Transcript STADIUM ECONOMICS: SHOW ME THE MONEY!!

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Stadium Trends
Arguments for Public Funding of Stadiums
Arguments against Public Funding of Stadiums
The Dollar Value of A Fans Pride
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Who should pay? Fans Vs. Non-fans
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In 1950, most pro-sports teams played in
privately owned stadiums or arenas
Most pro-football teams were the tenants of
pro-baseball teams & played football games
around the baseball schedule
All pro-hockey teams played in private arenas
Many pro-basketball teams played in college
arenas & played their games around the
collegiate schedule
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In the 1990’s U.S. cities spent $5,298m on 57 new
venues in the four major pro sports (NFL, NBA, NHL,
MLB).- Depken (2003)
Public contribution averaged $218m each (approx.
66% of cost)- Depken (2003)
 Average capacity of all new arenas: 35,727
 Average total cost per seat:
$6,613
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Average public cost per seat:
$4,534
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Reliant Field (Houston)
 Capacity: 69,500
 Cost: $449 Mil
 Public Money: $309
Mil
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Ford Field (Detroit)
 Capacity: 64,355
 Cost: $500 Mil
 Public Money: $125
Mil
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Gillette Stadium (New
England)
 Capacity: 68,800
 Cost: $397 Mil
 Public Money: $72 Mil
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Seahawk Stadium
(Seattle)
 Capacity: 67,000
 Cost: $360 Mil
 Public Money: $300
Mil
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Indirect Benefits (Benefits not accruing to the
team)
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The Multiplier Effect (Money keeps being
Spent)
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Job creation in the stadium/downtown area
due to team & stadium related activities
A pro-team will attract more
corporations to the area because of the
“Major League” image of the city
Community service by players
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Direct Benefits (Benefits to the team & the fans)
 Team can afford better players & contend for a
championship
 Enhances civic pride from living in a major league
city
 Entertainment value for the fans
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Academic studies find that:
 The multiplier effect is overestimated in
studies by consultants hired by teams seeking
new stadiums.
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Its hard to get an accurate number
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Stadium moves not only increase revenues
through higher prices and attendance but
lower costs through favorable rental
agreements (money that goes to the city).
Most rental agreements provide attendance
based rents. This shifts the risk to the
landlord (usually the city).
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The typical pattern in baseball stadiums is
one in which the stadium gets most or all of
the revenue from parking.
Teams get most or all of the revenue from
the sale of programs & novelties and food
and drink revenues are split between 1/3
and ½ with the rest going to the team.
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Millions
New MLB Stadiums & Attendance
1990-2000(Depken, 2003)
3.5
3
2.5
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1.5
1
0.5
0
2.18
3.01
2.04
Average Annual Attendance
MLB Average
New Stadiums
Old Stadiums
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New MLB Stadiums & Win%
1990-2000 (Depken, 2003)
650
600
550
500
450
500
543.52
492.51
400
350
Team Win Percentages
MLB Average
New Stadiums
Old Stadiums
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New MLB Stadiums & Ticket
Prices 1990-2000 (Depken, 2003)
Millions 2000 Dollars
60
50
40
30
20
41.058
53.088
38.987
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0
Team Payrolls
MLB Average
New Stadiums
Old Stadiums
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Millions 2000 Dollars
New MLB Stadiums & Profits
1990-2000 (Depken, 2003)
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10
8
6
4
2
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13.343
2.161
3.803
Team Profit
MLB Average
New Stadiums
Old Stadiums
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Why do we keep building new
stadiums with Public Funds?
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Who should pay for the new
stadium?
• The City?
• The Team?
• Private Sector?
• Combination?
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Personal Seat Licenses
Personal Seat Licenses (PSLs) are a
relatively new stadium revenue idea, which
involve a separate investment by
ticketholders to secure the right to
purchase seating at the facility.
 It has become an effective and popular
method to finance new stadiums and
arenas, and in some cases, it also serves as
an investment to those who participate.
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PSL Cont…
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PSL's are an option to generate revenue
from individuals making a one-time
investment with little or no expectation
of future returns.
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Why Buy One?
Fans in new markets are willing to pay a
premium just to buy a seat.
 PSLs give fans the lifetime right to
purchase season tickets and can cost
$25,000.
 In some ways these licenses resemble
stock sales. Why?
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Why?
You purchase the seat license at a lower
price when the new stadium is built.
 If the team does better, you could sell it
to someone else at a higher price.
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◦ Your seat can change in value
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It also guarantees you a ticket to every
game (like season tickets), that you get to
keep year after year.
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What kind of stadium would you like to see
built? A dome, by water, in the city?
It also must be "green, high-tech, and
humane".
How many will it seat?
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Designing a sports stadium involves
figuring out a remarkable number of
details.
How much space is needed for the playing
field, seats, bathrooms, parking, food service,
accessibility, HVAC, elevators, speakers, TV
monitors, and emergency exits?
 What construction materials are best?
 Safety, economics, and environmental impact
play a large part in design and construction.
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Build a model. Choose the scale for your
model. How big will it be?
Figure out the size of the playing field and
other areas. Construct an outer shell
using recycled boxes or other materials.
Add features such as a retractable roof or
sliding entrance made with construction
paper.
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Figure out the cost to build your stadium.
The turf in one stadium cost $1.5 million.
Research who pays for new stadiums and
how the money is collected.
A stadium takes up huge tracts of land and
the location can affect its success. Often
neighborhoods where people live are
proposed sites of new stadiums. Debate the
pros and cons of construction of a stadium.
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Examples
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Dimensions for Baseball
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New Stadiums
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 Dallas Cowboys
 Washington Nationals new stadium Tour
 New Yankees Stadium Video
Extra Info and Sources
• PSL Article
• Crayola Design Stadium Lesson Plan
• Examples
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