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Article
Publication date: 12 September 2016

Abhinav Alakshendra

American taxpayers heavily subsidize professional sports leagues and teams through direct and indirect public funding to build professional sports stadiums. Today, the proportion…

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Abstract

Purpose

American taxpayers heavily subsidize professional sports leagues and teams through direct and indirect public funding to build professional sports stadiums. Today, the proportion of public funding to build professional sports stadiums is greater than private contribution. In last 20 years, almost all of the 100 professional stadiums opened have received some form of direct or indirect financial assistance from local, state and federal government. The paper aims to discuss these issues.

Design/methodology/approach

This paper investigates and documents most often used methods of stadium financing in recent years along with the historical shift from privately built stadiums to public funded stadiums in the span of 65 years. This paper also briefly reviews the literature evaluating the impacts of public spending for professional sports stadiums. The vast literature on the topic reveals that economists and city planners agree that public subsidy to build expensive professional sports stadiums cannot be justified on the grounds of perceived economic development.

Findings

Over the years, funding mix to build professional sports facilities has changed dramatically. Local government has been coming up with various financing strategies involving new and old instruments.

Originality/value

The findings also suggest that share of local and state government has gone up in recent years compare to federal government share.

Details

Managerial Finance, vol. 42 no. 9
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 6 July 2020

Robert Sroka

This article intends to shine a light on venue-related tax increment financing (TIF) through the first comprehensive inventory of its use at the major league level.

Abstract

Purpose

This article intends to shine a light on venue-related tax increment financing (TIF) through the first comprehensive inventory of its use at the major league level.

Design/methodology/approach

For each 2018 venue in the five North American major leagues, data was collected on TIF contributions to direct venue capital costs as well as to projects using TIF to enable real estate development ancillary to a venue. Neighborhoods surrounding a venue were also assessed for the presence of a TIF district. With both the direct and ancillary elements, data was collected from government, industry, academic, mapping and media sources. A review of this data set and findings are followed by a discussion of implications and directions for future work.

Findings

Over one-third of the TIF eligible permanent stadiums and arenas studied in the five major leagues have a direct or strong TIF connection. Direct TIF contributions to sports venues, as well as TIF use intended to generate real estate development around these venues, are most frequent and financially significant in arenas and soccer-specific stadiums. Additionally, arena and stadium projects using TIF often accompany ancillary real estate development.

Originality/value

A primary purpose of this article is to provide a previously missing general reference resource to governments and citizens of jurisdictions considering facility TIF use on the scope, nature, extent and identity of TIF projects related to major league sports venues. More generally, the inventory and assessment of TIF use in professional sports venues offered by this article sets the stage for future research on associative relationships between TIF contributions and facility finance outcomes as well as the normative value of venue-related TIF.

Details

Sport, Business and Management: An International Journal, vol. 10 no. 4
Type: Research Article
ISSN: 2042-678X

Keywords

Article
Publication date: 26 June 2018

Geoffrey Propheter

The purpose of this paper is to evaluate a number of promises typically made by owners of professional sports franchises in the USA that are also typically ignored or…

Abstract

Purpose

The purpose of this paper is to evaluate a number of promises typically made by owners of professional sports franchises in the USA that are also typically ignored or underevaluated by public bureaus and their elected principals using the Barclays Center in Brooklyn, New York as a case study. Ex post subsidy outcomes are evaluated against ex ante subsidy promises in order to draw lessons that can inform and improve subsidy debates elsewhere.

Design/methodology/approach

The case study adopts a pre-post strategy drawing on data from multiple sources over a period of up to ten years in order to triangulate the narrative and build credibility. The franchise owner’s ex ante promises and financial projections were obtained from various media including newspaper, video and interviews between December 2003, when the arena was publicly announced, and September 2012, when the arena opened. Data on ex post outputs were obtained from financial documents and government records covering periods from September 2011 through June 2016.

Findings

The franchise owner is found to have exaggerated the arena’s financial condition, under-delivered on its employment promises, and exaggerated the scope and timeliness of ancillary real estate development. Only promises of event frequency and attendance levels, measures of the public’s demand for the facility, have been met during the first three years.

