, Sports
Law Practice and $ port$ Biz. ** Dennis Hughes, Jr. is a 2010 graduate of Marquette University Law
School and is currently serving a fellowship with Ilya Sheyman's Progressive campaign for U.S. Congress
in Illinois' 10th District., Marquette Sports Law Review, 22 Marq. Sports L. Rev. 91, ARTICLE:
SPORTS.COMM: IT TAKES A VILLAGE TO BUILD A SPORTS FACILITY, p. 103-4
A. Camden Yards
In the 1980s, Baltimore's downtown, located on a historic seaport, experienced a dramatic renaissance and
revitalization. A new convention center, the National Aquarium, and the Maryland Science Center attracted
tourists and Baltimore residents to the downtown Inner Harbor neighborhood, which resulted in property
values increasing and further new development occurring. n59 The downtown Inner Harbor neighborhood
has become an iconic Baltimore Landmark and today is the destination of not only the afore-referenced
centerpieces of development, but also the American Visionary Art Museum, Baltimore Museum of
Industry, Geppi's Entertainment Museum, Port Discovery Children's Museum, and First Mariner Arena, to
name a few. n60 More recently, the Inner Harbor neighborhood has seen the development of the Legg
Mason Tower, Ritz Carlton residences, and Harbor View Pier homes. n61
As a result, perhaps no city has garnered more attention and acclamation for its downtown revitalization
and rehabilitation efforts than Baltimore, Maryland. "Baltimore "is the town cities unabashedly seek to
copy to revive their own decaying downtowns.'" n62 The culmination and accumulation of these projects
have helped to create a "tourist bubble" in which a well-defined perimeter separates the tourist space from
the rest of the city. n63
[*104] However, not all of downtown benefited from the Inner Harbor neighborhood revitalization. Much
of the west side of downtown remained destitute, empty, and unsafe. Just fifteen years ago, Camden Yards
was home to a warehouse district filled with a dilapidated rail yard, vacant buildings, and a few businesses.
n64 The twin stadiums within the sports district, Camden Yards, home of the Baltimore Orioles, and M&T
Bank Stadium, home of the Baltimore Ravens (formerly known as PSINet Stadium and then as Ravens
Stadium), were conceived to address three primary goals: (1) to keep the Baltimore Orioles in Baltimore,
Maryland; (2) to attract an NFL franchise to the city; and (3) to bring the Inner Harbor success further west
to the Camden Yards area, which was considered the edge of town. n65
Construction began for the baseball stadium in 1989 and finished in 1992. Construction began for the
football stadium in 1996 and was completed in 1998. n66 The stadiums encompass approximately 115
acres and were 95% publicly funded through a sports-themed state lottery game. n67 Initially, the
neighborhood surrounding Camden Yards saw little economic development resulting from Camden Yards
construction. In an interview, Laurie Feinberg, the Division Chief of the City of Baltimore Planning
Department, indicated that with the exception of the renovation of the B&O Warehouse and the Camden
Train Station, which now house offices, gift shops and restaurants, the area surrounding Camden Yards
"saw no changes." n68
However, by 2005, approximately thirteen years after the Baltimore Orioles Stadium opened its doors,
some local development had occurred. n69 The Bromo Seltzer Arts Tower, a 100-year-old building, was
transformed to house visual and literary artists. n70 The historic structure, completed in 1911, was at that
time the tallest building in Baltimore and was modeled after Palazzo Vecchio in Florence, Italy. n71 It is
now listed on the National Register of Historic Places. n72 The Sports Legends Museum at Camden Yards
opened [*105] in 2005 and is housed in the former Camden Station. n73 The 22,000-square-foot museum
is adjacent to the main gate of Oriole Park at Camden Yards and features exhibits profiling Maryland sports
history. n74
The area has also seen a surge in residential and hotel development. Ground was broken in October of 2005
for the Zenith Apartments, a 21-story building including 191 apartments and 6000 square feet of retail
Planet Debate 2014
Subsidized Sports Stadiums Update
18
space at the corner of West Pratt and South Paca Streets. n75 Rombro Lofts, located at 22 Howard Street,
contains seventeen loft condo units in a historic six-story warehouse building. n76 During this period, the
Camden Yards area also witnessed the development of Camden Court Apartments. n77 The 757-room
Hilton Baltimore, opened in 2008, was built on two vacant blocks that are north of Oriole Park at Camden
Yards and west of the Baltimore Convention Center. n78 In addition, hotels in close proximity to the
Ballpark at Camden Yards have been recently renovated, including the Baltimore Marriott Inn Harbor at
Camden Yards renovated in 2007, Sheraton Inner Harbor Hotel renovated in 2007, Radisson Plaza Lord
Baltimore renovated in 2008, and the Hyatt Regency Baltimore renovated in 2009, to name a few. n79
In assessing Camden Yards in the context of concentric circles, it has "experienced some success as an
urban redevelopment catalyst." n80 Baltimore already had an entertainment district, the Inner Harbor,
which flourished as a catalyst for redevelopment long before the two stadiums were built. "Camden Yards
did not create the success that is Inner Harbor; it simply incorporated roughly 20 formerly industrial blocks
into the postmodern tourist economy." n81
While the public investment created two stadiums, maintained the team in town, and gave new life to the
warehouse at Camden Station, the Camden yards sports complex did not in and of itself spark a drastic
transformation of [*106] the western edge of downtown. n82 It was successful at expanding the tourist
bubble to the west, but little development carried over into the neighboring areas that were in desperate
need of economic stimulus. n83 Therefore, the economic impact of Camden Yards may be only an
extension of the Inner Harbor, and Baltimore may have only enough entertainment demand to sustain one
entertainment district. n84
There are also demographic features about the location of the two Camden Yards stadiums that could have
prevented a surge in real estate and economic development. The stadiums are located in two historic
neighborhoods in west downtown that did not need or desire new development. n85 To the south of the
stadiums is the elevated freeway, I-95, which offers easy access to the stadiums, but further separates the
stadiums from the remainder of the city. Finally, the immediate vicinity of Camden Yards is filled mostly
by surface parking to fill the need to sustain the entertainment nature of the two stadiums. n86 It should be
noted that a 1997 Request for Proposal from the Maryland Stadium Authority and the City of Baltimore for
an entertainment-oriented project to be sited on the parking lots between the two entertainment venues was
opposed by the Baltimore Orioles. n87
The Inner Harbor and West Downtown neighborhoods continue to excite the imagination. The Baltimore
Grand Prix, part of the Izod Indy Car Series, debuted along a 2-mile downtown track in September 2011,
drew more than 75,000 people during its inaugural weekend, and is expected to generate $ 11 million in
direct city tax revenue. n88 Baltimore Racing Development, the promoter of the Baltimore Grand Prix,
signed a five-year lease at the B&O Warehouse. n89 In addition there are preliminary plans to expand the
Baltimore Convention Center and build a new arena next to it. The cost would range between $ 750 million
and $ 930 million and would take 6.5 to 7 years to build, i.e. one of the most expensive construction
projects ever undertaken in the city of Baltimore. n90 The cost estimate includes a 4-level, 400,000-squarefoot convention center expansion, an 18,500-seat arena with a 2-level, 500-space [*107] garage beneath it,
and a 500-room Sheraton Hotel rising 23 to 25 stories. n91
Jacobs Field revitalized Cleveland
Martin J. Greenberg & Dennis Hughes, 2011, Jr.** * Martin J. Greenberg is managing member of the
Law Office of Martin J. Greenberg, member of the National Sports Law Institute Board of Advisors,
adjunct professor of law at Marquette University Law School, and has written The Stadium Game, Sports
Law Practice and $ port$ Biz. ** Dennis Hughes, Jr. is a 2010 graduate of Marquette University Law
School and is currently serving a fellowship with Ilya Sheyman's Progressive campaign for U.S. Congress
in Illinois' 10th District., Marquette Sports Law Review, 22 Marq. Sports L. Rev. 91, ARTICLE:
SPORTS.COMM: IT TAKES A VILLAGE TO BUILD A SPORTS FACILITY, p. 107-8
B. Jacobs Field
The second example of concentric circles occurred in Cleveland, Ohio, with the creation of Jacobs Field
(now Progressive Field), home of the Cleveland Indians, and Gund Arena (now Quicken Loans Arena),
home of the Cleveland Cavaliers. The ballpark and arena were the first sport facilities in the United States
Planet Debate 2014
Subsidized Sports Stadiums Update
19
to be constructed simultaneously at the same general location, i.e. the Gateway District. n92
The Gateway District was originally a produce and meat market known as the Central Market area from
1857 until the 1970s. n93 The area was dubbed the Gateway District because it was constructed just north
of a confluence of interstates that provides major entrances (or gateways) into downtown Cleveland. n94
The Gateway area had begun to decline after World War II, and by the 1980s, many buildings were either
dilapidated or torn down to make way for surface parking lots. n95 The Gateway District was meant to fill
the gap between the city's successful theater district, Playhouse Square, and the Tower City shopping and
office complex. n96 Jacobs Field was part of a $ 467 million initiative that also included a basketball arena,
office buildings, and improved district connections to a nearby train station and other activity centers. n97
The two sport complexes are connected to the Tower City Center and the RTA Rapid Transit System via an
underground walkway. n98
Construction began in 1991, finished in 1994, and involved approximately twenty-eight acres. n99
Seventy-five percent of the total cost was borne through public funding, which was a tax on cigarettes and
liquor. n100 The push for redevelopment of Gateway came from Cleveland Tomorrow, a downtown
[*108] development group. n101 Additionally a development corporation was formed, the Historic
Gateway Neighborhood (originally the Gateway Economic Development Corporation), with the goal of
promoting redevelopment in the Gateway District. n102
The change caused by the development of the Gateway complex was drastic:
Formerly vacant buildings have been renovated as market-rate housing, bringing upper-middle-class
residents to this portion of the city for the first time in decades. A total of seven residential projects, with a
combined total of over 800 units, have been opened in the district since 1994, with almost an equal number
of units currently in the planning stages. Included in these renovations are a number of historic and
architecturally significant structures (including the old Statler Hotel and the Osborn Building). Buildings
have been reused for retail spaces as well. New restaurants have been carved out of other formerly vacant
properties. n103
Additionally, several large new hotels have found homes in the Gateway district in historic, underutilized
buildings. n104 New upscale hotels built in Cleveland's historic shopping arcades have helped catalyze
redevelopment. n105 A hotel has been utilized to renovate an old warehouse adjacent to the Gateway
District and the historic National City Bank Building. n106 Moreover, the Colonial Marketplace project
includes not only a hotel but also a retail and office space across seven buildings. n107
Though the Gateway District is aging, new businesses continue to be developed. Recent developments
include a casino proposed by Dan Gilbert, owner of the Cleveland Cavaliers. n108 Another is a new arcade
located underneath the Hyatt Hotel downtown. n109 Additionally, the Med Mart Convention Center is
being constructed nearby on the corner of St. Clair [*109] Avenue and Ontario Street. n110 Most of the
other recent developments are restaurants and bars, including a House of Blues, Lola's, LaStrada, Wonder
Bar, and Greenhouse Tavern. n111
In 1997, the assessed value of the total downtown property of Cleveland dropped 1.7% from 1996. n112
However, the assessed value of properties within the three-block radius surrounding Progressive Field
actually increased. n113 For example, twelve of the hotels in the area increased in value, one remained
stagnant, and only one lost value. n114 Additionally, of the eight entertainment properties that existed in
1997, none of the properties lost value from the previous year, and in fact, increased an average of 68%.
n115 Finally, the residential properties showed an increase as well. Although smaller - at 3.5% - the
increase further showed the viability of the area. n116
After 1997, there was a rise in assessed property value throughout downtown Cleveland. n117 The assessed
values rose 2.3%, 3.2%, and 38.8% respectively. However, there was an even greater increase in the threeblock radius surrounding Progressive Field. n118 In fact, the hotel properties increased an average of 206%
between 1998 and 2000, and only one of the hotels decreased in assessed value, and even then it lost only
7%. n119 On the other hand, the entertainment properties increased an average of 413% and the residential
properties averaged a 45% increase during such period. n120
Planet Debate 2014
Subsidized Sports Stadiums Update
20
Conversely, the city of Cleveland faced dramatic decreases in assessed value in 2000 through 2003. n121
The downtown properties showed a 19.7% drop in assessed value in 2001; however, the properties around
Progressive Field continued to increase. n122 For example, commercial business properties increased 20%,
residential properties increased 55%, and hotel properties increased 91%. n123 The entertainment
properties were the only properties to [*110] see a decrease, but this was slight at two percent. n124
However, from 2003 through 2007, the assessed value for the commercial businesses, residential
properties, entertainment properties, and hotel properties all increased. n125 Even during the recession,
Progressive Field positively impacted the area. n126 Although the hotel and residential properties
decreased slightly, in the three-block radius surrounding the stadium, the commercial business properties
increased 8.5% and the entertainment properties increased 2%. n127 Robert Brown, Director of the City
Planning Commission of Cleveland praised the development:
A key factor in the success of Cleveland's sports facilities in helping to revive downtown is the fact that
both the stadium and arena are located in heart of downtown and are not segregated in some sports island
on the periphery of downtown. This location in the core of downtown, right on the downtown street grid,
has helped to maximize the spin-off traffic to nearby businesses. n128
Therefore, by strategically planning the development of the Gateway District, the City of Cleveland has
transformed a formerly dilapidated district into a lucrative regional tourist destination and economic engine
for the city.
Coors field revitalized Denver
Martin J. Greenberg & Dennis Hughes, 2011, Jr.** * Martin J. Greenberg is managing member of the
Law Office of Martin J. Greenberg, member of the National Sports Law Institute Board of Advisors,
adjunct professor of law at Marquette University Law School, and has written The Stadium Game, Sports
Law Practice and $ port$ Biz. ** Dennis Hughes, Jr. is a 2010 graduate of Marquette University Law
School and is currently serving a fellowship with Ilya Sheyman's Progressive campaign for U.S. Congress
in Illinois' 10th District., Marquette Sports Law Review, 22 Marq. Sports L. Rev. 91, ARTICLE:
SPORTS.COMM: IT TAKES A VILLAGE TO BUILD A SPORTS FACILITY
p. 110-111
C. Coors Field
Coors Field, home of the Colorado Rockies, completes the trilogy of baseball stadiums that have been
characteristic of the concept of concentric circles. Ground for the baseball stadium was broken in 1992 and
opened on April 26, 1995. n129 The 50,445-seat, $ 215 million stadium was located at the northern edge of
the Denver central business district, commonly referred to as Denver's Lower Downtown (LoDo), a 25square block section of downtown Denver that was designated a historic district in 1988. n130 However,
prior to the construction of Coors Field, LoDo was described as a "double-ugly" strip [*111] of
dilapidated 1930 warehouses and industrial buildings. n131 LoDo was considered one of the most blighted
areas in the Denver downtown area. n132 At the time of planning the sports facility, many politicians and
planners were worried that suburbanites would not venture into this part of downtown Denver. n133 Not
only have the Rockies set attendance records, but the Cincinnati Post described the area as a "sparkling
symbol of urban hipness." n134
The Coors Field project was funded by a $ 162 million six-county Denver Metropolitan Area ballot
initiative. n135 In addition, money was spent to insure access and pedestrian connections to the area. "The
announcement in 1991 that Coors Field would be located in LoDo gave the neighborhood another boost.
