Stadium Funding: How It’s Done

stadium fundingUnderstanding stadium funding

Stadium funding has become a controversial topic, especially among taxpayers, due to the burden is often placed on them and their preference that someone else foot the considerable bills.

Private vs. public: Paying for a stadium

Professional teams’ facilities are expensive, both through construction and afterward. Funding can essentially be split into two categories: private and public. Whom the bigger burden falls on often depends on the location of the stadium. In recent years, however, there have been pushes to ease the financial stress that public funding can have on taxpayers. These individuals generally would be pleased to keep their beloved football, baseball, hockey or basketball organizations in their hometowns, but the cost of doing so may be too much and they are left to wonder, “Why are we paying for this?”

The Obama administration’s 2016 budget includes a provision which aims to ease the burden on taxpayers by eliminating the use of tax-exempt bonds to finance professional sports facilities. These bonds are typically paid back by cities and states over the course of several years through a series of levies. Purchasing investors, meanwhile, don’t pay taxes on their income, making these tax-exempt bonds a more affordable way to get sports facilities built. However, they have also led to taxpayers covering large chunks of stadium funding costs.

Who funded stadiums built in the last 18 years?

A Conventions, Sports & Leisure International study broke down NFL stadium funding from 1997 to 2015. For example, it noted that the $1.6 billion total cost of MetLife Stadium was covered completely by private funding. However, the Tampa Bay Buccaneers’ Raymond James Stadium, built in 1998, was publicly funded, with a price tag of $194 million, with the money coming from a 0.5 percent county sales tax increase, tourist revenue, a state sales tax revenue bond and investment income.

Seven of the eight stadiums built from 1997 through 2001 were mostly covered by the public, ranging from 100 percent for the Buccaneers’ facility to 61 percent for the Pittsburg Steelers’ Heinz Field, built in 2001. Meanwhile, only half of the stadiums built from 2002 through 2015 were built using majority public funding, and none were 100 percent covered by taxpayers. Since the start of 2002, the largest percentage the public paid to cover an NFL stadium was 81 percent, for the Indianapolis Colts’ Lucas Oil Stadium. This facility was covered by a 3 percent Marion county hotel tax increase, a 2 percent county car rental tax increase, 1 percent increases to admissions tax and restaurant taxes in Marion county and six surrounding counties and Colts license plate sales.

However, year-to-year, who funds sports facilities seems to be more random, possibly due to local regulations and regional preferences. If tax-exempt bonds are actually eliminated from sports facilities funding budgets, the burden will likely shift more to private investors.

If you want to learn more about who is funding stadium construction or renovation in your state or city, speak with an experienced sports law attorney for information.

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Anthony R. Caruso is a business transactional attorney in New York and New Jersey with experience in structuring, negotiation and completion of legal deals involving business, entrepreneurs, athletes and performers.

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