Municipalities thinking of funding a new sports stadium should make a critical demand: “Show me the money!”

April 2, 1997

ANN ARBOR—Proposals for new sports stadiums generate plenty of excitement, but is that all they generate? Or can new stadiums be good for the area economy?

“New sports stadiums can have a positive effect on economic development but frequently they don’t because so many variables have to come together for the project to benefit the public as well as the franchise,” says Robert L. Dunn, research associate and project administrator at the University of Michigan Sports Facilities Research Laboratory. “Policy-makers and media should examine economic impact studies assembled by stadium advocates with a close eye. ‘Show me the money!’ should be their motto.” Dunn also is a Ph.D. student in urban, technological and environmental planning.

“A stadium is just one piece of a total community revitalization or identity process,” he adds. “Municipalities should make stadium decisions based on how the stadium will affect quality of life in the community and community identity, but they also must judge a stadium’s capacity to lure new business to locate within the community.”

Dunn lists key issues for policy-makers to consider:

—Are the public/private ratios of responsibility for construction costs and infrastructure costs reasonable?

—Will the stadium really generate new jobs or will it just transfer existing jobs from an existing stadium to a new location in the community? “Keep in mind that most of the jobs associated with the facility will be low paying, part-time positions,” Dunn cautions.

Also, will the stadium increase revenues for surrounding restaurants and shops or will the stadium provide its own eating and shopping facilities, which will compete with the surrounding neighborhood?

—Is the projected “increase in attendance” estimate realistic, and does it incorporate the “honeymoon” effect—the tendency for attendance to plateau or slip after five or six years?

—If the new stadium is publicly owned, will the tax revenues generated from the franchise and from surrounding businesses cover project costs, let alone compensate for the loss in property taxes?

—Is it realistic to include a “multiplier” on income projections, especially over a 20- or 30-year span? How much faith should be put in the multiplier effect, which assumes that each dollar expended on the stadium will generate X dollars in income annually to the franchise and to businesses in the surrounding area.

—If the stadium is a football stadium with a 10- or 11-game schedule, will income from other events continue to generate revenues year round?

—Will the social and historical benefits that accrue to a town with a beloved home team compensate for lost tax revenues or lost opportunities—public projects that would have been funded if not for the stadium costs?