Can A New Professional Sports Stadium be a Benefit to a City

Can A New Professional Sports Stadium be a Benefit to a City? Charles White COM215 Caryl Rahn March 10, 2008

Can A New Professional Sports Stadium be a Benefit to a City

Introduction In the modern world of today it is not uncommon for city residents to foot, at least a portion, of the bill for new sports stadiums. How these stadiums are funded is a sharply debated topic. Are new professional sports stadiums truly costing the citys residents or do the benefits outweigh the costs? Arlington Stadium Texas Professional sports stadiums are a huge expense that team owners are not willing to bear themselves. For example, the new football stadium for the Dallas Cowboys in Arlington Texas is estimated at $1.1 billion dollars (Pizzigati, 2007). Owners are more and more trying to push some of this cost onto tax payers. The city of Arlington will foot about one third of the cost (Pizzigati, 2007). This was approved by referendum vote. How would residential property values be affected? There have been many studies done on this subject and the results very tremendously. In the case of the Dallas Cowboy stadium there was numerous announcements on the proposed locations. Contemporary Economic Policy journal points out, These announcements provide a quasi-natural experiment to test whether the announcement that a stadium might be built in a particular area has any immediate impact on sales price of residential property (Dehring, Depken, & Ward, 2007). They find that just an announcement of the stadium being built in an area does indeed lower values. To offset these additional costs, cities typically raise taxes to raise the funds for their contribution to the stadium. In this case city officials decided rather than raising property taxes, they would tax the very people that the stadium would draw. The city targeted sports fans and

Can A New Professional Sports Stadium be a Benefit to a City Tourists to foot the bill. They did this by increasing the local sales tax by a half cent, local hotel tax by 2 percentage points, and increase Arlington based car rental taxes by 5 percentage points to finance the citys contribution to the stadium (Dehring, Depken, & Ward, 2007). All three were put to a vote by the residents and passed at 55% to 45%.

Economic and amenity effects are also part of the final equation. Though a little harder to quantify, they are there. The study Dehring, Depken and Ward did included factors for them. After all the numbers were crunched, they found that the general amenity effect in the city of Arlington is not distinguishable from zero. There are many opponents to Arlington providing funding of any kind to build a new sports stadium. Opponents site decreased property value, higher sales tax and putting money into the owners pockets. They feel that the owner gains all the benefits and the city gains very little.

Conclusion Is a new professional sports stadium a benefit to the host city? There are many schools of thought on the subject, but as we have discovered here, it may depend on how it is approached. The cost is large, more than $345 million dollars; the impact on the community is large. There are many people on both sides of the debate. But the fact, at least in this case, speak for themselves. The residential property values will decrease slightly, and taxes on day to day items will go up. The largest burden will be carried buy the very people that will be drawn to the area by the sport stadium, tourists and sports fans. They will shop and eat in the area; they will stay in hotels and rent cars. All of these will provide additional taxes.

Can A New Professional Sports Stadium be a Benefit to a City These tax dollars will service the bonds and provide for additional amenities which will raise residential property value and put us back to a zero net effect overall on the residents. The study conducted by Dehring, Depken and Ward proves that in this case the net effect for the residents will be zero.

Can A New Professional Sports Stadium be a Benefit to a City

References Dehring, C. A., Depken, C. A., & Ward, M. R. (2007). The impact of statium announcements on residential property values: Evidence from a nateral experiment in Dallas-Fort Worth. Contemporary Economic Policy , 627. Pizzigati, S. (2007). Outrage in the owners box. Multinational Monitor , 46.