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Introduction
Sports stadiums often are promoted as effective tools to bring economic development. Arguments in favor of this proposition are usually job creation and increase in demand for services such as restaurant and hotels, etc. However, the actual impact is debatable (Coates and Humphreys, 2008). This debate has gained prominence because of significant changes that have taken place in the ways we are now financing sports stadiums. Also, level of public spending on professional sports stadiums has also gone up multifold (Zimbalist et al. , 2006). President Obama's 2016 budget is very critical of public money spent on building sports stadium. In last three decades, tax-exempt bonds have raised $17 billion to facilitate construction of stadiums across the country. According to US treasury, tax exemption alone on municipal bonds issued for sports infrastructure cost $146 million a year and taxpayers subsidy to bond holders would be about $4 billion at the maturity of all the bonds issued since 1986 (Kuriloff and Preston, 2012).
It is important to understand how stadiums are financed and how the strategy has changed in last several decades before we move to another important question of he sustainability and the benefits of the public subsidy stadiums receive. Stadiums are now constructed/refurbished using exclusively private funds, public funds, and private-public partnerships. In the last 100 years or so, all three funding strategies have been extensively used.
Private funding
Private funding is the most straightforward and non-controversial way to fund construction of professional sports stadiums. This funding strategy was the norm before 1953. Professional teams would raise their own money either through profits, borrowings, or mix of both. In 1980s stadium construction cost soared due to high demand for bigger and luxurious stadiums equipped with modern amenities. Since then, average age of stadium has significantly declined, many stadiums were forced to retire early in favor of new super stadiums (Zimbalist and Noll, 1997). There are now multiple billion-dollar stadiums in the country (MetLife Stadium, Yankees, Levi's, etc.) and many more in the construction or planning phase (Vikings and Falcons Stadium). Post 1953, share of stadiums built using private funds started shrinking (Long, 2005) mainly due to new found notion of government that sports team can bring economic development and create new employment in...