Academic journal article Public Administration Quarterly

Old before Their Time: The Shortened Lifespan of Professional Athletic Venues and Its Implication for Public Subsidy

Academic journal article Public Administration Quarterly

Old before Their Time: The Shortened Lifespan of Professional Athletic Venues and Its Implication for Public Subsidy

Article excerpt

ABSTRACT

A growing body of popular and academic literature indicates that local and state taxpayers may experience significant losses through the subsidy of professional sports facility construction. Communities seldom reap the economic benefits promised by city and state officials in terms of improved economic conditions in their communities, particularly in distressed areas. This article focuses on one aspect of proposed sports facilities: the contracting life-cycles of sports complexes and how this impacts the projected financial viability of new facilities. The authors examine financial projections and assumptions from The Core States Spectrum 2 (Philadelphia) in light of this heightened obsolescence with lessons for the current state of sports facility construction. Experience from Spectrum 2 and elsewhere suggests that public finance experts need to explore "technological obsolescence" and its implications for fixed asset accounting.

INTRODUCTION

Taxpayers may enjoy the professional sports events they attend but seldom reap financial awards from the sports arenas and stadiums they help to finance. A growing body of scholarly and popular literature suggests that the multi-million dollar subsidies for newly constructed sports facilities will not result in a net financial gain for the donor community.

1) Sports franchises--particularly those outside of major tourist hubs--seldom provide boosts to their local economies;1 2) Jobs created in the Standard Industrial Classifications related to sports franchises and ancillary hospitality operations are low-wage, deadend positions; 3) Revenue projections from the sports arenas and auxiliary operations are grossly overstated and result in the need for higher than planned subsidies (Blade, 1996); 4) Downtown facilities have seldom provided the catalyst for redevelopment promised by their backers; indeed, some facilities may actually hinder rather than facilitate redevelopment (Laing, 1996); 5) Sports facilities construction may "crowd out" other critical infrastructure needs (Sanders, 1995); and 6) Public subsidies are often directed at wealthy franchise owners and/or broadcast companies that could finance their venues without public support (McGraw, 1996a).

Many of the newly built sports venues have been constructed as a result of intense competition between jurisdictions for the attraction and retention of franchises. This competition is an integral part of the American scene. As Timothy Bartik (1991 notes in Who Benefits from State and Local Economic Development, the Founders blessed us with a competitive federal order that fosters citizens' choice of service delivery and lifestyle on the domestic front and keeps us competitive in international trade. Team owners, like citizens, can "vote with their feet" and pit one jurisdiction against another to find markets and public subsidies that suit their financial needs (Johnson, 1983).

Unfortunately, this form of economic competition does not preclude jurisdictions from occasionally engaging in negative sum activities that may be to the detriment of their long-term economic well-being (Johnson, 1993; Raimondo, 1992). Publi subsidies of sports facilities that fail to deliver their promised economic benefits are an example of this phenomenon. Elected officials may be aware of the fact that sports franchises are dubious economic catalysts for their economies but compete for franchises to bolster feelings of "major league status" among citizens and corporate officials (McGraw, 1996a; Laing, 1996).

Phoenix and Dallas, for example, have recently convinced NHL franchises in Winnipeg and Minneapolis to relocate in efforts to move into the elite ranks of metropolitan areas with franchises in all four major leagues. Justification for Philadelphia's support of Spectrum 2 was in part an effort at "keeping Philadelphia as one of only two cities in America that are the home of all four major professional sports" (Commonwealth of Pennsylvania, 1994:41). …

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