Research limitations/implications

Because the evaluation is a case study, causal conclusions cannot be drawn and some aspects of the Barclays Center context may not be applicable in other jurisdictions or subsidy debates. In addition, the case study does not evaluate an exhaustive list of the promises franchise owners make.

Practical implications

Franchise owners have a financial incentive to overpromise public benefits, since subsidy levels are tied to what the public is perceived to receive in return. This case study demonstrates that the public sector should not take owners’ promises and projections of public benefits at face value. Moreover, the case study reveals that the public sector should put more effort into ensuring ex post policy and data transparency in order to facilitate benefit-cost analyses of such subsidies.

Originality/value

The data required to evaluate promises, other than economic development ones, made by franchise owners are not systematically collected across state and local governments in the USA, making large-n studies impossible. Case studies are underutilized approaches in this area of public affairs, and this paper illustrates their usefulness. By focusing on a single facility, an evaluation of the franchise owner’s less acknowledged and arguably more important promises about the facility and its local impact is possible.

Details

International Journal of Public Sector Management, vol. 32 no. 1
Type: Research Article
ISSN: 0951-3558

Keywords

Article
Publication date: 5 October 2012

James Santomier and John Gerlach

The purpose of this article is to examine selected public policy and funding issues of six New York Metropolitan Area sport venues and to discuss their implications for the future…

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Abstract

Purpose

The purpose of this article is to examine selected public policy and funding issues of six New York Metropolitan Area sport venues and to discuss their implications for the future of sport venue construction.

Design/methodology/approach

The design of this paper is a descriptive case study, which is appropriate when the question to be answered is how or why, when there is no necessary control of behavioral events, and when the study is focused on contemporary events. A systematic review of public documents and available research related to the recent development and funding of selected sport venues was conducted. In addition, a critical appraisal and financial analysis was performed on selected data collected from a variety of proprietary facility reports and public documents.

Findings

Based on a systematic examination of public documents and available research it was determined that a complex mix of local, regional, and state politics has impacted significantly the dynamics of professional sport venue development in the New York Metropolitan Area. It is also apparent that there has been a significant lack of transparency with respect to public policy. In addition, it appears that sport venue development in the entire US will experience a trend toward integration with retail, commercial, and residential real estate development that appears to be a result of political pressure and the need to rapidly recoup investment costs associated with sport venue construction.

Research limitations/implications

Because this is a descriptive case study, the findings, etc., are limited to those specific venues and public policy issues that were selected for examination.

Practical implications

This case study should provide educators and practitioners with insight into the complexity of mission critical decisions that are involved in the development and funding of sport venues. It also should provide insight into the political process related to sport venue construction and the importance of transparency in communicating with the public.

Social implications

This case study may provide educators and practitioners with insight into the relationship among public policy, venue financing, and selected social issues.

Originality/value

This case study provides original insight into the key elements of funding sport venues in the New York Metropolitan Area. It will provide educators and practitioners with a frame of reference for further examination of the development of sport venues worldwide.

Details

Sport, Business and Management: An International Journal, vol. 2 no. 3
Type: Research Article
ISSN: 2042-678X

Keywords

Article
Publication date: 14 September 2020

Michael T. Friedman and Adam S. Beissel

The purpose of this paper is to reframe analyses of stadium and arena subsidization policies from perspectives centered upon economic and financial issues toward a perspective…

Abstract

Purpose

The purpose of this paper is to reframe analyses of stadium and arena subsidization policies from perspectives centered upon economic and financial issues toward a perspective focused on broader issues of urban governance and the public purposes of sports facilities. Such assessments would provide a better understanding of whether such use of public resources represents good public policy.

Design/methodology/approach

To demonstrate this, the paper uses an integrated literature review to offer a historical analysis of sport facility development within the context of the broader assumptions that shape public policy and how sports have been used toward achieving particular public goals. This history provides a foundation for an analysis of sports facility development within the current moment as cities require team owners to invest in redevelopment activities in the neighborhoods surrounding sports facilities.

Findings

This paper asserts that focusing on the economic and financial aspects of sports facility development is a perspective that is too narrow. Instead, this paper shows that a more holistic approach, beginning with the dominant mode of urban governance and how its assumptions underlie the public purposes for which stadiums and arenas are used, provides a better explanatory framework and a deeper understanding of the issue in the contemporary moment.

