Is it beneficial for a city/state to subsidize the building of a sports stadium?
Debate Rounds (3)
The topic at hand is "Is it beneficial for a city/state to subsidize the building of a sports stadium?"
I am arguing that this assertion is true.
First I would like the toss out some definitions.
[D1] "Sports stadium" is defined as a large arena with a capacity of over 10,000 for spectators. This can include both arenas that are traditionally used for sports such as basketball and hockey, as well are larger stadiums used for sports such as baseball and football
[D2] "Beneficial" is to have two parts for this debate:
1) To have a positive financial return on investment.
2) To have a positive impact on the happiness of the city/state.
In this debate I hope to prove the following:
1) The return on investment on subsidizing a sports stadium will be a positive one when all financial aspects of the situation are analyzed
2) The overall happiness of the community is improved with the existence of a sports team in the city/state
2a) That without subsidizing sports stadiums, many city/state would or have lost their sports team to another city/state
I welcome my opponent to modify these definitions if he so chooses and wish him good luck.
On the topic of this debate, "Is it beneficial for a city/state to subsidize the building of a sports stadium?", I will assert the negative.
I concur with both of my opponents definitions.
In his debate, I hope to prove:
1) The return on investment on subsidized sports stadium is either negligible at best or a waste of public funds at worst.
2) The "happiness quotient" of the community is ephemeral in relation to the existence of a local sports team and their stadiums.
2a) The notion that subsidizing sports stadiums is necessary to keep sports teams is without merit.
And with that, I wish my opponent good luck and a good debate.
The first aspect I will look at is the income generated by the municipality based solely on the income taxes of the players.
The salary data I will be retrieving comes from USA Today: http://content.usatoday.com...
In major league baseball, the average team salary is $91 million. Using a base rate (this will vary slightly from state to state) of 7.25% for the state income tax, the yearly income only from the player's salaries is $6.6 million.
In the national football league, the average team salary is $101 million, resulting in $7.58 million per year.
In the national basketball association, the average team salary is $73 million, resulting in $5.48 million per year.
In the nation hockey association, the average team salary is $51, resulting in $3.43 million per year.
If this data is extrapolated over an estimated 30 year minimum for the life of the stadium, then here are the incomes over that period (assuming no salary growth what so ever)
MLB: $198 million
NFL: $227 million
NBA: $164 million
NHL: $115 million.
This alone is not enough to cover the average prices of some of these stadiums, but there are other revenue sources.
First, there is the sales tax that is applied to everything from the tickets, to the parking, to the food, to the merchandise. If my opponent will allow me, I am assuming that these purchases must roughly equal the team salary. (If he does not I will happily dig up these figures).
But this will then add an approximate 5% tax on those items.
This will bring up the revenues to the following values:
MLB: $334 million
NFL: $379 million
NBA: $274 million
NHL: $191 million
These values (again not counting for any increase in player salaries or other factors such as tourism generated by these teams) are in line with the public funding statistics laid out by a website dedicated to opposing public funding of stadiums. http://www.fieldofschemes.com...
In that report, the maximum public fund for a football stadium (which included massive infrastructure and local development) was $525 million. The maximum public fund for a baseball stadium was listed as $275 million. The maximum public fund for a basketball stadium was listed as $143 million. And although this site does not list hockey arena data, the recently built Xcel Energy Center in St. Paul (A hockey only facility) was built entirely at the cost of the state for $130 million.
Again, I want to re-iterate, that these numbers do not include money from tourism, the jobs created by the construction, the spending at local business before and after an event, or income generated from alternate uses of these stadiums/arenas for other sports, concerts, or conventions.
Now onto my second point that the general happiness of the population.
From a Ph.D thesis published at Harvard, http://thesis.haverford.edu... author concludes.
"This study seems to be showing that in general performance of teams in the region in which one
lives makes those people more happy. Even over time that still holds true and seems to be as expected.
However, it is once the data is broken down that the more confusing results come up. These all have to
do with those who one would not expect to care about sports being impacted positively by performance
variables. While there is no clear -cut answer as to why this happens it does give some hope because
someone is remembering the results and gaining from them."
This means that not only are the fans of the team enjoying increased happiness, but also the non-fans are benefiting as well.
Another article, posted in the "Economic Review" http://www.allbusiness.com... had this to say:
"A second source of happiness for fans comes from rooting for a team more generally, independent of actually attending games in person. Fans watch games on television, listen to them on the radio, and read about them in local newspapers. Games serve as an occasion for parties and barbecues. Teams' performance is the subject of long discussions among friends. And second-guessing team decisions is the subject of nearly continuous banter on local talk radio.
It is also possible that hosting a franchise increases the happiness of all metro area residents, regardless of their being sports fans. Home games and rooting for a sports team provide for shared community experiences. And hosting a sports team may increase civic pride-for instance, by contributing to a sense that one lives in a "world class" city."
