Heavy Lifting - thoughts and web finds by an economist
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Tuesday, December 21, 2004
From the Indy Star:
One day after Mayor Bart Peterson triumphantly announced a deal to keep the Colts, details showed a new stadium project could cost nearly $190 million more than anticipated, and key state lawmakers began picking apart the mayor's financing plan.That's what I call hyperinflation...
Here is another little tidbit:
Under the stadium plan announced Sunday, the Colts would contribute $100 million, but only after the city pays the team $48 million to terminate the current RCA Dome lease, making the team's net contribution $52 million. To pay back bonds funding the bulk of the stadium, the city would rely on taxes from new slot machines to generate $46 million a year for the next 30 years.And I thought we are getting screwed here in Arlington. The good folks of Indianapolis are paying fines, fees, and interest all over.
According to the Minnesota Vikings, a team lobbying for a new stadium, public dollars have, on average, paid just under 70 percent of the cost of all new stadiums built since 1992.The Vikings are speaking the truth - cities have foolishly spent too much on stadiums and then leased them to their teams.
I'm thinking the reverse would actually be better in ensuring incentives go in the right direction. The team should build the stadium and then the city will sign a long-term lease with the team. The city will pay the team to stay in the city instead of the other way around. If the city gets tired of having the team, the city can quit paying and either the team makes money on its own or it bails to another city. The fact that the team had to build the stadium will make it less likely that the team will relocate as it owns a highly specialized piece of capital - the stadium.
Team owners might not go for it, but in the end the cities probably hold more negotiating power than they believe. Even though Los Angeles looms as a possible city of relocation, the reality is that LA is doing just fine without a team and likely no team will move to LA - they have had two teams and both left voluntarily.
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