Originality/value

Moving beyond the question of economic efficacy, the public purpose-centered approach of this paper seeks to place subsidization policies into a broader dialog with other priorities toward maximizing the public good among the broadest population.

Details

International Journal of Sports Marketing and Sponsorship, vol. 22 no. 1
Type: Research Article
ISSN: 1464-6668

Keywords

Article
Publication date: 12 September 2016

Joel M. Potter

The purpose of this paper is to review the economics literature of publicly subsidized sports stadiums and mega-events. Let it be noted, however, that the author was unable to…

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Abstract

Purpose

The purpose of this paper is to review the economics literature of publicly subsidized sports stadiums and mega-events. Let it be noted, however, that the author was unable to find any substantial economics literature in terms of how publicly funded stadiums and events affect income and wealth inequality.

Design/methodology/approach

This paper was designed for coherent legibility with the intention of reviewing economic literature on the effects of publicly funded sports stadiums and events. However, upon investigation it was found that there is a surprising dearth of relevant literature pertaining to the implications of publicly funded stadiums and sports events and their effects on income and wealth inequality.

Findings

Although the author discovered research performed by non-economists, they were unable to find research wherein economists explicitly investigate the impact of stadium subsidies on income and wealth inequality.

Social implications

The social implications of publicly funded sports-related constructions and events, though surprisingly under-reported by economists, can be startlingly extensive in terms of sheer numbers. In all, 1.5 million individuals were purportedly displaced in order to make room for the 2008 Summer Olympics in Beijing. In total, 250,000 people were likewise forced to move in order to accommodate the 2014 World Cup in Brazil. These numbers warrant further investigation by economists.

Originality/value

The author was unable to find any literature pertaining to the effects on income or wealth inequality of publicly funded sports stadiums and mega-events. This review would therefore appear to be unique.

Details

Managerial Finance, vol. 42 no. 9
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 2 September 2020

Timothy Kellison and Madeleine Orr

Severe hazards associated with climate change are threatening human settlements, thereby requiring global cities to implement comprehensive climate adaptation strategies. For…

Abstract

Purpose

Severe hazards associated with climate change are threatening human settlements, thereby requiring global cities to implement comprehensive climate adaptation strategies. For sports organizations, adaptive measures may include designing and constructing new stadiums. In this study, the authors explore climate change as a vehicle for urban transformation, particularly as it relates to the replacement of existing stadiums with new, more sustainable and resilient venues.

Design/methodology/approach

The authors employed a collective case study approach focusing on three recent cases of stadium replacement: Globe Life Field in Arlington, Texas; Oakland Ballpark in Oakland, California; and Marlins Park in Miami, Florida. These cases were selected because an official representative of each team made explicit references to some form of climate adaptation, though each ballpark faces a distinctive climate-related threat.

Findings

Each of the cases illustrates the various ways in which climate vulnerability may be deployed by teams and policymakers to replace professional sports stadiums. Although all three examples involved the replacement of an existing ballpark, only in the Texas case was climate adaptation openly cited as the primary reason for stadium replacement. Still, ballpark replacement plans in Oakland and Miami included significant and costly design features to protect the stadiums from extreme weather events.

Originality/value

This study applies the concept of climate vulnerability to illustrate a potential strategy to justify stadium replacement. As cities and metropolitan regions continue to grapple with the grand challenge of climate change, the associated vulnerability of large public assembly facilities such as major sports stadiums – particularly those prominently situated in urban centers – can no longer be ignored.

Details

International Journal of Sports Marketing and Sponsorship, vol. 22 no. 1
Type: Research Article
ISSN: 1464-6668

Keywords

Book part
Publication date: 30 July 2020

Kyle S. Bunds, Christopher M. McLeod and Joshua I. Newman

The purpose of this chapter is to adopt and demonstrate the value of a political ecology approach in examining sport stadia, particularly stadia in the United States. We attempt…

Abstract

The purpose of this chapter is to adopt and demonstrate the value of a political ecology approach in examining sport stadia, particularly stadia in the United States. We attempt to highlight how in the development of stadia key decision-makers sometimes overlook questions of community and environmental health and security.

