Academic journal article Boston College Law Review

Playing a Man Down: Professional Sports and Stadium Finance-How Leagues and Franchises Extract Favorable Terms from American Cities

Academic journal article Boston College Law Review

Playing a Man Down: Professional Sports and Stadium Finance-How Leagues and Franchises Extract Favorable Terms from American Cities

Article excerpt

INTRODUCTION

Professional sports occupy a unique place in American culture, constituting one of the bedrocks of American civic identity.1 It should come as no surprise, then, that when sports franchises relocate, it feels as if their host cities lose a portion of their civic identity.2 Today, it seems like a new franchise threatens to leave and rip the heart out of its loyal fans more frequently than ever.3 When this occurs, it is often the taxpayers who are left out to dry, as they are bereft of their sports franchise and often stuck with the stadium bill.4

Despite the perils of franchise relocation, and the tremendous investment in both physical and emotional capital required to support a team in the National Football League ("NFL"), National Basketball Association ("NBA"), Major League Baseball ("MLB"), or National Hockey League ("NHL"), sports fans and cities alike crave the benefits that a professional franchise can bring.5 The costs associated with developing a stadium attractive enough to lure a franchise, however, are tremendously high; for example, the public contribution to U.S. Bank Stadium, the new home to the NFL's Minnesota Vikings, will total nearly $500 million.6 The stadium construction costs are not the end of the story, however, as there are the additional costs of developing the surrounding infrastructure as well as social costs imposed on surrounding communities.7 Moreover, the cost of a new stadium increases each year due to the stadium "arms race" taking place among franchises.8

There are additional challenges inherent in the development of any project requiring the land and resources of a stadium.9 Eminent domain and the takings power issues are particularly thorny when, arguably, the primary benefits of sports stadia flow to the private team and owner.10 These same concerns emerge when considering whether the state should aid in the financing of stadium construction projects when the financial benefits flow primarily to wealthy players and owners while the costs are borne by the average citizen who may never see the inside of the stadium.11 Furthermore, any federal efforts to address the inherent challenges of financing a new stadium face competing interests.12 On the one hand, courts and federal statutes are generally deferential to state and local government policy, particularly where it concerns taxation or specific projects such as stadium construction.13 On the other hand, states and municipalities routinely cut deals that appear less than desirable to the local taxpayers and the federal government has previously implemented tax changes that have had dramatic impacts on how states and municipalities spend and raise money.14 Further, in just this past year, the federal tax benefits awarded to national sports leagues have come under renewed scrutiny by President Trump and the Republican controlled Congress.15

This Note provides an overview of the most common costs associated with financing a stadium and the methods of financing available.16 Part I of this Note discusses the various methods of private financing available in the construction of stadiums and provides a brief overview of their advantages and disadvantages.17 Part II discusses the mechanics of how municipalities help finance stadium construction projects.18 Finally, Part III evaluates the various methods of combatting or addressing issues with the public financing of stadium construction.19 Part III also evaluates the proposed solutions to the public subsidization of stadiums and considers various leasing methods for protecting the taxpayer from "franchise free agency" and insulating municipalities from the infrastructure and construction cost overruns that are frequently associated with their construction.20 Further, the Note considers what role the federal tax policy ought to play in promoting or discouraging certain methods of finance.21

I. PRIVATE FUNDING

The owners of professional sports franchises are the most immediate source of funding for the construction of professional stadiums. …

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