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Economic Impact Of A Sports Facility

Before a facility’s economic impact can be determined, a feasibility study should be done to excite the community members about the facility. The purpose of a feasibility study is to “provide research information about the community, special interest groups, and its use as a decision-making tool in the community” (Farmer, Montgomery, Ammon, Jr. 12). In essence, this study is done to assure the community that building a sports facility is right for them and that their money will not go to waste. It also lets them know why their area is the most feasible for the facility. It also gives them non-economic influences such as civic pride in their team. If they have more than just economic reasons to approve the stadium, they will not need that much more influence to vote yes.

The main points of the study should include estimated economic benefits to the owner of the team and facility, the short-term costs along with term costs, and cultural or economic loses and benefits to the community. The cost of the study usually runs about $.08 per person in the community. (E.g. 75,000 people = $6,000 cost) When doing these studies, the city offices need to hire outside firms and specialists such as accountants and economists. These people will bring credibility to the studies, which will look good to the people in the community. The weakness with hiring these outside firms is that they are in this for themselves and may not understand what you are trying to do. If they do not understand how this is intended to be a positive influence on your residents, they may not focus on the positive points as much as the officials would like.

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When the financing of the facility needs to be determined, it forces the city officials to put together where the money they need is going to come from. They can take from the community, take from the owner of the teams, or hire an entirely new owner for the building. Before a facility is built, there may be a need to schedule dates for events in advance and collect deposits to help pay for the construction. By attracting a prime tenant immediately, many dates on the calendar will be filled, and attracting a prime tenant immediately will put a nice sum of money into the development funds for the facility. Also, setting dates for other events can contribute to the facility funding. This will be beneficial when figuring out the financial part of the study. The key elements in these studies are that first, the mission of the project needs to be clear and direct. For the people to understand where the study is going, they need to know what the study is all about.

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Next, it must be clear on who will be making the money and where will it be going. If the revenue of this facility goes to the owners and the players, there is no benefit to building a facility in the community. The people must have some benefit other than tourism. Third, is the facility appropriate? Fenway Park being built in New York would be a horrible fit due to the rivalry with the New York teams. The community should want to have the team and facility before the building begins. Fourth, will the facility be large enough to hold the fans, or will it be too big? The size of the facility needs to be precise with the number of interested fans in the area and tourism in that part of the year. Finally, will the facility be able to hold a variety of events? If a facility can only hold one event, it will be more difficult to bring money back into the community.

Estimated revenues for the facility do not have to come strictly from the community. Luxury seating and Personal Seating Licenses can be purchased before the final product is built. This is where most of the revenue will come from when it is complete. This way, it seems as though the taxpayer is paying less if the money is going into the facility now rather than later. Naming right for the facility can also make large contributions upwards of around $5 million a year, and that usually spans over a twenty-year period. Public stock, concessions companies using the facility, and parking companies and garages can also bring in money before the building of the facility. If this is a college facility, alumni donations and the universities themselves can contribute to the building. Finally, sponsors from local and nationwide organizations can even out the money needed to build these facilities so that tax-payers will not have to spend as much and will get more in return.

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When figuring in public contributions, most of the money comes from grant money sin taxes. Sin taxes are taxes on cigarettes, alcohol, and lottery. These are items that do not need to be used and are not beneficial to anyone, but the consumer. Soft taxes on tourists will not affect the community as much and will be a large contribution. Taxes on hotels/motels, car rentals, player’s salaries, and all other new money are an excellent way to pay for the facility without hurting the residents. These feasibility studies help develop where the money for these facilities comes from and how the community money can be used as little as possible. If these studies get the residents excited about the facilities, they have done their jobs. Once all these factors have been determined, the economic impact can be determined.

Work Cited

  • Balm, Dean V., The Sports Stadium as a Municipal Investment, 1994, Greenwood Press
  • Farmer, Peter J., Aaron L. Mulrooney, Rob Ammon Jr.,
  • Sport Facility Planning and Management, 1996, Fitness Information Technology Inc.
  • Rosentraub, Mark S., Major League Losers, 1997, Basic Books
  • Schoenfield, Bruce, Every Arena Issue Plays Out in Miami, “Street and Smith’s Sports Business Journal”, Vol. 2, issue 39, January 17-23 2000.
  • Sport Facility Planning and Management, Dr. Sharianne Walker, Class Notes, spring 2000.
  • Dunnvant, Keith, The Impact of Economics, “Sports Inc.”, March 18, 1989, pgs, 31-33

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Economic Impact Of A Sports Facility. (2021, Mar 15). Retrieved August 19, 2022, from