Sales tax revenue in LoDo increased by 22 percent a year from 1990 to 1995, and the number of restaurants
increased 140 percent between 1993 and 1996." n136
"However, the pace of change increased dramatically after the stadium opened" in 1995 as evidenced by
the increase in LoDo residential units from 270 in 1994 to 1374 by 2000. n137 Similarly, "hotel occupancy
rates rose from 66 percent in 1994 to 70 percent each subsequent year" despite the fact that room rates rose
Planet Debate 2014
Subsidized Sports Stadiums Update
21
continuously. n138 Moreover, "the total number of rooms in downtown grew 25 percent from 1995 to
2000." n139 Sales tax revenue also increased; "in 1995, sales tax collections rose by 86 percent to $ 4.7
million... . Even in the off season, few stores have closed, with new development continuing year round.
While Coors Field cannot take all the credit for these recent neighborhood improvements, it does appear
that the stadium has been an integral part of LoDo's turnaround." n140
Staples Center revitalized LA
Martin J. Greenberg & Dennis Hughes, 2011, Jr.** * Martin J. Greenberg is managing member of the
Law Office of Martin J. Greenberg, member of the National Sports Law Institute Board of Advisors,
adjunct professor of law at Marquette University Law School, and has written The Stadium Game, Sports
Law Practice and $ port$ Biz. ** Dennis Hughes, Jr. is a 2010 graduate of Marquette University Law
School and is currently serving a fellowship with Ilya Sheyman's Progressive campaign for U.S. Congress
in Illinois' 10th District., Marquette Sports Law Review, 22 Marq. Sports L. Rev. 91, ARTICLE:
SPORTS.COMM: IT TAKES A VILLAGE TO BUILD A SPORTS FACILITY, p. 111
D. Staples Center
Concentric circles works with any sports facility, not just a baseball stadium. In fact, the Staples Center has
revitalized a downtown area in Los [*112] Angeles. In the early 1990s, the area surrounding the Staples
Center was filled with gangs, drugs and dilapidated buildings. n141 The Staples Center was opened on
October 17, 1999 by the L.A. Arena Company and Anschutz Entertainment Group. n142 The ten-acre
facility cost approximately $ 375 million and was largely privately financed. n143 The facility is a multipurpose sports arena that is located adjacent to the Los Angeles Convention Center. Beyond hosting two
NBA teams, an NHL team, and a WNBA franchise, the Staples Center is host to approximately 250 events
and nearly four million visitors a year. n144
[The] Staples Center continues to distinguish itself as the host of major, high-profile events of national and
international distinction, including the 2004 and 2011 NBA All-Star Game, the 2002 NHL All-Star Game,
the 2000 Democratic National Convention, eleven Grammy Award shows as well as the annual X-Game
competitions and PAC-10 basketball championship tournaments. n145
While the Staples Center provides a shining example on how a sports facility can create momentum for
urban development, L.A. Live has helped make this area of Los Angeles one of the foremost destination
places for sports and entertainment. Adjacent to the Staples Center, L.A. Live is the premier entertainment
complex in downtown Los Angeles. At a cost of approximately $ 2.5 billion, L.A. Live was developed by
Anschutz Entertainment Group, Wachovia Group, and McFarland Partners. n146 Its 27-acre site features
5.6 million square feet of apartments, ballrooms, bars, concerts, theaters, restaurants, movie theaters, and a
54-story hotel and condominium tower. n147
Construction of L.A. Live was conducted in three phases. The first phase [*113] opened on October 18,
2007, and included a 7,100-seat Nokia Theater, a concert and awards show venue, and Nokia Plaza, a
40,000-square-foot open space featuring six, seventy-five-foot towers with LED signage. n148 The second
phase of L.A. Live began in 2008 and included ESPN studios, the Grammy Museum, Club Nokia (a 2,300
person club and live music venue), Lucky Strike bowling alley, the Conga Room, and thirteen eateries.
n149 Phase three of L.A. Live included a fifty-four-story hybrid tower constructed above the parking lot
directly north of Staples Center that houses the JW Marriott, Ritz-Carlton Hotel, and Ritz-Carlton
Residences at L.A. Live. n150 Phase three also included the fourteen-screen, $ 100 million Regal
Entertainment Group movie complex.
Ten years after the grand opening of the Staples Center there has been $ 5 billion worth of development in
the four block radius of the arena, half of which was generated by L.A. Live. n151 Much of the economic
growth can be attributed to a dramatic growth of the area's residential market. When construction of the
Staples Center began, the district was home to 5,000 residents, but today the same area is home to almost
50,000 residents. Tim Leiweke, president and CEO of Anshutz Entertainment Group (AEG) explained the
Planet Debate 2014
Subsidized Sports Stadiums Update
22
transformation:
Staples Center has not only been the catalyst for development, it's been the catalyst for making this a true,
livable downtown community... . Ironically, in our industry, we always hear from the politicians and
professors about how sports facilities ultimately don't create any economic rejuvenation... . The fact [that]
there is $ 5 billion worth of bricks and steel and glass proves that is not accurate. n152
In October 2010, the L.A. Live complex was honored as one of five worldwide winners of the Urban Land
Institute's Global Awards for Excellence competition honoring the world's finest achievements in land-use
practices. n153
Development of L.A. Live was also important for highlighting the [*114] necessity of ensuring that a
multi-use stadium district development provide local benefits. Development of L.A. Live incorporated a
Community Benefits Agreement (CBA), which were first utilized in California beginning in 1997. n154 A
CBA is a contract usually entered into by community-based organizations, a private real estate developer, a
public official, and local government agencies that defines specific benefits, amenities and mitigations, or
only mitigations to the local community or neighborhood guaranteed by the developer as a result of the
planned development. n155 In exchange for the promised benefits, the community groups who normally
would oppose development subsidization agree to publicly support the project or at least not openly oppose
it. n156 Normally, a development project involves the creation of a development agreement, which is
basically an agreement between the government unit and the developer that provides for a completed
development for some form of taxpayer subsidy. CBAs permit community groups to become active
partners in the process at the forefront and to receive benefits and protect the community as a result of the
agreed-upon development.
The most well-known and probably one of the most successful CBAs is that created in 2001 for the L.A.
Sports and Entertainment District adjacent to Staples Center in Los Angeles, California, wherein the public
subsidies were to approximate $ 150 million. Some of the provisions contained in the Staples Center CBA
include: $ 1,000,000 for the creation or improvement of parks and recreational facilities; $ 25,000 per year
for a term of five years for the creation of a residential parking permit program; agreement to comply with
the city's living wage ordinance and to make all reasonable efforts to reach the goal of ensuring that 70% of
the jobs created by the project pay a living wage; priority hiring to persons displaced by the project and to
low income individuals residing within three miles of the project; job training programs; a requirement that
20% of the residential units in the project be affordable; and an agreement to cooperate with the coalition to
establish an advisory committee to assist with the implementation and enforcement of the agreement. n157
CBAs have recently been used in other sports developments including Yankee Stadium, Pittsburgh Penguin
Arena, Atlantic Yards, the 2010 Vancouver Winter Olympics, and Ballpark Village in San Diego.
[*115]
Planet Debate 2014
Subsidized Sports Stadiums Update
23
Teams That are Part of Large Economic Development Initiatives
are Economically Desirable
Sports arenas that are part of larger development efforts boost economic
activity
Martin J. Greenberg & Dennis Hughes, 2011, Jr.** * Martin J. Greenberg is managing member of the
Law Office of Martin J. Greenberg, member of the National Sports Law Institute Board of Advisors,
adjunct professor of law at Marquette University Law School, and has written The Stadium Game, Sports
Law Practice and $ port$ Biz. ** Dennis Hughes, Jr. is a 2010 graduate of Marquette University Law
School and is currently serving a fellowship with Ilya Sheyman's Progressive campaign for U.S. Congress
in Illinois' 10th District., Marquette Sports Law Review, 22 Marq. Sports L. Rev. 91, ARTICLE:
SPORTS.COMM: IT TAKES A VILLAGE TO BUILD A SPORTS FACILITY, p. 115
III. Sports.comm
Given the rippling effect of real estate development as a result of the creation of a sports venue, it was only
a matter of time before professional sports owners, governmental units, and real estate developers began
cooperating to form sports and entertainment destinations near or adjacent to the sports venue on a preplanned basis. Using the examples of stadiums that have transformed their city into a sports and
entertainment destination such as Camden Yards, Cleveland Gateway, and LoDo, developers have sought
to consolidate the business and entertainment needs of a community at professional sports venues. The
result has been the creation of a new type of collaborative relationship between privately-owned sports
teams and local governments with both parties working towards the common goal of constructing a masterplanned sports and entertainment community, or sports.comm.
For a sports.comm to be successful, the venue, team owners, and the community must work together
beginning at the planning stages of development. Local governments are necessary to identify the type of
land uses that would be appropriate for a district, to provide the infrastructure needed to support the
sports.comm, and to obtain the permits required to begin construction. A sports.comm can support an
almost limitless array of retail, residential, recreational, and business facilities; therefore, each venue can be
tailored to meet the specific needs of its community. Common structures include shopping centers,
restaurants, sports bars, condominiums, offices, apartments, hotels, movie theaters, museums, "green
space" public areas, and parking structures.
A sports.comm is essentially a joint venture between a government unit or units and a sports team in
conjunction with a real estate developer or solely a real estate developer. The success of the sports.comm
will be dependent upon a number of factors including, but not limited to: the location of the development,
an agreed-upon master plan acceptable to the community, market timing, financial staying power of the
developer, ability to control construction costs and schedules, an absence of legal challenges, a properly
marketed and targeted development, a well-conceived and sustainable financial package, effective
management control, a healthy economy where expansion is occurring, an ability for all parties to
compromise, and good old-fashioned luck.
A sports.comm, like any other real estate development, involves a multitude of targeted tasks to achieve the
ultimate goal, which may include, but are not limited to: determining development concept; site selection;
zoning approvals; meetings with local officials; neighborhood groups and planning [*116] boards; land
acquisition and site assemblage; title searches; comprehensive project studies such as soil, geotechnical,
and environmental and wetland testing; construction cost analysis; market study; site schematics; pro
formas; the lender package; marketing and leasing strategy; compliance with land use policies; traffic
issues; green issues; scheduling; and market feasibility analysis.
The basic goal of a sports.comm is to transform a sports venue that attracts millions of people, but is only
used on a limited basis, into a year-round entertainment destination for an entire region. The sports.comm
has been especially popular in the professional sports context because league revenue-sharing rules have
made sports venues the most useful generator of nonshared revenues for team owners. Every professional
sports league requires its members to share some portion of its ticket sales and media revenues with rival
Planet Debate 2014
Subsidized Sports Stadiums Update
24
teams. n158 Therefore, modern team owners have placed a greater emphasis on generating revenues from
personal seat licenses, stadium naming rights, local media contracts, luxury suites, in-stadium advertising,
and sponsorships. n159 The stadium itself was generally considered to be a limited source of nonshared
revenues based on its maximum occupancy of up to 100,000 spectators. However, the sports.comm concept
has served to expand the definition of the sports venue to include an entertainment district, which has
allowed team owners to capture and convert its fans' auxiliary entertainment dollars into a new source of
nonshared revenues.
Examples of successfully completed sports.comms include Patriot Place, home of the New England
Patriots; Nationwide Arena, home of the Columbus Blue Jackets; and Ballpark Village, home of the San
Diego Padres. The sports.comm is most often associated with professional sports venues; however, the
beneficial economic impact of a sports.comm can be realized on both a smaller and larger scale. Minor
league venues such as Victory Field in Indianapolis attract smaller crowds but are more family-friendly and
affordable, which allows fans to spend more at surrounding retailers. The concept has most recently led to
the creation of college sports villages with schools such as Florida Atlantic University, the University of
Nevada-Las Vegas, the Ohio State University, and the University of Notre Dame, with each school
applying the elements of a sports.comm to their venues. In contrast, the sports.comm has also been applied
on an international scale in an attempt to form a sports and entertainment destination capable of attracting a
global market, which is most recently exemplified by developments in Dubai and Qatar. Together, these
successful developments demonstrate the potential [*117] of a sports.comm to serve as an economic
catalyst for a community regardless of its market size or location.
A. Patriot Place
The modern sports.comm can be traced to Robert Kraft's (Kraft) decision to keep the New England
Patriots in Massachusetts in 1999. Kraft's attempt at creating a sports.comm began in 1993 when he
proposed moving the Patriots from Foxborough, Massachusetts, into a new $ 1 billion stadium attached to a
convention center in South Boston. n160 In his initial proposal, Kraft pledged a $ 215 million private
contribution with the rest of the costs provided by the state. n161 The mayor of Boston refused Kraft's
initial plan because it required the city to contribute a portion of its hotel tax revenues, even though those
revenues stood to increase greatly with the presence of a new stadium and convention center. n162 The
state government also refused to offer bond financing based on criticism that such an extensive bond
offering would overburden the government, which would require the reprioritizing of other public works
projects like prisons, bridges, and public housing. n163
A University of Massachusetts professor summarized the city's problem succinctly, "There's a tension
between the role a facility like this plays in strengthening a city's identity and all these new pressures... .
Like a lot of cities, Boston was going through an identity crisis. The difficulty in building a consensus for
these kinds of showcase facilities mirrors that crisis." n164 The City of Boston simply did not understand
the potential benefits a sports.comm could provide in the early 1990s, so Kraft was forced to look
elsewhere to build a new facility.
Next, Kraft attempted to secure public assistance to build a new stadium in Foxborough, the site of the
Patriots original stadium that was built in 1971 for a total cost of $ 6.7 million. n165 The proposal required
the State of Massachusetts to contribute $ 57 million in infrastructure improvements, to buy the land upon
which the stadium would be built, and to lease the land back to the Patriots. n166 The government rejected
even this minimal allocation of [*118] public financing, and the Patriots were forced to expand their
search beyond Massachusetts.
