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Full Count: The Real Cost of Public Subsidies for Major League Sports Facilities Author: Judith Grant Long Dissertation School: Harvard University Pages: 549 Publication Date: May 2002 Availability: Access Number: 10753 Abstract: The real cost of public sports facilities is significantly higher than popularly reported, and as a result, governments and taxpayers underestimate the magnitude of their financial commitment. Specifically, land, infrastructure, the ongoing public costs associated with the operation of the facility, and forgone property taxes are routinely ignored. For each of the 99 facilities in-use for the 2001 season for the "big four" major league sports, I calculate the present value (PV) of the total public subsidy including public development costs (maintenance, capital improvements, and municipal services) net of annual public revenues (rent and other revenue sharing as specified in the lease), and forgone property taxes, over an average 30-year lifespan, discounted to 2001. I construct two measures of variation: total public subsidy (expressed as a percent) to demonstrate that there is indeed significant variation in deal outcomes across jurisdictions. I find that the real cost of public subsidies is underreported by an average of $51M per facility, representing a 40% increase in the total public subsidy. Whereas industry sources report an average public subsidy of $125M per facility based on a total development cost of $222M, I estimate that the real total public subsidy is $175M. Across all 99 facilities, I estimate the total value of the underreported public subsidy to be $5 billion. The impact of adding these unreported costs is to increase the average public share of total development costs from 56% to 79%, and increase of 23 percentage points. |
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