ABSTRACT
Introduction While the previous chapter brie°y discussed private versus public funding of facilities, this chapter gives much more detail regarding the ‰nancing of sport facilities. What separates ‰nancing in the sports industry from that of other industries is the level of investment in facilities made by governments. Since fans do not want to see their teams move to other cities that do not have a major league franchise, and leagues limit the supply of franchises, local governments are often willing, or forced to subsidize the needed arena, ballpark or stadium. In recent years, state and local governments have invested billions of dollars in sports facilities, indicating that the demand is high relative to the supply of franchises created by the leagues. e public investment is sometimes raised through higher property and/or sales taxes, new taxes on the use of rental cars or the consumption of alcohol and tobacco products, taxes on gaming, or the diversion of tax revenues from a government’s general revenue fund. In at least one instance, lottery funds were used to pay for a facility and a team was given quite a favorable lease. Many regard the use of these funds as a voluntary tax, but numerous analyses have shown that lotteries shift the burden of the public sector’s investment to lower income groups (Mikesell, 2009). Some consider sports subsidies a waste of tax dollars and a result of the monopolistic powers that the sports leagues have acquired. Others point to the appropriateness of a certain level of public investment in these facilities. is public policy issue and its implications for team ‰nances is discussed in the context of a brief history of the roles assumed by team owners and the public sector in paying for, ‰nancing, and maintaining the facilities used by professional sports teams.
