Publicly Financed New Sports Facilities: Are They Economically Justifiable? A Case Study of the Los Angeles Staples Center
33 Pages Posted: 11 Aug 2006
The last twenty years have seen an unprecedented growth in the number of new sports facilities for professional sports teams. This incidence has been matched by an equally extraordinary trend of state and local governments providing public financing to help build such facilities. This article analyzes this burgeoning area of urban economic redevelopment and attempts to answer the controversial question of whether the public financing of new sports facilities is economically justifiable. The article dissects the real estate and financial deals between state and local governments and the professional sports teams and developers, and critiques the alleged benefits that advocates say redound to the governments that invest in such buildings. The article also contextualizes the decisions of state and local governments in helping to finance the construction of new sports facilities through larger economic development theories. The article provides a case study of the Los Angeles Staples Center, one of the more successful and economically justifiable publicly financed new sports facilities. Through this analysis, the article concludes that publicly financed sports facilities are rarely justifiable for governments, but that in certain, limited circumstances - like that of the Los Angeles Staples Center - such deals can be crafted in a manner to justify, to some degree, the public investment in a new sports facility.
Keywords: Sports, Stadium, Public Finance, Economic Development
JEL Classification: L83, H7, H71, O1, O18
Suggested Citation: Suggested Citation