In 1998, Kraft accepted a proposal from Hartford, Connecticut in which the state agreed to completely fund
the $ 374 million cost of a new stadium and to build additional facilities as part of an urban renewal project.
n167 Despite finding a city that was willing to cooperate in building his sports.comm, Kraft abruptly
exercised an opt-out clause in his contract with Hartford and decided to keep the team in Massachusetts.
n168 Based on his decision, the Massachusetts Legislature agreed to extend public financing for
infrastructure improvements to the Foxborough site, but held firm on its refusal to purchase the land for a
new stadium. n169 Therefore, as one of the few visionaries that understood the potential of the
sports.comm, Kraft decided to privately finance the $ 325 million cost of Gillette Stadium in 2000 and the
$ 350 million cost of Patriot Place in 2006. n170
The purpose of Patriot Place was to construct "a self-sustaining, super-regional destination" on the 1.3
million-square-foot area surrounding Gillette Stadium. n171 As evidence of the necessity for a privatepublic partnership to construct a sports.comm, the first hurdle was to obtain the necessary state land use
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Subsidized Sports Stadiums Update
25
permits. In order to allow for the construction of a mixed-use sports and entertainment facility,
Foxborough's zoning rules had to be revised. n172 The Patriots also needed to obtain approval from the city
to manage traffic and to receive liquor licenses for the various restaurants to be built on the site. n173 In
total, Kraft spent over six months working to obtain the necessary approvals in order to begin construction.
n174
Following approvals, Kraft's implementation of the design for Patriot Place set the standard for the modern
sports.comm by incorporating retail and recreational options that had been traditionally underserved in the
New England region. Patriot Place was an immediate success based on Kraft's decision to anchor his
entertainment venue with New England's first Bass Pro [*119] Shops. Bass Pro Shops is a unique
destination retailer that acts as both a store and an entertainment venue; complete with indoor waterfalls,
fish ponds, live animals, and indoor shooting ranges. n175 The largest Bass Pro Shops in Springfield,
Missouri attracts four million visitors a year and is the state's number one tourist attraction. n176 Similarly,
the store at Patriot Place was an immediate success, drawing over 60,000 shoppers in its first five days. Due
to the scarcity of Bass Pro Shops in the Northeast, the store expected to attract customers from up to 500
miles away. n177 Despite the popularity of Bass Pro Shops, Kraft purposely tried to avoid the "man mall"
moniker that has been used to describe Patriot Place since its early stages of development by selecting other
retail and entertainment options meant to attract women and families.
Kraft was able to broaden the appeal of Patriot Place by incorporating traditional retailers, a wide variety of
restaurants, and a multitude of entertainment options. Like a traditional mall, Patriot Place includes retailers
such as Hollister, Old Navy, Bath and Body Works, and Victoria's Secret. n178 Most recently, Tech
Superpowers announced the opening of its flagship retail store at Patriot Place, which is a new retail
concept that combines over a dozen technology brands under the same roof, including Apple. n179
Moreover, it includes dining options for every price point to ensure that all visitors are satisfied. n180 Most
notably, Patriot Place includes a CBS-themed restaurant called "CBS Scene" and Toby Keith's famous "I
Love This Bar and Grill." n181
Beyond shopping and affordable dining, Patriot Place offers a multitude of family-friendly entertainment
options. The Showcase Cinema de Lux provides visitors much more than the traditional movie theater
experience. It offers standard tickets, but also, for a $ 10 upgrade, leather seating, a server, and access to the
"Lux Level" bar and lounge. n182 Understanding that movie theaters are slowly becoming extinct, the
purpose of the Cinema de Lux is to [*120] attract people to the theater by offering something for
everyone, even if they do not intend to see a movie. Patriot Place also includes Showcase Live, an intimate
two-story, 500-seat concert venue. Patriot Place has also opened two new interactive games called
"Espionage" and "20,000 Leagues Under the Sea," which are designed to make visitors feel like they are
inside a real video game. n183 The games are aimed at drawing families, but are also utilized for corporate
team-building excursions. n184
To further cater to families and to provide accommodations for visitors from far and wide, Patriot Place
includes a museum, hotel and spa, and health care center. The Hall at Patriot Place is the focal point of the
development and includes a state-of-the-art museum that utilizes video and audio technology to help fans
experience the history of New England football. n185 To provide accommodations to visitors, the facility
features a four-star Renaissance Hotel & Spa. n186 Hotels, condominiums, and apartment complexes are
essential to the success of a sports.comm because they naturally instill a sense of community that benefits
the entire venue. Surprisingly, Patriot Place also includes Brigham and Women's/Mass General Health Care
Center located next to the stadium, which provides outpatient care and some surgical services to the
Foxborough area. n187 The inclusion of the Health Care Center reflects the true purpose of a sports.comm,
to benefit the local community.
Patriot Place was truly ahead of its time, but reflects the important aspects of the sports.comm concept.
Kraft was successful in making Foxborough, Massachusetts a retail destination for all of New England,
which benefited him personally, and in turn, the entire business community of Foxborough. Therefore,
Patriot Place is proof of the potential for a sports.comm to transform a city from an afterthought into a
tourist destination.
B Nationwide Arena
Like Patriot Place, Columbus's Nationwide Arena was built without the help of significant public
assistance. In 1997, after four failed ballot initiatives to bring a professional sports team to Columbus over
the prior two decades, [*121] the NHL offered Columbus a thirty-day window to obtain financing to build
a stadium for a new expansion franchise. n188 The government proposed a three-year, one-half percent
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Subsidized Sports Stadiums Update
26
sales tax to fund both an NHL arena and Major League Soccer (MLS) stadium in downtown Columbus.
n189 Voters also rejected that proposal, and with no "Plan B," the city accepted an offer from Nationwide
Insurance to privately finance a downtown arena for $ 150 million. n190 To secure its interest, Nationwide
retained their right to the revenues generated from the arena's naming rights, parking structures, and luxury
boxes. n191 Beyond the arena cost, Nationwide promised to invest another $ 350 million in an
entertainment district surrounding the venue that served a dual purpose: enriching downtown Columbus by
transforming a formerly blighted area into a regional attraction and protecting Nationwide's investment in
the arena. n192
In return for Nationwide's investment, the city was required to lease, and eventually sell, the site of an old
federal penitentiary and to contribute $ 16.6 million towards roads, sewers, and other capital improvements.
n193 Columbus taxpayers ultimately contributed $ 44 million to finance the arena district, which was
financed through municipal bonds that were repaid through property taxes generated from a thirty-year tax
TIF district. n194 However, the TIF district has been an overwhelming success that has allowed Columbus
to profit greatly from its initial investment. The district was initially projected to generate $ 47 million in
tax revenue over a thirty-year period, but has instead generated over $ 31 million per year. n195
The success of the TIF district is also proof of Nationwide Arena's success in transforming Columbus, Ohio
into a regional destination. The Nationwide Arena district includes restaurants, bars, office space, a movie
theater, a concert pavilion, a baseball stadium, hotels, and apartment and condominium structures. n196
Unlike Patriot Place, which is most attractive due to its retail [*122] options, Nationwide Arena is a
sports.comm focused on providing family-friendly entertainment and downtown residential options for
young professionals.
The arena district has successfully attracted families to downtown Columbus by offering a safe, affordable
environment featuring many unique attractions. The Arena Grand Movie Theater, for example, was the first
movie theater built in downtown Columbus in seven decades. n197 The Lifestyle Communities Pavilion is
another distinctive attraction, which features the first ever "reversion stage" that can serve up to 2,200
visitors indoors or 4,500 outdoors. n198 Huntington Park, home of the Columbus Clippers Minor League
Baseball team, is another exciting destination for families in the arena district. Built in 2009 for the price of
$ 55 million, Huntington Park was voted the 2009 Best New Ballpark in America, beating out its parentclub New York Yankees' $ 1.5 billion new stadium. n199 From a practical standpoint, the arena district's
success in attracting families can be attributed to the reasonable prices charged for parking. Rather than
charge the premium price of up to $ 15 for Blue Jacket's home games, the district only charges $ 3-$ 5 for
Minor League Baseball parking and charges $ 1 everyday for movie theater parking. n200 By ensuring
families that they will not be gouged unnecessarily for a trip to the arena district, Nationwide Arena
provides an affordable entertainment option for families throughout Ohio.
Nationwide Arena has also been extremely successful in attracting young professionals to live within the
arena district. The district currently offers six residential options. Arena Crossing, a 252-unit apartment
complex, was the first to be built and is 100% leased, despite being priced nearly $ 0.20 more per square
foot in comparison to other downtown residential options. n201 Due to its success, Burnham Square was
constructed, offering 98 upscale condominiums for as much as $ 500,000 per unit. n202 The
Condominiums at North Bank were built in 2007, providing 109 more high-class [*123] condominiums.
n203 The three remaining apartments and condominiums are smaller in scale and price and are located in
refurbished buildings throughout the district. Nationwide is also in the process of developing a residential
neighborhood featuring condominiums and retail space near Huntington Park, which would add the final
piece to the western reaches of the arena district. n204 Overall, the 800 residents of the arena district
represent over $ 30 million in annual consumer expenditures. n205 However, a negative effect of the arena
district's residential development is that because the district is privately owned, Nationwide has had little
incentive to provide affordable housing given that the upscale residential market has been so lucrative.
Beyond Nationwide's initial $ 350 million investment in the arena district, over $ 1 billion has been
committed to the final project. n206 Since the beginning of the arena district project in 1999, the average
property value in the district has increased by 267%, and property values in all of Columbus have increased
a total of 22%. n207 The arena district was extremely profitable and also well-planned, considering that the
one million square feet of available office space has a 95% occupancy rate. n208
The immense success realized by private investors in Patriot Place and Nationwide Arena has led to an
increased willingness by local governments to participate in the construction of sports.comms. Greater
government involvement is important to provide a diverse range of financing alternatives for the
development of a sports.comm and to encourage development that is focused on benefiting the community
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Subsidized Sports Stadiums Update
27
as a whole rather than a private investor's bottom line.
C. Ballpark Village - Petco Park
Development of the Ballpark Village sports.comm began around the same time as Patriot Place and
Nationwide Arena, but had the added benefit of significant public support. Petco Park, home of the San
Diego Padres, was constructed as the last phase in the revitalization process of downtown San Diego,
California and was to be the centerpiece of the downtown [*124] revitalization. n209 In 1998, 60% of
voters approved Proposition C, which allocated $ 411 million toward building a ballpark and redeveloping
a twenty-six block area of downtown San Diego now known as Ballpark Village. n210 In return, the Padres
pledged to spend $ 115 million on the new ballpark, to invest at least $ 300 million in the surrounding
developments, and to be responsible for all construction cost overruns. n211 Ultimately, the Padres
contributed over $ 200 million to Petco Park and nearly $ 600 million to the surrounding redevelopment.
The revitalization of the blighted East Village section of San Diego exemplifies the effective utilization of
the sports.comm public-private partnership model. Redevelopment areas like the East Village are more
attractive to private investors that hope to develop a sports.comm because these areas offer greater access to
public funding like New Market Tax Credits and Build America Bonds. The city used the leverage created
by its public investment to require that the developer sign a CBA in order to build Ballpark Village. n212
The CBA requires developers to meet LEED green building standards, provide employees and the
employees of its service contractors with a living wage, and to institute a local hiring program. n213 The
agreement also commits the developer to offer affordable housing, to provide a grocery store that offers a
living wage and benefits, to fund community arts programs, and to study the effects of the CBA and the
Petco development on the local community. n214
The redevelopment of a blighted area also gave San Diego increased flexibility to repay its bonds.
Traditionally, 17% of citywide property tax revenues would accrue to the city and 83% to the state;
however, in a redevelopment area most property tax revenue stays in the city. n215 Therefore, San Diego
was able to use its extra projected tax revenue to accumulate the necessary funds to pay off the bonds
issued for construction of Petco Park and Ballpark Village. Moreover, through the use of redevelopment
district tax [*125] incentives, San Diego was able to entice its professional baseball franchise to move
from the affluent Qualcomm Stadium district to the inner city. n216 Thus, the formation of a sports.comm
enabled the city to successfully redistribute one of its most valuable resources to an area in need of
economic development. Currently, the Chargers are discussing a similar move from Qualcomm to the
Ballpark District, and hope to have a public vote on $ 800 million worth of subsidies for the project by
2012. n217
Like Nationwide Arena, the Petco Park sports.comm has been more successful as a residential rather than
commercial development. The focal point of the redevelopment is the 511-room Omni Hotel and
Metropolitan Condominiums, which features a pedestrian walkway that connects directly to the ballpark.
n218 Many other upscale condominiums and apartments populate the district, but unlike Nationwide
Arena, Petco also includes Lillian Place, a much needed low-income housing development. n219 The
presence of low-income housing in the middle of an entertainment district reveals the unique opportunities
that sports.comms present for community improvement. The district's development has also included San
Diego City College, the New School of Architecture, two high schools, and the Thomas Jefferson School of
Law; n220 none of which would have been possible without the development of Petco Park. n221 By the
end of 2009, the sports.comm had expanded to include more than 3500 residential units, 957 hotel rooms,
and over 600,000 square feet of commercial space. n222 Therefore, Petco Park has been extremely
successful in attracting residents and consumers to take advantage of downtown San Diego businesses.
Petco Park has exceeded expectations as a tax revenue generator, as a catalyst to lure businesses into a
previously underutilized downtown, and as a stimulus to San Diego's overall economy. n223 In fact, from
2000 to 2009 the Petco Park district has generated more than $ 207 million in new tax [*126] revenues.
n224 Prior to Petco Park, the same area was 70 percent vacant and created only $ 2 million per year in
property tax revenue. n225 The immense increase in tax revenue is a result of $ 1.2 billion in new spending
by consumers within the twenty-six block district. Petco Park is also responsible for creating 19,220 jobs
since 2000. n226 The success of Ballpark Village at Petco Park offers encouragement to other cities
debating whether to offer public investment for the creation of a sports and entertainment district, by
demonstrating that a city's investment can guarantee tangible returns for its community.
Planet Debate 2014
Subsidized Sports Stadiums Update
28
Pro Arguments Apply to Minor League Teams
Minor league broader community development programs boost economic
activity
Martin J. Greenberg & Dennis Hughes, 2011, Jr.** * Martin J. Greenberg is managing member of the
Law Office of Martin J. Greenberg, member of the National Sports Law Institute Board of Advisors,
adjunct professor of law at Marquette University Law School, and has written The Stadium Game, Sports
Law Practice and $ port$ Biz. ** Dennis Hughes, Jr. is a 2010 graduate of Marquette University Law
School and is currently serving a fellowship with Ilya Sheyman's Progressive campaign for U.S. Congress
in Illinois' 10th District., Marquette Sports Law Review, 22 Marq. Sports L. Rev. 91, ARTICLE:
SPORTS.COMM: IT TAKES A VILLAGE TO BUILD A SPORTS FACILITY, p. 127-
D. Minor League Sports.comm
Professional sports teams are clearly more successful at drawing large crowds than their minor league
counterparts; however, minor league stadiums are equally attractive as a sports anchor facility to a
sports.comm. In contrast to attendance at professional sports stadiums, which is often dependent upon team
success, minor league stadiums are attractive due to their affordable family-friendly environment and
consistent attendance levels. Consistent fans and affordable prices offer great potential for a sports.comm
because fans have more money left in their pockets following a game to spend at local nearby businesses.
