"Miami" Marlins stadium approved!

[zff4]

Ok so you believe the Marlins new stadium will not show an increase in total tax revenue (when you account for the cost)?

Put it like this. Would you pay $500 million for the concession to sell beer and hotdogs?

Also, most of the reference material shows that the public has a fixed entertainment income. If they buy a ticket, and a beer and a dog, that cost to the family is money that is not spent elsewhere. There's no net gain for the tax coffers.

[TyCobb]

Again, most of the studies have refuted this.

For instance, because the stadium construction and improvements is dependent on nearly 500 million in tax generated funds, an actual return on investment for the city is so far down the road as to be meaningless. Additionally when you look at the cost to tax payers per job provided (and the types of jobs), the city comes out behind. Based on the assumption that nearly 2000 jobs might be created, the city sees a net loss when it funds job creation at a cost of upper $100,000's (or more) per job.

According to The Brookings Institution, "a new sports facility has an extremely small (perhaps even negative) effect on overall economic activity and employment. The economic benefits of sports facilities are de minimus."

Interestingly, the "negative" effect on a community was found in Baltimore where per capita income in the surrounding area actually dropped.

1, for a general discussion that talks about MD

2, for a paper arguing the effect is actually negative

3, Tax-Exempt Bonds and the Economics of Professional Sports Stadiums

4Public Funding of Sports Stadiums

5The Costly Relationship between Major

League Sports and Government

There are plenty of academic and think-tank resources on the web that refute the notion that there is public gain from tax funded stadiums, I've just cited a few.

Don't get me wrong. In a Miami fan's shoes, I'd support it, but purely for personal reasons. But arguing that tax funded stadiums is a net gain to the community is not supported by evidence.

edit: hahah beaten by Drungo

I am not saying that a stadium will be great for the economy. I am saying that the tax revenues will increase because of this stadium and after a 35 year lease the stadium will have provided more money to the government than the government paid for the stadium.

Also it may create 2000 more jobs, but I wonder how many jobs it will save. Florida economy is near the bottom of the states.

[TyCobb]

Put it like this. Would you pay $500 million for the concession to sell beer and hotdogs?

Also, most of the reference material shows that the public has a fixed entertainment income. If they buy a ticket, and a beer and a dog, that cost to the family is money that is not spent elsewhere. There's no net gain for the tax coffers.

Well the Marlins would have to pay 15 million a year in taxes so that after 35 years they out do their cost.

Is that a lot for a baseball club to pay in taxes?

[DrungoHazewood]

I am not saying that a stadium will be great for the economy. I am saying that the tax revenues will increase because of this stadium and after a 35 year lease the stadium will have provided more money to the government than the government paid for the stadium.

Or they could put the half a $billion in a passbook savings account in their local bank and come out way, way, way, way ahead in 35 years. They're spending hundreds of millions of dollars so that they can create a thousand jobs, and make back their investment in 35 years? 35 years is an eternity. Most businesses won't touch investments that might not break even in a quarter of that time. Who knows if MLB will even exist in a recognizable form in 2045?

[TGO]

Or they could put the half a $billion in a passbook savings account in their local bank and come out way, way, way, way ahead in 35 years. They're spending hundreds of millions of dollars so that they can create a thousand jobs, and make back their investment in 35 years? 35 years is an eternity. Most businesses won't touch investments that might not break even in a quarter of that time. Who knows if MLB will even exist in a recognizable form in 2045?

Not to mention the time value of money. If you use a pretty conservative estimate of inflation, 2.5% (I say that's conservative because we're currently increasing the money supply), then $500 million is the present value of $1.186 billion 35 years from now. In other words, if in 35 years you haven't grossed 1.186 billion on your investment, you haven't even beaten inflation.

[zff4]

Also it may create 2000 more jobs, but I wonder how many jobs it will save. Florida economy is near the bottom of the states.

With the stadium deal, that's about a $240,000 cost per job to the city. You got baseball smarts and are a great poster. But no way am I ever voting you for mayor.

[McNulty]

Don't forget in all of this that Florida has no state income tax.