Finally onto my last point, that municipalities that do not put forth public funds for a stadium generally loose their team.
This has been shown by a number of examples of teams moving to other cities over the entire course of professional sports. Most recently, when the Montreal Expos baseball team requested funds for a new stadium, and the demands were not met, they moved to Washington DC where the city helped them finance a new stadium.
This demand for new stadiums can be seen as malicious at times, with owners demanding these to increase their own profits, but the economics of professional sports demands that these teams are able (especially small market teams) to compete, financially, for the best players. If they are stuck with an antiquated stadium that does not have the revenue sources of stadium, the team will suffer, driving down interest as well as public happiness, and the owner will seek to move the team elsewhere where a stadium could be built using public funding.
The idea that a new stadium increases team revenues is proven in a paper published at the University of Chicago. http://www.journals.uchicago.edu...
Additionally, even the publicly owned Green Bay Packers, recently renovated their stadium at a cost of $300 million, where ownership greed must be entirely discounted.
It should also be noted that I have been unable to find any example of a team moving to a new city, where the new city/state was not in some way, subsidizing a new stadium.
I await my opponent's rebuttal
First of all, since it's always the city and not the state (at least to my knowledge) that funds the construction of sports stadiums, its usually the state that receives a higher ROI at the expense of the city's investment, especially when it comes to state teams, like the Florida Marlins or the Minnesota Vikings.
Unlike our federal government, cities and states cannot borrow money from China to balance their budgets. In order to fund these stadiums, they will need to either raise taxes or cut public services (sometimes both) in order to fund the subsidies, thereby reducing the purchasing power of the citizens. My opponent also argues that the expected boom in sales generated by the stadium will also result in a boom in sales tax revenue, which is great, if people used the stadium as much as they say they would and on a consistent basis.
"According to a recent study by the economists Bruce K. Johnson of Centre College in Kentucky, Michael J. Mondello of Florida State University, and John C. Whitehead of Appalachian State University, the public recognizes this as well. The researchers used the "contingent valuation method," which surveys people to estimate economic values for things they aren't directly buying themselves. Many economists argue that this method often overstates people's willingness to pay for public goods such as sports team spillovers. Yet the study discovered in the case of Jacksonville's Jaguars—won by the Florida city at the cost of at least $121 million in stadium renovations—that the locals value the presence of the team and the alleged public goods it generates at only $25 million."
Then there's the exceedingly more common problem of eminent domain abuse, whereby private developers "exercise" eminent domain in order to seize private property, thereby depriving people of their livelihoods and sometimes their homes and businesses, under the guise of doing a "public good" by erecting their stadiums. (Case in point: The Atlantic Yards Project http://www.nytimes.com...)
What my esteemed opponent fails to take into account two things when calculating the economic gains of a new stadium against the cost. 1 ) is the interest rate on the life of the bond, which my city, Miami, will know all too well http://www.nbcmiami.com.... 2 ) that ticket dollars are entertainment dollars. What I mean by this is that the money residents spend on sporting events could just as easily have been spent on concerts, movies, the beach, theater…etc. The same holds true for the jobs "created" which could have easily just have been allocated to other actual public works such as building/improving roads, sewers, schools and the like, possibly over an even larger area instead of being concentrated on one part of the city. The argument of economic stimulus is a broken window fallacy.
Second Argument: The happiness quotient of the cities inhabitants are ephemeral when it comes to their local sports club
My opponent has argued that having a sports team and a stadium to host them increases happiness for both fans and non-fans and increases civic pride. I do agree that having a sports team around gives people something to talk about and something to root for, but is the cost worth it? What about the seasons that just break the fans hearts draping the city in a general malaise. Fans invest a lot in sports teams and they share their highs and their lows. So much so, that a poor performing team, such as the Miami Dolphins in '07 and the Detroit Lions the following season could negatively impact worker productivity. My opponent also claimed that non-fans also enjoyed increase happiness from sports team and I can tell you as a non-fan of basically every major league sport this is false. As a non-fan, I really don't care and don't pay any attention what so ever about the results from last nights game. In fact, sports talk can actually have an inverse affect on non-fans happiness since apathy or lack of knowledge about the game can hinder social interaction and conversations when sports are involved (e.g. "Great, sports, something I can talk nothing about with them"). But the real question I ask my opponent is: is the public funding of building sports stadiums the most wide-reaching and most efficient way to achieve city wide happiness? After all, sports are just one of many forms of cultural and entertainment activities a city can offer, and I would argue, not the most enriching.
Third Argument: The notion that public funds are necessary to keep sports team is without merit.
For this argument, I'm afraid I must concede to my opponent. Given the current status quo of corporate welfare given to sports team owners to fund their stadiums, any municipal government who is not willing to cough up taxpayer's dough to fund the construction and maintenance of their stadium will indeed move their team to a city that will. As long as cities are willing to subsidize sports stadiums, private team owners will expect the local city to foot the bill for their stadium if they want to keep their team.