The most complete vision of a minor league sports.comm and the use of sports for economic revitalization
is the development of downtown Indianapolis and its use of a Minor League Baseball stadium as the
catalyst for economic development. The construction of Victory Field, home of the Indianapolis Indians,
the Triple-A affiliate of the Pittsburgh Pirates, was strategically designed to synergize the developing
professional and amateur sports districts within the city. Beginning in the 1980s, Indianapolis became a
model for the utilization of sports for economic revitalization with the institution of their Regional Center
General Plan: Indianapolis 1980-2000, which was designed to foster the development of Indianapolis as the
capital of the Midwest for both professional and amateur sports. n227 The plan arose in response to two
decades of economic decline throughout Indianapolis and the Midwest, in general. n228
To combat the declining economy, a Policy Group (Group) comprised of [*127] more than twenty local
business and civic leaders began meeting to discuss a redevelopment plan for the city and to decide on an
identity for the future of Indianapolis. The Group settled on three sectors to focus on during the city's
redevelopment efforts: amateur sports, convention and tourism, and arts and culture. n229 Implementation
of the plan included the allocation of over $ 125 million over ten years for the creation of numerous
amateur, professional, and business facilities. n230 The $ 77.5 million Hoosier Dome was the most
significant investment, but the $ 30 million spent on amateur sports infrastructure transformed Indianapolis
into the amateur sports center of the country. n231 By 1992, the headquarters of nineteen amateur sports
organizations had relocated to Indianapolis, including the Amateur Athletic Union, U.S. Diving
Association, and the U.S. Gymnastics Federation. n232 The city solidified itself as the nation's premier
destination for amateur sports in 1999 when the National Collegiate Athletic Association (NCAA) moved
its headquarters to its current downtown Indianapolis location. n233
In 1980, Indianapolis' initial public investment in sports was met with unprecedented local and national
philanthropic support. As part of its revitalization plan, the city constructed a downtown public meeting
place to solicit community input on its future development projects. n234 These meetings were attended by
25,000 people in the first year. n235 They were especially popular due to Indianapolis' unique local
political structure. The city had a unified city and county government, which offered greater power to the
mayor and ultimately made the local government more flexible to the will of the people. n236 The
Indianapolis revitalization also utilized unprecedented philanthropic support from the Lilly Endowment
Foundation, which provided a $ 25 million donation for the revitalization project. n237 However, by the
end of the 1980s, the public had grown tired of its tax contribution to sports development in the city and
voted against a $ 40 million bond offering to build dormitories for the Pan-American Games, which were to
be converted to low-income housing. n238 Following the failed bond offering, the attempt to secure [*128]
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Subsidized Sports Stadiums Update
29
public funding for a new minor league stadium for the Indianapolis Indians became a major challenge.
In 1977, the City of Indianapolis bought the Indians' home, Bush Stadium, from their deceased owner for a
total of $ 300,000. n239 The city leased the stadium to the Indians, who were responsible for operational
and maintenance costs, while the city provided major structural repairs, including a $ 1.8 million
renovation in 1979. n240 During the 1980s, the public debate over moving the team from its location
outside of downtown into the city centered on whether the city should invest in a minor league or
professional baseball stadium, not whether a stadium should be constructed at all. As public sentiment
turned, the Indians' private ownership group was unable to get their stadium completely funded by the city.
Instead, the team's private investors and the Indianapolis Capital Improvement Board split the initial $ 18
million construction costs, which were privately funded through ticket sales and fundraising. n241
Victory Field opened in 1996 and was immediately named the "Best Minor League Ballpark in America"
by both Baseball America and Sports Illustrated. n242 The stadium shares many characteristics with its
Major League counterparts' architecture, which exemplifies the city's desire to create a minor league
sports.comm. The stadium includes open concourses, lawn seating for 2000 fans, and 12,500 permanent
seats. n243 It also includes twenty-eight luxury suites, five party suites, and two large picnic areas. n244
The city recently committed another $ 700,000 to upgrade Victory Field by installing an open-air restaurant
and bar in the stadium's left field stands. n245
The $ 20 million facility was strategically placed to act as an economic catalyst with the purpose of
consolidating the amateur and professional sports sections of downtown Indianapolis. n246 The stadium is
located at the southwest border of White River State Park in downtown, which is now home to numerous
cultural, commercial, recreational, and educational facilities. [*129] Nearby attractions include the NCAA
Hall of Champions, the Indiana State Museum, an IMAX theater, and the Congressional Medal of Honor
Memorial. In the ten years following the stadium's opening in 1996, the area received over $ 3 billion in
private and public capital investments, which includes the development of the Circle Centre Mall, 300 new
retail stores, and 200 bars and restaurants downtown. n247
The city has used the minor league stadium as a catalyst for urban revitalization by taking a synergistic
approach to implementing its various recreational and entertainment attractions. n248 Professional and
amateur sports attractions generally draw different markets; therefore, the utilization of baseball, America's
pastime, has been the perfect element to combine the distinct districts. Victory Field's strategic location in
downtown Indianapolis and the city's decision to forego an attempt to lure a professional baseball franchise
has made it an attractive place for budget-conscious families, which has produced a consistent revenue
base. The city of Indianapolis began its economic revitalization plan over twenty years ago, and has
successfully created the model minor league sports.comm through smart investment and by highlighting its
Midwestern identity by focusing on quality and affordability in order to create a vibrant, family-friendly
entertainment district.
Following the success of Victory Field as an economic catalyst, minor league sports.comms have been
utilized by cities that are unable to support a professional sports franchise. Examples of successful minor
league sports.comms include Louisville Slugger Field in Louisville, Kentucky; Autozone Park in Memphis,
Tennessee; Canal Park in Akron, Ohio; Fifth Third Field in Dayton, Ohio; and Campbell's Field in
Camden, New Jersey.
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Sports Teams Prestigious
Prestigious for state and local governments that have sports teams
Williams et all, 2012, Jack F. Williams,* Jessica O'Quin,** and Joshua Stein***, * Professor, Georgia
State University College of Law and Middle East Institute, Graduate Research Assistant. J.D., Georgia
State University 2011.
Associate, Mesirow Financial Consulting, LLC. B.S., University of Georgia 2010Albany Government Law
Review, 5 Alb. Gov't L. Rev. 123, BASEBALL AND THE LAW: AMERICA'S NATIONAL PASTIME:
ARTICLE: PUBLIC FINANCING OF GREEN CATHEDRALS
p. 124-5
For state and local governments, there appears to be a certain distinction associated with
maintaining a professional sports franchise. A city that lands a team makes it into the inner circle of
prominence among other cities. There are only thirty Major League Baseball (MLB) teams, thirty-two
National Football League (NFL) teams, thirty National Basketball Association (NBA) franchises, and
thirty National Hockey League (NHL) teams. With the recent move of the NHL's Atlanta Thrashers to
Winnipeg, Manitoba, there are just twelve cities with teams from [ the four major sports. In all, only
about forty-nine cities may tout that they are the home of at least one team from a major sports
league.
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Revenue/Economic Opportunity
Stadiums generate revenue and economic opportunity
Brett Smith is a 2001 graduate of the Georgetown Public Policy Institute, The Georgetown Public Policy
Review, Fall, 2001, 7 Geo. Public Pol'y Rev. 45, If You Build It, Will They Come? The Relationship
Between Public Financing of Sports Facilities and Quality of Life in America's Cities
The increase in new and renovated sports facilities, particularly the public financing of such projects, has
been justified in a variety of ways. Claims that the facilities would improve the economic condition of the
city are foremost among them. Many stadium supporters claim that the facilities lead to an increase in
direct revenue for the state and local governments (Shropshire 1995, Hefner 1996, Rafool 1998). More
importantly, the facilities will supposedly provide the community with a multiplier effect that will improve
its economic situation in several ways (Shropshire 1995, Hefner 1996, Rafool 1998, Noll and Zimbalist
1997). Tourism will increase, crime rates will decrease, jobs will be created and these facilities will serve
as a magnet for other businesses (Hefner 1996, Baim 1994).
Baim, D.V. 1994. The Sports Stadium as a Municipal Investment. Westport, CT: Greenwood Press.
Hefner, F. 1996. "Using Economic Models to Measure the Impact of Sports on Local Economies." In
Sports Business, edited by P.J. Graham. Madison, WI: Brown and Benchmark.
Rafool, M. 1998, March 27. Playing the Stadium Game: Financing Professional Sports Facilities in the
'90s. Washington, D.C.: National Conference of State Legislatures.
Noll, R.G. and A. Zimbalist, eds. 1997. Sports, Jobs, and Taxes: The Economic Impact of Sports Teams
and Stadiums. Washington, D.C.: The Brookings Institution.
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Civic Pride
Stadiums boost civic pride and the civic image
Brett Smith is a 2001 graduate of the Georgetown Public Policy Institute, The Georgetown Public Policy
Review, Fall, 2001, 7 Geo. Public Pol'y Rev. 45, If You Build It, Will They Come? The Relationship
Between Public Financing of Sports Facilities and Quality of Life in America's Cities
Finally, proponents argue that new stadiums provide intangible benefits to the city, the most prevalent of
which involve the civic image of the host area. Proponents hold that cities often judge themselves
internally, and are judged externally, based on their quality and support of sports. More prevalent is the
argument that cities losing sports teams no longer view themselves as "major-league," having a diminished
civic image (Shropshire 1995). When combined with the various economic arguments for new stadiums,
these judgments have convinced many state and local government officials to allocate public funds toward
new and renovated sports facilities.
.S. Kern. Kalamazoo, MI: W.E. Upjohn Institute for Employment Research.
Shropshire, K.L. 1995. The Sports Franchise Game. Philadelphia, PA: University of Pennsylvania Press.
The Sporting News. 2000, June 30. "Best Sports Cities 2000."
http://www.sportingnews.com/sportscities2000/.
Sports important to a city’s identity and pride
Zachary A. Phelp, JD, 2004, NOTE: STADIUM CONSTRUCTION FOR PROFESSIONAL SPORTS:
REVERSING THE INEQUITIES THROUGH TAX INCENTIVES, St. John's Journal of Legal
Commentary, Summer, 18 St. John's J.L. Comm. 981, p. 981-2
There are few things in today's society that garner more attention or have a larger significance on everyday
life than sports. Avid fans follow their favorite teams not only during their respective seasons, but search
the Internet and sports page in the off-season to find even the slightest bit of information. Popular holidays
are interwoven with various sporting events, such as football on Thanksgiving Day or baseball on the
Fourth of July. n1 Some events even attract their own celebration, such as Super Bowl Sunday. If a city's
local team is fortunate enough to win a championship, a large-scale parade is usually held to honor the
players and coaches. n2 Clearly, sports permeate multiple aspects of our lives, and it is this popularity that
sports franchises use to their advantage. People become so attached to a team that it becomes part of the
identity of the city.
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A2: No Public Purpose
Publicly-funded stadiums have public purposes
Brian Adams, JD, 2002, Catholic University Law Review, Winter, 51 Cath. U.L. Rev. 655, NOTE:
Stadium Funding in Massachusetts: Has the Commonwealth Found the Balance in Private vs. Public
Spending?, p. 662-3
Later, the city of Cleveland became one of the most noteworthy battlegrounds in the public stadium
funding debate. n61 In Meyer v. City of Cleveland, n62 a citizen challenged the results of a voter
referendum that directed $ 2.5 million in bonds be used to finance the new Municipal Stadium. n63 The
taxpayer alleged that using public funds for a stadium did not serve a public purpose, and he, therefore,
sought to enjoin [*663] construction of the stadium. n64 The Meyer court disagreed and held that public
funds could be used for, "generally speaking, anything calculated to promote the education, the recreation
or the pleasure of the public . . . ." n65
When Meyer was decided, there was no case precedent for a publicly funded stadium and the court had to
analogize stadium funding to other public expenditures. n66 To that end, the court's primary example to
justify a publicly funded stadium was that a municipality could undoubtedly fund a public auditorium. n67
The court stated that a stadium could promote all of the same public benefits as an auditorium, including
concerts, festivals, mass meetings, and other public functions, while also allowing the crowd to enjoy the
outdoors. n68 As long as the stadium promoted the public welfare, it would serve a public purpose. n69
The court broadened the definition of a city's responsibilities to its citizens by holding that "the powers of a
municipal corporation are not limited to providing for police, pavements, water, light, sewers, docks and
markets, but it has been held that a municipality may minister to the comfort and health of its citizens, and
may educate, instruct, please, and amuse its inhabitants." n70
The Meyer court identified ninety-three municipal stadiums built in the United States to bolster its
argument. n71 The court also pointed to ancient [*664] Roman and Greek civilizations for examples of
publicly built stadiums. n72 In its opinion, the court had "no hesitancy in reaching the conclusion that the
stadium is a public building," and that Cleveland was justified to fund its construction. n73
State courts have found a public purposes is served
Brent Bordson, JD, 1998, Hamline Law Review, 21 Hamline L. Rev. 505, CASENOTE AND
COMMENT: PUBLIC SPORTS STADIUM FUNDING: COMMUNITIES BEING HELD HOSTAGE BY
PROFESSIONAL SPORTS TEAM OWNERS, p. 512-3
3. State Public Purpose Requirements and Recent Funding Schemes
Recent state court decisions have continued to find that a valid public purpose exists in the construction of
professional sports stadiums, even when they are not paid from revenue generated by the stadium itself.
n69 State courts across the United States have considered different challenges to the validity of the taxexempt bonds, and all of the recent decisions have found that state constitutions permit the funding
schemes used to discharge the bonds. n70
Funding schemes that have been considered and approved by state courts for financing new stadiums
include: 1) imposing surtaxes within counties, n71 2) imposing taxing districts encompassing several
counties, n72 and 3) using proceeds generated from agreements with Native American casinos. n73
Additionally, a fourth funding plan considered but not yet approved or [*513] disapproved by courts
would utilize "user fees" produced by the stadiums to fund new stadiums. n74 Examples of each of these
funding plans is considered below.
a. Imposing surtaxes within counties to fund new stadiums
Tampa, Florida
The Florida Supreme Court recently validated the issuance of tax-exempt bonds to be used to finance a new
football stadium in Poe v. Hillsborough County. n75 Since 1976, the Tampa Bay Buccaneers NFL team
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has played its home games in a stadium operated by the Tampa Sports Authority (TSA). n76 The TSA and
the team reached an agreement to build the team a new stadium on August 28, 1996. n77 Meanwhile,
voters in Hillsborough County, n78 Florida passed a referendum on September 3, 1996. n79 This
referendum levied a half cent surtax in the county for a period of thirty years to pay for the bonds to be sold
to finance the new stadium. n80
A group of taxpayers filed a complaint alleging that the actions of the [*514] city, the county, and the
TSA in striking the deal with the Buccaneers to provide public funding for the new stadium violated the
Florida Constitution. n81 The trial court ruled that issuing the bonds could satisfy a public purpose, but it
refused to validate the bonds because of the clause in the stadium agreement between the TSA and the team
granting the Buccaneers the first $ 2 million of revenue from non-Buccaneers events. n82 The court held
that bonds do not violate article VII, section 10 of the Florida Constitution if they serve a "paramount
public purpose," and the bonds are not invalid merely because a private party may gain some benefit. n83
The court also compared State v. Daytona Beach Racing & Recreation Facilities District n84 to the
present stadium situation. n85 In that case, the court noted that a private party would benefit from the
construction of a facility built with public funds, but only during certain times of the year. n86
In determining that the bonds were valid, the court placed great emphasis on the fact that the new stadium
would attract tourists to the area and provide recreation for the citizens in the district. n87 Thus, the public
gain would outweigh any private gains from the new stadium. n88 The court cited other cases in which it
found that the public purpose requirement was satisfied in the construction of other recreational facilities,
n89 and the court ruled that the economics of this deal would positively affect the area as well. n90 Even
if the Buccaneers operated the stadium exclusively, and dictated all use of the publicly funded stadium, the
court possibly still would have found a proper public purpose. n91 The court concluded by stating that it
would not invalidate the bonds based on the taxpayer's principal argument that the Tampa Bay [*515]
Buccaneers were unjustly enriched. n92 The court also noted that the stadium would host forty major
events each year and would provide entertainment and cultural pride for all citizens.
