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“As Stadiums Vanish, Their Debt Lives On”

2010 September 8
by Skip Sauer

Ken Belson digs into the financial legacy of the Meadowlands Sports Complex in today’s New York Times.  In short, it’s a money loser, with $266 million in debt for which the citizens of New Jersey are liable.  At the current rate, they’ll be paying off $35.8 million per year until 2025.

The story is accompanied by a graphic with informative tables on stadium costs, public subsidies, and public debt.  As Belson notes, “The finances of public authorities are often murky. To determine that the RCA Dome in Indianapolis, which was demolished in 2008, has $61 million in debt remaining and will not be paid off until 2021, one must sift through 700 pages of bond documents.”

A well known proposition in the field of public choice is that politicians deliver current benefits with hidden future costs.  The story of stadium finance fits this model quite well.

2 Responses
  1. Greg Pinelli permalink
    September 8, 2010

    A previous discussion concerning the financial land mines Mega Events like the Olympics and the World Cup lay down ties in with this issue. It’s really another case of privatizing benefits..and socializing the costs, expenses and realities of ownership.

    If sports teams want stadiums let them build them on their own dime…it’s pretty clear they won’t so easily walk away from them for better deals if they do. The 49ers are ready to start construction in 2011 of a very expensive new facility in Santa Clara…amid the usual bogus announcements of all the benefits and jobs it will bring.

    Candlestick isn’t great and represents a real traffic issue..all of 10 times a year! Inside it’s got a great turf field and a lot of very good, inexpensive seating. So for about a billion bucks they move to Santa Clara…ticket prices go much higher..amenities are more expensive..and Candlestick sits and largely rots away..Though the costs of keeping it habitable or tearing it down are very substantial.

    Welcome to subsidy and ripoff land..where every city gets to delude themselves that their interests and those of teams and owners are aligned!!

  2. September 8, 2010

    @ Greg Pinelli

    Absolutely right. The costs of these more often outweigh the benefits for a city. I don’t know all the financial details about the SF Giants stadium built, but wasn’t that mostly privately funded? I was under the impression it was. So where is the accountability on other teams in all sports to create mostly privately funded stadiums?

    I think they did get the land much cheaper than otherwise it would have gone for, so there is an opportunity cost there. But given it is opportunity cost, I think we can look at that in a different light. They’re still paying their own bill. And doing it just fine that way. Are stadiums/land/etc. just too expensive now for them to be privately funded?

    Regardless, to your point, the fact of the matter is that stadiums are being done away with for new, shiny ones just because its the trend. No teams really NEED new stadiums to the point that public funds should come in to play. And I’ve been in and out of Candlestick plenty. The stadium is just fine; nothing some renovations couldn’t take care of over time (see Dodgers Stadium).

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