The bottom line: Why should public money go to building a private complex for private interests for their direct profit when those private interests can build it with their own money?
First of all, there are many cases where the state does fund a spots stadium, especially with state teams. Living in Minneapolis, I know that the talk of a new Vikings stadium would be subsided primarily by the state itself. Second, even if a the ROI went to the state, the state provides much local funding back to those communities. But that is outside the scope of this debate, so I will leave that issue there.
I was unable to find where my opponent found the large quote citing a study about the Jacksonville Jaguars, but I was able to find the paper referenced. http://www.appstate.edu... It does not make any reference to a $121 million dollar sports stadium, or the locals valuing the team at $25 million. It is a paper that discusses a survey given to Jacksonville residents on their willingness to have their taxes increased in order for the city to buy the team.
Also, with regards to the Atlantic Yards Project, I reviewed it and found that while it is partially a stadium project, it is a privately funded one. I believe the issue of eminent domain out of the scope of this debate, but I would be willing to debate that in the future.
With regards to interest rate on the life of the bond and link referenced to the Florida Marlins, the life of the bond is stated in the article as being a 40 year bond. This means that the intrest rate I'm calculating based on a $515 million dollar principle and the $2.4 billion final price is approximately 3.9%. That is just a little more than the annual rate of inflation over the past three decades, which means that if recent historical inflation rates remain the same, the city of Miami is not in much of a bind. In fact, by choosing such a long period, they have significantly reduced the annual cost to them, letting the sales taxes more effectively pay for the stadium instead of having a period where the city bears much of the cost, then receives a windfall after the loans have all been paid off.
The second argument my opponent made as to the empirical nature of sports subsidies is an argument brought up often in debates and papers regarding sports stadium funding, but I have never seen any empirical data showing this to be the case, or it not to be. I have yet to find a study on this matter, and in the absence of data all we have is our intuition.
That in mind, I'll offer an addition to that narrative. Perhaps it may be true that some entertainment dollars are spent on the local team instead of the local bowling alley, but what about people living in cities without sports teams? Perhaps they will take a vacation to another city to watch a team play. In this case they are paying for gas, maintenance on their car, (or an airplane ticket), hotels, meals, other sightseeing trips, as well as the admission to the event. In this case, these too are entertainment dollars not being spent at the local bowling alley. I find the argument that entertainment dollars would go to other local establishments hard to believe. Instead I believe they would to to sports tourism, taking their money out of the community entirely.
As far as sports teams increasing the general happiness of the population, I stand by the data that I presented. Anecdotal evidence can go either way. I for one live in Minneapolis, but I was not born here. I am originally from Wisconsin and I root for Wisconsin teams. In particular I root for the Minnesota Vikings' rival, the Green Bay Packers. Yet when I am around other fans of the Vikings, I typically find that my mood is boosted when these people are excited about the upcoming games. Additionally, I have noticed that when the Minnesota Timberwolves (one of the worst teams in the NBA the last couple years) people find a way to poke fun at the team and they get a good joke out of it.
But again, this is all anecdotal, and I would like to re-iterate a quote from my 2nd Response:
"It is also possible that hosting a franchise increases the happiness of all metro area residents, regardless of their being sports fans. Home games and rooting for a sports team provide for shared community experiences. And hosting a sports team may increase civic pride-for instance, by contributing to a sense that one lives in a "world class" city."
I am also please to find that my opponent and I agree that in the current situation, the only thing communities can do to keep their sports teams is to subsidize these stadiums. While in an ideal world, funding for stadiums would come directly from the fans, this is not the current case. Team owners expect that they can keep reaping the profits of the team, then ask for money to build new stadium. I do believe that most teams can provide all of the necessary funding for a new stadium but there is no incentive for them to do so in the current state of affairs when other communities are willing to give away vast sums of money to lure a team to their city. Until something is done at a larger level, communities are going to have to look out for themselves and the economic effects of having a team in a particular city is diminished by the capital costs of purchasing the stadium.
In veering away from this discussion for a moment, this situation is played out all over the country and in almost every community with various industries. A car manufacturer comes in and says they want to build a factory in a particular state if and only if their terms on tax brakes and other subsidies are met. These communities know that if they accept these terms, they will receive a small net benefit, but if they stand on principle, they will not have gained anything. Our communities are faced with choosing a small gain or nothing at all.
Overall, I believe that while it is unfortunate that communities are forced to subsidize their sports teams to keep them, the math works out to a positive gain for the community, and thus it is in their best self-interest to keep helping to fund sports stadiums.
I again thank my opponent for the opportunity to debate this topic.
Well done, sir. Thank you for a challenging debate and for allowing me to come face to face with my ignorance on some aspects of this issue. I'd do well to research my position more thoroughly before I jump in the ring again.
1 votes has been placed for this debate.
Vote Placed by ReptiDeath 6 years ago
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