Seattle, Washington
The ultimate decision whether to approve the $ 336 million of bonds in financing a new baseball stadium
for Major League Baseball's Seattle Mariners rested on the Washington Supreme Court in King County v.
Taxpayers of King County. n93 Washington's stadium act, which was the item of dispute, authorized any
county with a population of one million or more people to impose a special sales and use tax not to
exceed.017 percent. n94 This tax would not be an additional sales and use tax, however. n95
The plaintiffs alleged that Washington Constitution article VIII, sections 5 and 7, which declared that no
state credit may be loaned except under limited circumstances, were violated, and that any direct benefits to
a private organization violated this provision. n96 The court adopted a three-part process for testing the
validity of a bond. n97 The court cited the rule in Washington n98 that an incidental benefit to a private
individual or organization will not invalidate an otherwise valid public transaction. n99
The court next noted that it had previously been decided that as long as the Mariners rent payments to the
county did not amount to a nominal figure, and real consideration was present, as opposed to mere donative
intent on the part of the county, a public purpose was served. n100 The court then examined the terms of
the rental lease and concluded that the consideration [*516] was valuable and that the issuance of the
municipal bonds did not violate article VIII, ß 7 of the Washington Constitution. n101 Even if the terms of
the deal result in a poor economic bargain for the county and district, the court could only consider the
constitutionality of the plan and not its wisdom. n102 It concluded by stating that the operation of a
baseball stadium serves a state purpose. n103
In a vigorous dissent, Judge Sanders argued that the state constitution prohibits a county from giving any
money, property, or credit except to support the poor and infirm. n104 Judge Sanders also cited the
popular rallying cry of "Save the Mariners" to show that the government was giving a public gift to a
private enterprise. n105 Additionally, the dissent discussed pieces of evidence showing that there would
be only nominal and, at best, inadequate consideration resulting from the deal. n106 The dissent felt that
the consideration was grossly inadequate, which rendered the purpose of the bonds private rather than
public in nature. n107
According to one commentator, the consideration to be paid by the Mariners for rental in the new stadium
is nominal. n108 The normal fair market value return on capital would be approximately ten percent per
year of the total amount of debt. n109 Thus, the Mariners should pay about ten percent of the $ 336
million debt per year, or $ 33,600,000. n110 This figure is also close to the amount of interest payable in
one year on the debt. n111 Using the figures [*517] of $ 336 million as the amount of the debt and $
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700,000 as the amount of rent due each year, the Mariners are paying about fifty times less than fair market
value each year for their lease. n112
Phoenix, Arizona
In Hancock v. McCarroll, n113 the appellant plaintiff was denied serial numbers for a petition that would
have attempted to repeal a stadium district tax area to fund a new stadium for the new Major League
Baseball team in Phoenix, Arizona. n114 In 1990, the Arizona legislature enacted ß 48-4202, n115 which
allowed counties having a population of more than 1.5 million, or counties where a Major League Baseball
team conducts spring training, to organize a stadium district. n116 The petitioner felt he had a right to
circulate a petition against the stadium because the stadium district should be deemed a municipality and
therefore subject to a referendum. n117
The court responded that a stadium district is "a tax levying public improvement district and a political
taxing subdivision of this state" n118 and is not a municipal corporation. n119 The court also ruled that
people were not denied referendum power because ß 48-4202, n120 which created the Stadium Districts,
was subject to a referendum petition within 90 days of adjournment of that special session. n121 The court
did not discuss the issues of constitutionality and public purpose requirement found in article IX, section 7
of the Arizona Constitution. n122
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A2: Teams Won’t Leave
Teams have left
Brett Smith is a 2001 graduate of the Georgetown Public Policy Institute, The Georgetown Public Policy
Review, Fall, 2001, 7 Geo. Public Pol'y Rev. 45, If You Build It, Will They Come? The Relationship
Between Public Financing of Sports Facilities and Quality of Life in America's Cities
Two facets of this issue have changed over the past 20 years, resulting in the entrance of state and local
governments into the area of stadium financing. 1) 1990 saw the construction of two new publicly financed
facilities that quickly became the envy of professional franchise owners: Baltimore's Oriole Park at
Camden Yards and Cleveland's Jacobs Field. Both of these facilities became instant successes due to their
enjoyable combination of modern amenities and traditional ballpark features. Over the next few years,
many team owners in all sports began to desire similar facilities for their franchises and looked to local and
state governments for financial assistance.
2) Owners are increasingly more willing to move the team from one city to the next in search of a publicly
financed stadium. Some of the most striking cases have been the shift of the Baltimore Colts to
Indianapolis, the Cleveland Browns to Baltimore and the Minnesota North Stars to Dallas. In each of
these originating cities, attendance and civic pride for the teams was consistently high. However, the
reluctance of public officials to finance new facilities resulted in their teams' eventual departure for
other areas, leaving thousands of citizens without the teams that they had vigorously supported. In
response to both the increased quality of sports arenas and the threat of franchise shifts, state and local
elected leaders have become major players, since their decisions about financing new facilities carry
tremendous impact for the sports fans in their constituencies.
The end result of these developments has been a recent explosion in the number of publicly financed sports
facilities across the country, raising two important questions. 1) What types of cities support publicly
funded stadiums, those with low or high qualities of life? 2) What impact do these stadiums have on local
quality of life? The goal of this analysis is to determine what variables influence an area's decision to spend
public money on new sports facilities, and whether such spending has an impact on local quality of life
factors.
St. Louis Cardinals moved to Phoenix
Zachary A. Phelp, JD, 2004, NOTE: STADIUM CONSTRUCTION FOR PROFESSIONAL SPORTS:
REVERSING THE INEQUITIES THROUGH TAX INCENTIVES, St. John's Journal of Legal
Commentary, Summer, 18 St. John's J.L. Comm. 981p. 1004-5
In 1988, the St. Louis Cardinals decided to relocate to Phoenix, Arizona, leaving behind a city without an
NFL franchise. n123 In [*1005] 1993, when the league expanded, St. Louis was not awarded a franchise,
even though they had already begun construction on a stadium. n124 However, in 1995 St. Louis secured
an agreement with the Los Angeles Rams to relocate and begin play in St. Louis. n125
37
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Sports Businesses Profitable
Professional sports is a large and growing business
Williams et all, 2012, Jack F. Williams,* Jessica O'Quin,** and Joshua Stein***, * Professor, Georgia
State University College of Law and Middle East Institute, Graduate Research Assistant. J.D., Georgia
State University 2011.
Associate, Mesirow Financial Consulting, LLC. B.S., University of Georgia 2010Albany Government Law
Review, 5 Alb. Gov't L. Rev. 123, BASEBALL AND THE LAW: AMERICA'S NATIONAL PASTIME:
ARTICLE: PUBLIC FINANCING OF GREEN CATHEDRALS, p. 124
Sports is no longer simply a business; it is a big business. Moreover, as a business, it is still growing
financially and is still far from reaching its maturation point. Much of the present financial growth is
tied to leveraging existing technologies and devising new ones. Participants in the business of sports
aggressively pursue alternative sources of revenue in an effort to drive earnings.
Traditionally, revenue platforms in the sports sector consist of: (1) gate revenues for live sporting
events; (2) rights fees paid by broadcast and cable television networks and TV stations to cover those
events; (3) merchandising, which includes the selling of products with team and/or player logos; (4)
sponsorships, which include naming rights and payments to have a product associated with a team or
league; (5) actual team ownership; and (6) concessions. n1
More recently, other revenue streams such as from the internet, satellite, or mobile phone
subscriptions to sports events or programming are pushing sports toward programming content
designed as a means to secure greater revenue. Participants in the business of sports are looking at
various angles to make money. Among these participants are state and local governments seeking to
generate revenue either directly or indirectly through maintaining and attracting professional sports
franchises.
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Hotel and Rental Car Taxes Bad
Hotel and rental car taxes drive down tourism
Williams et all, 2012, Jack F. Williams,* Jessica O'Quin,** and Joshua Stein***, * Professor, Georgia
State University College of Law and Middle East Institute, Graduate Research Assistant. J.D., Georgia
State University 2011.
Associate, Mesirow Financial Consulting, LLC. B.S., University of Georgia 2010Albany Government Law
Review, 5 Alb. Gov't L. Rev. 123, BASEBALL AND THE LAW: AMERICA'S NATIONAL PASTIME:
ARTICLE: PUBLIC FINANCING OF GREEN CATHEDRALS, p. 134
D. Hotel and Rental Car Tax
Other types of focused tax include the hotel and rental car taxes; combined, these taxes are often called a
"tourist tax." n88 These taxes are intended to affect tourists who come into town to attend events at the
stadium. n89 However, all tourists are targeted equally, regardless of whether they attend stadium events.
n90 The intent to narrow the tax to stadium-goers by targeting tourists is further undermined by data that
suggests team "fan bases tend to be highly localized rather than heavily tourist oriented." n91 These taxes
tend to be supported by voters because they target non-residents. n92 For example, "[a] hotel tax increase ...
helped raise nearly eleven million dollars in one year for the Georgia Dome." N
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A2: Teams Will Leave
Teams won’t actually move
Williams et all, 2012, Jack F. Williams,* Jessica O'Quin,** and Joshua Stein***, * Professor, Georgia
State University College of Law and Middle East Institute, Graduate Research Assistant. J.D., Georgia
State University 2011.
Associate, Mesirow Financial Consulting, LLC. B.S., University of Georgia 2010Albany Government Law
Review, 5 Alb. Gov't L. Rev. 123, BASEBALL AND THE LAW: AMERICA'S NATIONAL PASTIME:
ARTICLE: PUBLIC FINANCING OF GREEN CATHEDRALS, p. 125-6
Major League Baseball, however, has largely missed this development. Aside from the unique situation
involving the relocation of the Montreal Expos to become the Washington Nationals, only one MLB team
has relocated since 1972. n5 This lack of movement for over thirty years undermines an MLB team's
threats that it will move from a given city if that city does not provide it with a new stadium. n6 In
order for a team to relocate, MLB must consider the financial needs of other, more desperate teams, rather
than simply the desires of one discomfited team.
8 of 150 DOCUMENTS
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Financial Benefits Exaggerated
Projected financial benefits of stadiums exaggerated
Gregory Fox, 2005, B.A., Cornell University; J.D. candidate, 2006, Brooklyn Law School, Public Finance
and the West Side Stadium: The Future of Stadium Subsidies in New York, Brooklyn Law Review,
February, p. 498-9
A. The Projected Benefits of the NYSCC Were Founded upon Inflated Figures
New York City's estimates of the potential revenues of the West Side Stadium were based on a study done
by Ernst & Young for the Jets, n136 which the City accepted without [*498] performing its own study.
n137 To justify the cost of the stadium to the public, the Jets and New York presented this study as fact
when it was unlikely that the facility, if built, would actually generate the amount of revenue projected.
n138 This study reported that the NYSCC would generate $ 72 million in new tax revenues each year of
operation - more than enough to cover the $ 42 million in annual debt service over thirty years. n139 These
figures assumed that the stadium would host many more events than appeared feasible and that those events
would draw more people than similar ones in other markets. n140 The bottom line is that the only events
that would definitely occur if the stadium was built were ten annual New York Jets football games.
Proponents of the NYSCC claimed that the stadium would frequently be used in its non-stadium,
"convention" setup. n141 However, if it turned out that the stadium was not used as often as the City and
the Jets claimed it would be, the loss would have fallen upon the taxpayers not the Jets.
According to the New York City Independent Budget Office (IBO), "the Jets and the Bloomberg
Administration have publicly acknowledged that if the new facility were operated only as a football
stadium, it would not generate sufficient tax revenue to justify the public investment." n142 The Jets, on the
other hand, would break even on their $ 800 million investment solely from their football games. n143
Since the Jets would have been the owners of the stadium, the team would have been under no obligation to
continue to operate it as a convention center if that business turned out to be unprofitable, as has been the
case in other large cities with comparable facilities. n144 This realistic scenario would have left the
taxpayers of New York to supply however much of the $ 42 [*499] million in annual debt service that
could not be covered by tax revenues from convention operations.
Independent analysis of the proponents' projections revealed that the estimated revenue of $ 72 million was
a significant overstatement. n145 The Jets' study projected that the West Side Stadium would be used for
thirty-eight conventions, trade and consumer shows that would attract 8,427 attendees per show. n146
Many critical aspects of the Jets' study, however, were dramatically flawed. The report claimed that these
figures were reached using data from "comparable venues," but it failed to provide detailed enough
information regarding these "venues" that would warrant such optimistic predictions. n147 Second, high
costs for exhibitioners and visitors in New York City would have negatively impacted NYSCC's
attractiveness as a convention location. n148 Additionally, the overlap of the NFL season with prime fall
convention season would have cut into the NYSCC's availability to hold weekend shows during the busy
season as well as deterred scheduling of weekend shows years in advance, when the future NFL schedule is
unknown. n149
Convention center studies have shown that cities consistently present optimistic and unlikely figures to
justify large public expenditures for convention centers that end up failing to meet expectations once
constructed. n150 The competition for national conventions is very strong and there are many cities that
consistently fail to fill their convention centers. The most recent example of this is Boston, which recently
built the $ 850 million Boston Convention and Exhibition Center. n151 Prior to construction, Boston
released a feasibility study that predicted the center would book thirty-four conventions each year. n152
There have only been forty-three confirmed bookings through 2010, an average of less than ten [*500]
bookings per year. n153 Similar attendance figures in New York City would have proven detrimental to its
ability to service the massive debt associated with building the NYSCC.