We took an ontological approach in considering what it means for the stadium to exist in the current political ideological time period. For us, this meant raising questions about how we understand the varying human and nonhuman components of the stadium, and how they connect and influence one another. From there, we outline why political ecology is a useful framework for examining the environmental costs of stadia and their development. We utilize the city of Detroit's decision to provide funding for Little Caesars Arena – home to professional basketball and hockey competitions – to argue that investment in sport stadia creates environmental opportunity costs to the “host” community.

In the case of Detroit, we argue that private economic gain took precedence over community and environmental health and security when decisions were made on infrastructure. Specifically, despite the city going through bankruptcy and locking citizens out of water, the decision was made to provide millions of dollars for the construction of Little Caesars Arena and the development of the land immediately surrounding the arena. Through this, we suggest the need to produce informed case studies surrounding the environmental consideration.

The focus on community and environmental health and security is lacking from the discourse of stadia development in the United States. This chapter seeks to bring this consideration to the forefront by offering a way to examine these issues from a political ecological standpoint, and we urge researchers to conduct case studies using a political ecological framework with a community focus.

Article
Publication date: 9 May 2016

Nola Agha and Daniel A. Rascher

The purpose of this paper is to understand why some sports show a positive economic impact and other sports do not, and to identify a common set of explanatory factors explaining…

Abstract

Purpose

The purpose of this paper is to understand why some sports show a positive economic impact and other sports do not, and to identify a common set of explanatory factors explaining the differences.

Design/methodology/approach

This explanatory research reviews the economic impact literature to identify the underlying conditions that would theoretically allow any sport, large or small, to generate positive economic effects.

Findings

Nine conditions are identified that, when present, could allow a community to experience a positive economic impact from a team or stadium. These are then used to explain the discrepancy in known empirical outcomes in major and minor league baseball (MiLB). It appears as if major league teams are more likely to violate the conditions than minor league teams. This research finds theoretical support for previous suggestions that smaller teams and events may be beneficial to local economies. In doing so, it also explains previous empirical results that found some MiLB classifications are associated with positive gains in per capita income.

Practical implications

Stakeholders can use the nine conditions to understand expected economic impact of their relevant sports. This research provides a comprehensive guide to understanding when economic impact can be positive.

Social implications

This research helps explain some of the existing controversy regarding economic impact analysis.

Originality/value

It is the first research to help provide a pre-set of conditions that can help predict whether positive economic impact will occur for specific sports teams or stadium projects.

Details

Sport, Business and Management: An International Journal, vol. 6 no. 2
Type: Research Article
ISSN: 2042-678X

Keywords

Article
Publication date: 6 June 2019

Christian Gjersing Nielsen, Line Bjørnskov Pedersen and Rasmus K. Storm

The purpose of this paper is to examine citizens’ willingness to pay (WTP), in relation to having a professional first-tier football club in a medium-sized Danish municipality…

Abstract

Purpose

The purpose of this paper is to examine citizens’ willingness to pay (WTP), in relation to having a professional first-tier football club in a medium-sized Danish municipality, when tangible economic benefits such as economic growth and/or inbound migration produced by these are absent.

Design/methodology/approach

Using the contingent valuation method on survey respondents, the study examines factors affecting WTP using binary logistic regression and interval regression and further extrapolates the WTP from the sample to the municipal population.

Findings

Citizens significantly value having a first-tier football club in their municipality even when tangible benefits are absent, although a large proportion of respondents stated to be against the municipality being financially involved in professional team sports clubs (PTSC). WTP is largely driven by interest in sports and the local football club. It is argued that the findings cannot be generalized across contexts.

Research limitations/implications

There can be circumstances where public subsidy of PTSCs is beneficial to economic welfare. However, authorities should be careful in their evaluation of whether to subsidize PTSCs.

Originality/value

The study expands on existing research by informing respondents about the lack of tangible benefits produced by PTSCs, hereby focusing on WTP on an informed basis.

Details

Sport, Business and Management: An International Journal, vol. 9 no. 3
Type: Research Article
ISSN: 2042-678X

Keywords

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