The Edward Jones Dome and America's Center ("the Dome") in St. Louis is considered the most
successful stadium/exhibition hall in the country and the Jets' study cited it as a comparable facility to the
proposed NYSCC. n154 In 2003, the Dome hosted only eight non-sports related events, and those were
low-impact events that drew local residents but did not generate hotel and restaurant taxes. n155 These
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eight events come nowhere close the thirty-eight non-sports events that the Jets' study based its revenue
projections upon. n156 Seeing as how, unlike the Dome, the NYSCC would have lacked continuous floor
space between the stadium and the convention center since they would be connected by a 100-yard long
corridor, convention planners may have been further deterred from bringing large shows. n157 It is hard to
believe that the NYSCC would have been filled thirty-eight times a year with conventions, when less
expensive cities such as St. Louis and Boston are having trouble filling their convention centers ten times a
year.
Under the IBO's optimistic projections, the NYSCC would have been used for twenty expositions, two
plenary sessions and two mega-events n158 each year. n159 This amounted to a projected $ 28.4 million in
city tax revenues and $ 24.9 million in new state revenue, meaning that the city tax revenues would have
been $ 6.7 million and the state tax revenue would have been $ 11.9 million less than the proponents of the
plan estimated. n160 While these independent figures would have still [*501] allowed the city and state to
cover the debt service on the West Side Stadium, the margin for error would have been much narrower than
the Jets' study indicated. n161 Since the IBO analysis was based on an optimistic number of exposition
events, the revenues generated by the non-Jets stadium events could quite possibly not have covered the
enormous debt, leaving the taxpayers to cover the rest. n162 This sizeable risk to the taxpayers, in
conjunction with the limited risk to the Jets, demonstrates that the public benefits of this stadium plan were
highly speculative while the private benefit to the team was enormous and clear.
Job creation predictions are another figure that the proponents of publicly funded stadium and convention
center construction consistently rely on for support. Studies on the reliability of these predictions have
shown, as in the context of revenues, that post-stadium construction job creation figures rarely meet
expectations. n163 The Jets' study predicted that the project would create 6,971 jobs. n164 The IBO
determined that even under an optimistic scenario, the facility would generate only about half of that figure,
or 3,586 jobs. n165 Using these more realistic figures, the IBO predicted that the new jobs created by the
NYSCC would generate $ 144 million in new earnings, while the Jets' study predicted $ 284 in earnings.
n166 As with the IBO's revenue predictions, these job figures were under an optimistic scenario of twenty
convention style events each year. n167 If there were fewer than twenty conventions, the job numbers
would fall along with the revenues. Also, since twenty percent of the jobs would most likely have been held
by residents not living in one of the five boroughs of New York City, only $ 86 million of the $ 144 million
optimistically predicted new earnings would have benefited residents of the [*502] city called upon to foot
$ 300 million of the bill for the stadium. n168
Aside from the strong likelihood that the actual number of jobs that would have been created by the
construction and maintenance of the West Side Stadium would have fallen far short of the proponents'
predictions, the jobs created by the West Side Stadium would mostly have been of the low-paying service
variety or not new jobs at all. n169 The construction unions were one of the major supporters of the plan
because of the construction jobs associated with it. n170 The jobs involved in the construction of stadiums,
however, only represent new earnings if those construction workers would be out of work otherwise. n171
Additionally, the options for the West Side were not between a stadium and an open rail yard. Those who
opposed the stadium favored building commercial, residential, and open spaces on the site, just not a
publicly subsidized football stadium for the Jets. n172 If apartment buildings, office complexes, or
anything else were built on at that spot instead of a stadium, construction workers would still have been in
high demand.
There were additional financial risks to the public if the NYSCC was financed and constructed as planned,
not the least of which was the burden to the MTA. The MTA is the cash-strapped state agency that
currently owns the rail yards that the Jets planned to build above. n173 Over the past few years, the MTA
has been raising its tolls and fares and cutting services to counteract a ballooning deficit that may soon
reach $ 1.2 billion. n174 There was widespread concern that the stadium financing strategy, which only
offered the MTA $ 100 million for [*503] the air rights above the Hudson Yards, would deprive this
already struggling state agency of the market value of its asset. n175 The MTA's financial struggles have
significantly increased costs for the public, especially commuters. n176 If tax dollars were spent to
compensate for the air rights above the Hudson Yards in an inefficient manner that benefited the Jets more
than the MTA, the costs of this project would have been further exacerbated to the detriment of New
Yorkers' wallets.
Demonstrating that the Jets planned on depriving the MTA of the fair value of the air rights above the rail
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yards, in February of 2005, Cablevision, the biggest opponent of the West Side Stadium plan, offered to
pay $ 600 million for the right to build office buildings and housing over the Hudson Yards. n177 This bid,
$ 500 million more than what the Jets were offering, also covered the cost of the platform that the stadium
plan required state and city taxes to pay for. n178 A bidding war ensued between the Jets, Cablevision, and
other prospective developers. n179 The MTA eventually accepted the Jets' $ 715 million bid even though
Cablevision's bid was $ 760 million. n180 Cablevision brought suit against the MTA in state court alleging
that "the MTA acted arbitrarily and capriciously in selecting the Jets' bid." n181 The Supreme Court ruled
in favor of the MTA, holding that, "in assessing which terms are most beneficial, the MTA can take into
account not only the dollar figure being offered, but the long-term benefit to the MTA and [*504] the
public it serves." n182 Unfortunately for the Jets, days after this decision was handed down, their West
Side Stadium aspirations were ended by the PACB's veto. n183
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Financing Stadiums Violates the Public Purpose
Taxpayers dollars should be spent on projects that support the public purpose
Gregory Fox, 2005, B.A., Cornell University; J.D. candidate, 2006, Brooklyn Law School, Public Finance
and the West Side Stadium: The Future of Stadium Subsidies in New York, Brooklyn Law Review,
February, p. 507
IV. The Public Purpose Doctrine: Can it Be an Effective Tool in the Fight Against Publicly Financed
Stadiums?
Whether discussing the use of tax-exempt bonds to finance the construction of a professional sports facility
in terms of the debt incurred by the local and state governments or the loss of federal tax revenues, the issue
is basically the same: do stadiums provide a significant benefit to the public that warrants massive
subsidies? The public purpose doctrine, as it is commonly referred to, has been incorporated into nearly
every state constitution in order to ensure that taxpayer dollars are being spent on projects that benefit the
public, not private individuals and corporations.
Public funding for stadiums does not fulfill the public purpose
Gregory Fox, 2005, B.A., Cornell University; J.D. candidate, 2006, Brooklyn Law School, Public Finance
and the West Side Stadium: The Future of Stadium Subsidies in New York, Brooklyn Law Review,
February, p. 507-8
A. The Evolution of the Public Purpose Doctrine
The public purpose doctrine was originally designed by state legislatures to curb corruption and
exploitation of the public by legislators and railroad developers during the late 1800s. n200 The
public concern during that period was that tax dollars were being designated to repay bonds issued
for the private benefit of railroad owners. n201 Today, taxpayers throughout the nation continue to
call upon the public purpose doctrine in lawsuits challenging the use of public funds to repay bonds
issues to pay for the construction and renovation of stadiums. n202 In the majority of these lawsuits,
courts have found that the expenditure of taxpayer dollars for sports [*508] facilities fulfilled a public
purpose even though private corporations would receive a substantial benefit as a result. n203
One of the first taxpayer lawsuits challenging public funding for a stadium under the public purpose
doctrine was Meyer v. City of Cleveland. n204 Meyer, a Cleveland taxpayer, sued on behalf of the city and
sought to enjoin the issuance of $ 2,500,000 in bonds for the construction of "a fireproof stadium on the
lake front." n205 He argued that the true purpose of the stadium was for use by the Cleveland Indians
baseball club, a primarily private use that should not be publicly funded under the public purpose doctrine.
n206 The court, in rejecting the taxpayer's argument, pointed to the public entertainment and educational
purposes that a stadium could provide, such as carnivals, theatric performances, and concerts. n207 The
court stated that cities are "not limited to policing the city, to paving the streets, to providing it with light,
water, sewers, docks, and markets" and that "the power of cities and towns to maintain institutions which
educate and instruct as well as please and amuse their inhabitants . . . is unquestioned." n208 In regards to
the Cleveland Indians' use of the stadium, the court said that, "where buildings of that character are owned
by the city there can certainly be no objection to the city deriving revenue therefrom." n209
After the Meyer decision, many other municipalities began utilizing public funds for new stadiums. n210
As more cities began to plan publicly financed stadiums, more taxpayers arose to challenge them. In the
1960s, taxpayer lawsuits challenging public expenditures for sports facilities were defeated in Philadelphia,
n211 Cincinnati, n212 and Denver. n213 In each of those [*509] cases, the plaintiffs unsuccessfully
argued that the city was committing a violation of the state constitution by failing to follow to the public
purpose doctrine. n214 The courts adhered to the broad definition of public use in Meyer and deferred to
the state legislature to determine whether the public benefit of a stadium outweighs the private benefit to
the team that would play there. n215 The trend towards allowing municipalities to classify a stadium as a
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public purpose, which began with Meyer in 1930, has continued to pervade in many large American cities
practically undeterred. n216
Two state courts in the 1960s, however, did invalidate publicly funded stadium plans. n217 In 1966,
the Supreme Court of Florida upheld a taxpayer challenge to the issuance of $ 1.5 million in bonds to
pay for a spring training stadium for the Pittsburgh Pirates. n218 In Brandes v. City of Deerfield
Beach the court held that the bond issuance would violate the Florida State Constitution's public purpose
provisions, which forbid municipalities from assessing taxes for non-municipal purposes and from
extending public credit to any private entity. n219 The [*510] court stated that although the presence of a
private interest does not per se violate the public purpose requirement, "the mere incidental advantage to
the public resulting from a public aid in the promotion of private enterprise is not a public or municipal
purpose." n220
In 1969, the Supreme Judicial Court of Massachusetts, in an advisory opinion, held that a plan to
use public funds to construct a multi-use stadium in Boston did not meet the public purpose
requirement of the state constitution. n221 While recognizing that stadiums do provide certain public
benefits, the court determined that the stadium proposal contained insufficient safeguards to protect the
public interest from the "improper diversion of public funds and privileges for the benefit of private persons
and entities." n222 As a result of this decision, recently proposed stadium acts requesting public funds in
Massachusetts include safeguards that limit the amount of public money that may be spent and guarantee
specific returns on public investments. n223 In contrast, the plan to finance the West Side Stadium included
neither of these safeguards. n224
In the early 1970s, the courts of New York State were confronted with a taxpayer challenge to a stadium
funding plan. In Murphy v. Erie County, n225 the plaintiff taxpayers sued to prevent Erie County from
issuing $ 50,000,000 in bonds to finance a new domed stadium to be leased for 40 years to a private entity.
n226 The plaintiffs claimed that the lease would violate Article VIII of the New York Constitution, which
forbids a loan or gift of county property in aid of a private undertaking. n227 The Court of Appeals held
that the private benefit would be "incidental" to the public purpose of the [*511] stadium. n228 The court
also reiterated the holding of Martin v. Philadelphia by stating that, "it is established that a municipality
may lease its public improvements to private concerns so long as the benefit accrues to the public and the
municipality retains ownership of the improvement." n229 This case is in line with many states' sentiment
towards stadium finance. n230
More recently, the Supreme Court of Florida broadened the public purpose doctrine in Poe v.
Hillsborough County. n231 In that case, a taxpayer sued to invalidate the bond issued to fund the
construction of a stadium for the Tampa Bay Buccaneers under that state's public purpose provision.
n232 The court upheld the issuance of the bond as fulfilling a public purpose. n233 The public purposes
that the court believed the stadium would provide included the anticipated economic benefits projected by
the city as well as "national media exposure" and the "civic pride and camaraderie" associated with having
a professional football team play in the city. n234 This case provides an excellent example of the great
deference given by state courts to the municipalities that wish to expend tax dollars to build sports
facilities. Today, even speculative and unquantifiable benefits to the public will be sufficient in many
jurisdictions to demonstrate that there is a public purpose that justifies massive public subsidies of
stadiums. n235
One of the most recent examples of a public purpose challenge to a taxpayer financed NFL stadium project
took place in Chicago. In Friends of the Parks v. Chicago Park District, n236 a non-profit organization
seeking to protect Soldier Field from being altered at the public's expense challenged a plan to issue $
399,000,000 in bonds to reconstruct the stadium [*512] and erect a parking garage. n237 They claimed
that this issuance of debt disproportionately favored the Bears NFL franchise, thus violating the section of
the Illinois Constitution that forbids public funds from being used for private purposes. n238 In line with
the national trend, the Supreme Court of Illinois deferred to the legislature to determine what constitutes a
public purpose. n239 The court stated that: it is historically clear that Soldier Field has served public
purposes since its dedication in 1924. It will continue to do so after the completion of the Burnham Park
project as authorized by the Act. A financial benefit accruing to the Bears, standing alone, does not
diminish the fact that the renovated Soldier Field will be used and enjoyed by the public for a wide variety
of public purposes, whether or not the projected positive effects on jobs and the local economy generally
result as predicted by the legislature. n240
The Illinois Supreme Court in Friends of the Parks, like the court in Poe, took an expansive view of the
concept of public benefit. By making findings of public benefit that may turn out to be false, the legislature
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was able to shift the burden of proving that the project would primarily benefit a private entity to their
opponents. n241
Due to the nationwide broadening of the public purpose doctrine from the 1930s to the present, nonprofit organizations and individual taxpayers in New York City would have had their work cut out
for them if they wished to challenge the bond issuances for the West Side Stadium as solely
representing a handout to the Jets. n242 As described above, stadium opponents could have made
compelling arguments demonstrating that the public benefit of a West Side Stadium, if any existed,
was merely incidental to the massive private [*513] benefit to the Jets. n243 If such arguments were
made in state court, the court should have deemed the NYSCC bond issuance proposals
unconstitutional under Articles VII and VIII of the New York State Constitution, New York's public
purpose provisions for the investment of state and local funds. n244 While such a challenge to the West
Side Stadium ended up being unnecessary after the PACB vetoed the plan, opponents of publicly
financed stadiums should be preparing their arguments for a narrow reading of the public purpose
provisions now so they can effectively fight the stadium financing plans for New York City's other
sports franchises.
B. Why Challenges to the NYSCC Under the Public Purpose Doctrine Could Have Succeeded
It is inequitable to force the taxpayers of New York to assume the monumental risks associated with
stadium projects of the magnitude of the West Side Stadium without first asking them if they agree that the
government should go ahead and fund that stadium. Many New Yorkers, including officials elected to
serve the interests of the public, feel that the taxpayers should not be forced by franchise owners and
a handful of powerful city officials to subsidize stadiums when it is not in their best interest. n245 The
plan to construct the West Side Stadium would not have been voted upon by the City's legislature or its
citizenry. There is no plan to allow people of New York City or their local legislators to vote on the funding
of the new Mets, Yankees, or Nets sports facilities either. Therefore, stadium opponents will likely have to
turn to the courts in order to stop public funds from being used to finance these projects.
Taxpayers around the nation have been forced by municipalities to fund stadiums by assuming debt and
forfeiting tax revenues from sports teams. n246 With the aid of state courts that have proven exceedingly
deferential to the proponents of public funding for stadiums, the United States has been experiencing a
stadium construction boom for nearly [*514] forty years. n247 During this period, the public purpose
doctrine's ability to protect taxpayers from funding private benefits has been steadily diminishing in most
jurisdictions. n248 In the near future the courts of New York will be presented with an excellent
opportunity to put a resounding halt to this practice by upholding challenges seeking to enjoin the
expenditure of hundreds of millions of city and state dollars for stadiums.
Taxpayer challenges to the NYSCC would have needed to overcome the widespread national trend of
approving these public finance schemes as well as the Murphy case, which recognized a public purpose in
sports facilities. n249 The courts of New York, if faced with a taxpayer challenge to the NYSCC should
have looked to the independent analysis of this plan indicating that the City and the Jets were relying on an
inaccurate study that overestimated the community growth, jobs, and revenues that this stadium would
create. n250 The courts should also have looked to the fates of several other cities that have
committed huge amounts of tax dollars to stadiums and convention centers that have failed to come
close to meeting expectations. n251 With the opportunity to hear taxpayer suits against the West Side
Stadium, the state courts could have breathed life back into New York's public purpose provisions by
holding that a massive private benefit from enormous tax dollar expenditures cannot be overridden by
speculative and risky plans to derive a public benefit propounded by the same private entities that would
see the greatest benefit.
When hearing upcoming stadium challenges, New York courts should consider the fact that the public has
been afforded no opportunity to vote on whether the stadium should be built. n252 The court in Poe
deferred to the unsubstantiated and speculative benefits to the public that were presented by the respective
municipalities. n253 While the plaintiffs in that case had valid arguments that their taxes were being used
to benefit a private corporation in violation of the Florida State [*515] Constitution, the majority of
taxpayers voted to approve the stadium financing scheme when it was presented to them on the ballot. n254
A court can more easily justify the expenditure of taxpayer dollars for a controversial purpose when the
taxpayers themselves have voted in agreement with the municipality to spend in that way. New York
citizens are not being offered a similar opportunity to vote on upcoming stadium projects. n255 While a
ballot measure or referendum is not required for all proposed expenditures of tax dollars, decisions to
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assume hundreds of millions in debt to fund stadiums that will immensely benefit private
corporations must not be made by a handful of politicians and developers.
Similarly, the legislature elected by the people of New York City will not have been given direct authority
to approve or deny funding for these projects. n256 The Supreme Court of Illinois in Friends of the Parks
deferred to the legislative findings of prospective public benefits when approving a large bond issuance to
renovate Soldier Field. n257 Again, the court rejected valid taxpayer arguments that public funds were
disproportionately benefiting a privately owned corporation. n258 However, the taxpayers of Chicago at
least had a body of elected officials with political accountability researching and weighing the prospective
public harms and benefits of that tax-free stadium bond issuance. n259 The New York City Council had no
direct authority to decide on the NYSCC plan and will have no authority to approve the Yankees, Mets, or
Nets proposals either. n260 The courts of New York must not defer to flawed studies done for the very
private corporation that stands to benefit from a stadium, which was the case with the Jets' plan. n261
Without voter or legislative approval, the public purpose requirement cannot be met because the public has
had no constructive opportunity to weigh in.
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Neoliberalism Bad K Links
Public funding for stadiums blurs public and private purposes
Brian Adams, JD, 2002, Catholic University Law Review, Winter, 51 Cath. U.L. Rev. 655, NOTE:
Stadium Funding in Massachusetts: Has the Commonwealth Found the Balance in Private vs. Public
Spending?, p. 655-6
Public spending on sports stadiums is not a new phenomenon. n6 In fact, municipalities have been
spending public money to build stadiums [*656] throughout the twentieth century. n7 The reason for
teams seeking new stadiums, however, and the tactics used to achieve their respective goals has changed.
n8 With escalating player salaries and increased revenue sharing in many leagues, teams have sought new
avenues of income. n9 One of the primary sources of this new income has been new stadiums. n10 The
proliferation of new stadiums has compelled teams without new stadiums to seek other "lucrative financial
incentives" to keep teams from moving. n11 Because these new stadiums are being built, a whole
generation of professional sports stadiums has been rendered obsolete before the termination of their life
expectancies. n12 Further, for those teams that cannot obtain better accommodations in their home cities,
several American cities stand ready with offers of stadium riches to lure franchises to their own backyards.
n13 As a result, municipalities are forced to make large concessions on stadium funding to team owners to
keep their teams in place. n14
Subsidies support and enrich private businesses
Brett Smith is a 2001 graduate of the Georgetown Public Policy Institute, The Georgetown Public Policy
Review, Fall, 2001, 7 Geo. Public Pol'y Rev. 45, If You Build It, Will They Come? The Relationship
Between Public Financing of Sports Facilities and Quality of Life in America's Cities
One of the most complicated aspects of public funding decisions for local leaders is their interaction with
franchise owners. Utilizing the inherent power of owning their franchises, owners often influence local and
state officials to gain more favorable stadium deals from them. Despite the possibility of civic enhancement
and personal enjoyment, the most important goal for all franchise owners is financial profit. For the most
part, they approach their franchises as business ventures, with a majority of them attempting to acquire
turnaround profits from the sales of their teams within 20 years (Scully 1995). In fact, since 1990, the
average rate of return for sports [*48] franchise sales is 10.7 percent (Quirk 1999).
A key consideration here is that a new stadium, particularly a publicly financed stadium, dramatically
increases the value of a franchise for a future resale (Scully 1995, Baade and Dye 1990). Finally, a recent
study demonstrated that the monopolistic nature of professional sports increases franchise values, public
subsidies of stadiums and the likelihood of franchise shifts (Fort 2000). Given these facts, it is perfectly
rational that team owners attempt to obtain public financing from state and local leaders for new or
renovated stadium projects.
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A2: Improved Quality of Life
No improvement in quality of life, no reduction in unemployment
Brett Smith is a 2001 graduate of the Georgetown Public Policy Institute, The Georgetown Public Policy
Review, Fall, 2001, 7 Geo. Public Pol'y Rev. 45, If You Build It, Will They Come? The Relationship
Between Public Financing of Sports Facilities and Quality of Life in America's Cities
The regression for unemployment rate yields similarly contradictory results. Here, increasing the
percentage of public funding was intended to decrease the rate of unemployment in the area. The
coefficient does not support this theory. Its low, but positive value and lack of statistical significance
indicates that unemployment does not appear to decrease with more public spending on sports facilities.
Therefore, the results of this regression echo those of the previous three in that the higher levels of public
funding demonstrate no evidence of improving the quality of life in a metropolitan area.
Several other items are notable from the results of these four simple regressions. Including the five-year
lagging period of the quality of life variables from the time before the stadium was built, as used in Stage
One, yielded statistically significant effects, indicating that past results predict present results. For the
control variable concerning the year the facility was built, all of the coefficients were statistically
significant at least at the 90 percent confidence level. Each of these results were negative, indicating that
stadiums constructed in the last few years have yielded lower values in all four of the quality of life
variables. The variables for the professional leagues of the franchises were all statistically insignificant.
Furthermore, the diagnostic measures demonstrated several important facts about the regressions. Although
using the Tolerance indicator exposed no problems with multicollinearity in the four models, the White test
showed heteroskedasticity in two of them. For the regressions studying the number of business
establishments and unemployment rate in the metropolitan area, slight heteroskedasticity was observed to
increase standard error values, generating slightly less precise estimates. Finally, a few outliers became
notable in the results, but mostly occurred in the largest metropolitan areas such as New York, Chicago and
Washington, DC. None of these results was unexpected. Taken together, they merely signal that the actual
relationships uncovered in this analysis might be somewhat stronger than indicated.
The wealthy receive the benefits and the least well off bear the costs
Brett Smith is a 2001 graduate of the Georgetown Public Policy Institute, The Georgetown Public Policy
Review, Fall, 2001, 7 Geo. Public Pol'y Rev. 45, If You Build It, Will They Come? The Relationship
Between Public Financing of Sports Facilities and Quality of Life in America's Cities
Despite a litany of studies proving them incorrect, proponents of new stadiums continue to advocate their
construction based on forecasts of economic growth and job creation. Most troubling in this situation is that
state and local officials often believe the predictions and devote large sums of public funds to the creation
of these sports facilities. The question remains, therefore, as to why stadium construction has expanded
greatly in recent years, despite the many studies disproving their economic success. Bast (1998) attributes
the recent boom to a glut of cities desiring professional sports, with a limited number of franchises to
satisfy demand. He also cites the financial strength of pro-stadium forces compared to the grassroots efforts
opposing them and a lack of revenue sharing between teams as reasons for the expansion in new stadiums.
Bast explains the negative aspects of the increased public funding of sports stadiums as well. He claims that
the diversion of public funds from other important causes and the disproportionate benefits the facilities
provide for the wealthy are reasons why public subsidies for sports should be discouraged. Finally,
Siegfried and Peterson (2000) demonstrated that publicly financed stadiums result in increased ticket prices
and the creation of corporate seats and luxury boxes. In other words, all those who bear the burden of the
costs do not broadly share the benefits of the new stadiums.
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Undermines Education/Public Goods
Private funding for stadiums diverts funds from public goods such as education
Brett Smith is a 2001 graduate of the Georgetown Public Policy Institute, The Georgetown Public Policy
Review, Fall, 2001, 7 Geo. Public Pol'y Rev. 45, If You Build It, Will They Come? The Relationship
Between Public Financing of Sports Facilities and Quality of Life in America's Cities
p. 46-7
This analysis draws from research on how a city or state determines its need and use for a facility. David
Petersen (1996) surveys the possible factors for determining need (such as popularity, prosperity, and
population size), as well as future use estimates based on historical trends, user surveys and characteristics
of the sports [*47] industry. Commonly held theories that new stadiums facilitate economic growth, create
jobs and increase tax revenues are utilized by stadium proponents to convince decisionmakers to publicly
fund new facilities. In addition, the argument exists that a city is viewed by local citizens and outsiders
based upon its support of professional sports (Shropshire 1995).
Conversely, many critics of publicly financed stadiums argue that cities and states often make choices
regarding the devotion of public funds to sports facilities at the expense of education, health care and
other causes, raising massive opportunity costs.
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A2: Public Support
Existing support doesn’t prove anything—opponents are outmatched in
resources
Brett Smith is a 2001 graduate of the Georgetown Public Policy Institute, The Georgetown Public Policy
Review, Fall, 2001, 7 Geo. Public Pol'y Rev. 45, If You Build It, Will They Come? The Relationship
Between Public Financing of Sports Facilities and Quality of Life in America's Cities, p. 48
Conditions of local policy further complicate the situation for public officials. Since these facilities involve
such large amounts of potential public funding, many of the projects are subject to approval referenda by
the citizens of the city, metropolitan area, or state. What results are massive public opinion campaigns
waged by both proponents and opponents of the facilities. Supporters of the stadium are usually business
interests from the community and the team ownership (both seeking financial gain) and certain politicians
(seeking to avoid a decline in civic image) (Quirk 1999). Conversely, small grassroots organizations of
concerned citizens often attempt to fight the proposed stadium projects. They are often alarmed with the
prospect of devoting millions of dollars in public financing to projects that may not improve the quality of
life in their cities. Although the warring factions may appear to be evenly matched, they are not, with prostadium forces drastically outspending grassroots groups (Noll and Zimbalist 1997). As a result, despite a
recent poll showing that 64 percent of the public is opposed to tax funding for sports facilities, most
referenda pass overwhelmingly (Bast 1998). This uneven public battle over funding for new sports facilities
presents a further complication for the decisionmakers in state and local government on this issue.
Public sentiment against building the new stadiums
Brent Bordson, JD, 1998, Hamline Law Review, 21 Hamline L. Rev. 505, CASENOTE AND
COMMENT: PUBLIC SPORTS STADIUM FUNDING: COMMUNITIES BEING HELD HOSTAGE BY
PROFESSIONAL SPORTS TEAM OWNERS, p. 507-8
Even when cities decide to use public funds to build new stadiums, it is not clear whether these decisions
are favored by the cities' taxpayers. The sentiment against using public money to fund sports stadiums
seems to be just as strong in areas that are still considering building new stadiums. Even having a
successful team does not always translate into public sentiment to build a new stadium. Some taxpayers
attribute their opposition to new stadiums to their disagreement with the contractual agreements of
professional athletes. The high salaries agreed upon in professional athletes' contracts cause many members
of the public to be adamantly opposed to giving any public funds to provide athletes with a stadium in
which to play.
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A2: Reduced Crime
Public funding for stadiums doesn’t reduce crime
Brett Smith is a 2001 graduate of the Georgetown Public Policy Institute, The Georgetown Public Policy
Review, Fall, 2001, 7 Geo. Public Pol'y Rev. 45, If You Build It, Will They Come? The Relationship
Between Public Financing of Sports Facilities and Quality of Life in America's Cities, p. 55-6
The hypothesis for the regression concerning crime rates was that the number of serious crimes per 1,000 in
a population decreased with more public funding of the facilities. After performing the analysis, however,
this correlation did not emerge. In fact, the inverse materialized. Although the estimate is modest and the t
value is low, this regression demonstrates that financing a large portion of a new sports facility with public
funds does not seem to decrease the overall crime rate in the area.
Public spending on sports stadiums does not improve wealth or reduce crime
Brett Smith is a 2001 graduate of the Georgetown Public Policy Institute, The Georgetown Public Policy
Review, Fall, 2001, 7 Geo. Public Pol'y Rev. 45, If You Build It, Will They Come? The Relationship
Between Public Financing of Sports Facilities and Quality of Life in America's Cities
The second stage of this analysis tests the hypothesis that the higher levels of public funding for new sports
facilities undertaken by cities with lower quality of life variables created the intended improvements in
living conditions. Increasing the percentage of public funding in each of these four simple regressions,
according to popularly held theories and practices, is thought to increase per capita income and the number
of business establishments as well as decrease crime and unemployment rates in the metropolitan areas.
Contrary to Stage One, the hypotheses of Stage Two were inaccurate. The positive correlations for
income and establishments with public funding did not materialize. In addition, the intended
negative correlations for the crime and unemployment rates with the public percentages of funding
were incorrectly predicted. In a few of the cases, in fact, opposing correlations materialized from the
regression results.
In the regression for per capita income, the original model yielded an adjusted R-squared value of 0.93. The
regression result suggested convergence in the model and indicated that the facilities do not have the
intended effects on per capita income. Thus, I altered the dependent variable in the regression to be the
change in per capita income for the metropolitan area from the periods before and after the facility was
built. The new adjusted R-squared value became 0.38, but the coefficient estimates remained largely
unchanged. In the regression, a high percentage of public funding was intended to increase the average
income for the metropolitan area after the stadium was constructed. The results of this analysis prove
otherwise. The coefficient indicates that increases in the level of public funding, as a fraction of the total
cost, is associated with decreases in the per capita income of the area. While a small effect, and not quite
statistically significant at the 90 percent level, it is nonetheless inconsistent with the hypothesis. Instead of
producing a positive correlation, this regression presents a slightly negative one, demonstrating that
spending public funds on new sports facilities does not appear to improve the area's level of wealth.
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A2: New Businesses
Public funding for stadiums doesn’t increase the number of businesses
Brett Smith is a 2001 graduate of the Georgetown Public Policy Institute, The Georgetown Public Policy
Review, Fall, 2001, 7 Geo. Public Pol'y Rev. 45, If You Build It, Will They Come? The Relationship
Between Public Financing of Sports Facilities and Quality of Life in America's Cities
Higher levels of public funding were also intended to increase the number of business establishments in the
metropolitan area, a general measure of economic growth. However, the results of the regression strongly
contradict this hypothesis. The coefficient for the public percentage variable here is -495.70, signifying a
substantial decrease in the number of business establishments for every one percent increase in public
funding. Since this estimate is statistically significant, it can be safely concluded that public financing of
stadiums decreases the number of business establishments in the metropolitan area.
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A2: Better Players
No, owners spend carelessly and still make profits
Zachary A. Phelp, JD, 2004, NOTE: STADIUM CONSTRUCTION FOR PROFESSIONAL SPORTS:
REVERSING THE INEQUITIES THROUGH TAX INCENTIVES, St. John's Journal of Legal
Commentary, Summer, 18 St. John's J.L. Comm. 981p. 1008-9
The reason this deal is cited by franchise owners is because it best supports their economic theory. This
"sweetheart deal" allowed the Rams to increase their pay roll and attract better players, n145 which
subsequently led to the Rams being one of the most dominant teams in the league.n146 They won the
Superbowl [*1009] in 2000, n147 and once again advanced to the final game in 2002, where they lost to
the New England Patriots. n148 Owners argue the Rams success is due to the revenues made available by
their stadium, and have allowed greater flexibility in contracting with players. n149 This argument seems to
fail because financial superiority does not always equal on-field success. n150 Rather, it allows an owner to
spend more carelessly, while still being able to make a profit.
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A2: General Economic Benefits
Even if there are economic benefits, those benefits are so small they are
immeasurable
Zachary A. Phelp, JD, 2004, NOTE: STADIUM CONSTRUCTION FOR PROFESSIONAL SPORTS:
REVERSING THE INEQUITIES THROUGH TAX INCENTIVES, St. John's Journal of Legal
Commentary, Summer, 18 St. John's J.L. Comm. 981p. 1012-3
Stadium funds are also justified by the promise of a stimulated and vibrant economy - both locally around
the stadium, and generally in the surrounding community. n163 But a further look reveals how little a
sports franchise can generate. Most franchises are a very small percentage of the overall economy in their
local market. n164 In fact, even multiple franchises in a given location cannot create an economic impact.
For example, it has [*1013] been estimated that the nine major sports teams in the New York City area
only account for 0.3% of the regional economy. n165 If this statistic is accurate, the impact of one team is
virtually immeasurable. This is countered with the argument that outside jobs are created, which cannot be
directly linked to a stadium's impact on the economy. While this may be true, most of these jobs are in the
restaurant and tourism industries, which even the highest estimates show, only amount to 2-3% of a local
economy. n166 Even assuming there is increased spending in a particular area due to the presence of a
stadium; it is possible that consumer spending is just shifting. n167 Instead of creating new dollars coming
into the local economy, the stadium is simply diverting money from other recreational activities. n168 This
[*1014] creates little economic stimulus and a very poor return on the investment in a stadium.
A2: Jobs
Stadiums create low skill jobs, better ways to spend the money
Zachary A. Phelp, JD, 2004, NOTE: STADIUM CONSTRUCTION FOR PROFESSIONAL SPORTS:
REVERSING THE INEQUITIES THROUGH TAX INCENTIVES, St. John's Journal of Legal
Commentary, Summer, 18 St. John's J.L. Comm. 981p. 1011-12
It cannot be questioned that a stadium will create jobs. n159 But further analysis shows that these jobs are
usually very low [*1012] paying and low skill jobs. n160 Further, if you look at the opportunity costs of
stadium construction, such large expenditures could be used to create jobs directly. n161 By funding
various programs that develop skills and educate, the local government can realize a much higher return on
its investment.
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A2: General Economic Benefits
Even if there are economic benefits, those benefits are so small they are
immeasurable
Zachary A. Phelp, JD, 2004, NOTE: STADIUM CONSTRUCTION FOR PROFESSIONAL SPORTS:
REVERSING THE INEQUITIES THROUGH TAX INCENTIVES, St. John's Journal of Legal
Commentary, Summer, 18 St. John's J.L. Comm. 981p. 1012-3
Stadium funds are also justified by the promise of a stimulated and vibrant economy - both locally around
the stadium, and generally in the surrounding community. n163 But a further look reveals how little a
sports franchise can generate. Most franchises are a very small percentage of the overall economy in their
local market. n164 In fact, even multiple franchises in a given location cannot create an economic impact.
For example, it has [*1013] been estimated that the nine major sports teams in the New York City area
only account for 0.3% of the regional economy. n165 If this statistic is accurate, the impact of one team is
virtually immeasurable. This is countered with the argument that outside jobs are created, which cannot be
directly linked to a stadium's impact on the economy. While this may be true, most of these jobs are in the
restaurant and tourism industries, which even the highest estimates show, only amount to 2-3% of a local
economy. n166 Even assuming there is increased spending in a particular area due to the presence of a
stadium; it is possible that consumer spending is just shifting. n167 Instead of creating new dollars coming
into the local economy, the stadium is simply diverting money from other recreational activities. n168 This
[*1014] creates little economic stimulus and a very poor return on the investment in a stadium.
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A2: Stadiums Increase Visitors and Benefit the Economy
No real economic impact from visitors
Zachary A. Phelp, JD, 2004, NOTE: STADIUM CONSTRUCTION FOR PROFESSIONAL SPORTS:
REVERSING THE INEQUITIES THROUGH TAX INCENTIVES, St. John's Journal of Legal
Commentary, Summer, 18 St. John's J.L. Comm. 981p. 1014
The final argument espoused in favor of publicly funded stadiums is the attraction of outsiders into the
community. n169 This argument is advanced on two different levels. Some studies say it will attract
visitors into the community which will create an increase in tourism. n170 The problem with this rationale
is that new stadiums are independent entertainment complexes. Even if a large portion of non-residents
enter the community they are unlikely to spend more money because they have all the essential products,
such as food and merchandise, at the stadium. n171 Also, it has been noted that even if the hospitality
industries like restaurants and hotels did benefit, they are too small a percentage of the overall economy to
have any significant effect. n172
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A2: Attracts Corporate Residents
Better ways to attract corporate residents
Zachary A. Phelp, JD, 2004, NOTE: STADIUM CONSTRUCTION FOR PROFESSIONAL SPORTS:
REVERSING THE INEQUITIES THROUGH TAX INCENTIVES, St. John's Journal of Legal
Commentary, Summer, 18 St. John's J.L. Comm. 981p. 1014-5
The other argument supporting the theory that a stadium will attract outsiders relates to corporate residents.
Some feel that luring a professional sports team into a community will increase the community's
attractiveness to industry. n173 However, if this is [*1015] a goal of the local government, there are many
more direct ways to attract industry than by building a sports facility. Local governments can offer property
tax breaks or other special incentives that are less costly and can directly create new jobs. n174 This job
creation could bring new money into the economy, instead of just recycling the old. n175 Additionally, the
availability of a professional sports franchise will have little if any relevance in a company's decision to
relocate. n176 The economic factors of a community, including labor costs, will be weighted much more
heavily than the availability of a professional sports franchise. n177 A city could invest in giving corporate
tax breaks or other incentives that would greatly [*1016] benefit both the local economy and community
more than a new stadium. n178
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Alternative Finance Mechanisms
Other ways to finance stadiums
Zachary A. Phelp, JD, 2004, NOTE: STADIUM CONSTRUCTION FOR PROFESSIONAL SPORTS:
REVERSING THE INEQUITIES THROUGH TAX INCENTIVES, St. John's Journal of Legal
Commentary, Summer, 18 St. John's J.L. Comm. 981p. 1015-7
The tension in the stadium financing debate is centered on an owner's lack of capital to fully fund a
stadium. n179 Due to this lack of revenue, owners seek outside contributions, which leads local
governments into making their funds available. n180 One solution to the stadium construction debate is to
attract third parties to invest. n181 One of the most significant and successful examples of this is Pacific
Bell Park in San Francisco. Pac Bell [*1017] opened at the beginning of the 2000 season as the home field
for the San Francisco Giants. n182 This stadium was a successful private venture by China Basin Ballpark
Corp., a subsidiary of the Giants and private investors. n183 China Basin secured a loan for $ 170 million,
and solicited Pacific Bell, a regional telephone company, for $ 50 million in naming rights. n184 They also
received other corporate sponsorship totaling $ 61 million. n185 The city of San Francisco contributed an
estimated $ 15-20 million indirectly through its redevelopment agency for infrastructure improvements
around the park. n186 The owners then used the Personal Seat Licensing (PSL) technique to secure another
$ 70 million. n187 The entire estimated cost of $ 306 million was raised [*1018] through these various
techniques, and more notably did not require any extra expenditure by the local government. n188
Some believed this privately financed stadium would mark the end of a great baseball tradition because the
team's revenue stream would be harmed. To the contrary, the team has prospered since the new stadium,
with sell-outs for nearly every game, one of the league's higher payrolls, and advancing to the World Series
in 2002. n189 The Giant's organization has shown what a successful blend of private financing and team
contribution can create.
A. Corporate Naming Rights
As San Francisco has proven, there are other alternatives to publicly funded stadiums. The combination of
private investment and team contribution can create a successful stadium and team. n190 There are several
alternatives emerging as alternative sources of revenue to fund a stadium construction. The San Francisco
development utilized one of these profitable and growing trends in sports today, corporate naming rights.
n191
[*1019] The San Francisco Giants received $ 50 million from Pacific Bell to acquire the naming rights to
the stadium. n192 In more recent events, Reliant paid $ 300 million for naming rights of the home of the
new NFL franchise in Houston to be named Reliant Park. n193 In Maryland, just outside Washington D.C.,
the Washington Redskins entered into a contract with Federal Express for a $ 205 million, 27-year deal.
n194 These partnerships with corporations provide the essential third party to invest in such a large project.
n195 They also prevent local governments from expending funds they simply do not have. The team also
benefits from a naming agreement. n196 Instead of taking on debt to finance a stadium, which could harm
revenues until the debt is paid, this is a two-way transaction. The team gets a stadium, [*1020] while the
corporation receives valuable advertising to a large portion of the community. By creating this two-way
system of benefits, the team can protect its existing revenue and use any increases from a new stadium to
re-invest in personnel on the field. n197
B. League Contribution
Another means of privately financing a stadium is through a league-sponsored program. In 1999 the NFL
took a pro-active approach to stadium finance and realized that a source of capital from a third party was
needed. n198 The league adopted resolution G-3, which will contribute between 34% and 50% of the cost
of a stadium on a case-by-case basis. n199 The money will come partially from the team and partially from
league revenue. n200 The league's contribution comes from the most recent $ 17.6 billion television
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contract. n201 Because this is a steady source of income for the league until 2006 it can commit to this
program [*1021] without worry of economic downturns. n202 The G-3 program has been utilized for
several stadiums, including the new football stadium in Philadelphia, which opened in the 2003 season.
n203 The Philadelphia stadium is almost 80% privately financed, due in large part to league and team
contributions that totaled $ 310 million. n204 This program can be a valuable asset to not only a team
looking to build a stadium, but a city debating how much public money should be spent. Other professional
sports leagues should consider instituting programs similar to the G-3 program, especially if a lucrative
television deal is in place.
C. Personal Seating Licenses
Another third party revenue source is the fans that actually benefit from the stadium. For many recent
stadium constructions, personal seating licenses (PSLs) have been sold. This license allows an individual
fan to pay a fixed price to obtain the right to a seat in the stadium. n205 For each game at the stadium, the
PSL holder is notified and has a chance to purchase the tickets before anyone else. n206 If a PSL holder no
longer wants to continue purchasing these tickets they can opt out of the [*1022] agreement or sell the
license to a third party. n207 Consequently, in some cases reselling a PSL can be very profitable. n208 For
teams with a strong fan base of season ticket holders this can be a very lucrative revenue source. In San
Francisco, the Giants raised almost $ 70 million from PSL's alone. n209
PSL's are a fair and successful way of raising large amounts of capital. They allow the beneficiaries of the
stadium, the fans, to contribute to the cost. For this contribution they receive a valuable license. This twosided transaction is a balanced approach with both sides benefiting, unlike the one sided transaction of a
city contributing money and getting little back in return. n210
D. Luxury Suites
Another form of third party investment is a luxury suite. n211 Typically corporations will be the ideal
consumers due to the high cost and large number of people involved. Usually a suite holds 15-20 people
and has its own bathroom, living room style seating, and is enclosed from the elements by a glass window.
Luxury suites in the NFL can range in price from $ 50,000 to well over $ 100,000. n212 The benefit of the
luxury suites is not just the large amount of revenue they generate, but that they are normally purchased for
more than just one season, creating [*1023] stable income no matter the economic climate. n213 Also,
initial payments can be obtained before stadium construction is underway due to the increasing demand for
these suites, thereby generating construction revenue. n214
Both luxury suites and PSL's are significant sources of fan-based revenue for most teams today. n215 The
advantage of both is the considerable amount of revenue that is obtained before construction even begins.
Along with the fan based revenue sources, any third party, such as a corporation or professional sports
league, should be considered to avoid public expenditures. By utilizing outside sources of revenue the
pressure placed on local governments to contribute is decreased. Additionally, by allowing fans and other
outsiders to contribute, the burden is shifted to the true beneficiaries of the stadium.