[TyCobb]

Or they could put the half a $billion in a passbook savings account in their local bank and come out way, way, way, way ahead in 35 years. They're spending hundreds of millions of dollars so that they can create a thousand jobs, and make back their investment in 35 years? 35 years is an eternity. Most businesses won't touch investments that might not break even in a quarter of that time. Who knows if MLB will even exist in a recognizable form in 2045?

Yea because you can put 500 million bucks in a bank. There are probably 1000s of things the governments could do with 500 million dollars that would improve the state better than a baseball stadium. One of those things is not taxing for another 500 million bucks.

My point is that the stadium will eventually pay for itself.

[TGO]

Don't forget in all of this that Florida has no state income tax.

What's the sales tax?

[TyCobb]

What's the sales tax?

6%

Where do they get their money?

[srock]

Those claims are more plausible than the claimed economic gains and tax revenues, but there's an open question as to whether a publicly funded sports stadium with a lease that's very slanted to the team's million- or bilionaire owners, and that will sit empty for 200 or more days a year, is the best way to obtain those things for half a $billion or more.

I agree a deal such as this isn't the best economic plan for a city, county, or state but it isn't all about economics. It is better to get a nice economic plan in place, but not always feasible. If the Marlin's ownership were paying for the entire statdium that they would own and the city was only paying for infrastructure to support it, it would likely be a great thing for local economics. Unfortunately, South Florida continues to prove a fickle sports market. Spending $700 million or whatever in up front capital isn't a workable business plan. They need the city to support this or it won't happen.

Miami wants the team for cultural reasons more then economic. This means spending money to build a venue. Just like the city spends money to maintain South Beach or build a concert hall to attract top flight theater, music, and art. So long as the economics won't endanger the city budget, it is worth paying for.

[zff4]

My point is that the stadium will eventually pay for itself.

To shift the discussion to alternatives, look at the Giants who funded their stadium with private investements, no new taxes, and lease the land from the city.

Michael Ozanian, an editor at Forbes magazine, was quoted in the Dayton study as saying the Giants "should serve as a model for other teams. They've proven that you can finance a stadium, without going to the taxpayers, and succeed."

However, even that is not without pitfalls.

"Most likely, as one gets out past 10 years, the interest costs will in fact exceed the revenue enhancement," said (Stanford University economist) Noll. "The reason teams have in fact asked for public subsidies is that these stadiums aren't worth it. They actually cost more than the incremental revenues they generate over their lifetimes. And that's why they go for public subsidies. It's not really a good business investment over the long run."

Right now, instead of paying rent of the stadium, the Giants pay much, much less rent on the public land and use that money they saved to service their debt.

"We are paying more for our stadium than most other teams do," said (Giants vice president) Slaughter. "We have an annual debt payment that we have to pay. But at the same time, other teams around the league are paying rent for their stadiums in excess of several million dollars. And they don't necessarily generate the revenues we do. So at the end of the day it's pretty much a wash."

However, if their attendance decreases significantly, they may have trouble servicing the debt. As the Stanford guy mentions, it's very difficult in the long run to see profitability with a stadium - and is why MLB doesn't want them as their liabilities...but are happy to have them as taxpayer liabilities.

[TGO]

6%

Where do they get their money?

Probably property taxes. There's a corporate income tax but I believe I read something like 98% of businesses pay nothing.

[TyCobb]

To shift the discussion to alternatives, look at the Giants who funded their stadium with private investements, no new taxes, and lease the land from the city.

Michael Ozanian, an editor at Forbes magazine, was quoted in the Dayton study as saying the Giants "should serve as a model for other teams. They've proven that you can finance a stadium, without going to the taxpayers, and succeed."

However, even that is not without pitfalls.

"Most likely, as one gets out past 10 years, the interest costs will in fact exceed the revenue enhancement," said (Stanford University economist) Noll. "The reason teams have in fact asked for public subsidies is that these stadiums aren't worth it. They actually cost more than the incremental revenues they generate over their lifetimes. And that's why they go for public subsidies. It's not really a good business investment over the long run."

Right now, instead of paying rent of the stadium, the Giants pay much, much less rent on the public land and use that money they saved to service their debt.

"We are paying more for our stadium than most other teams do," said (Giants vice president) Slaughter. "We have an annual debt payment that we have to pay. But at the same time, other teams around the league are paying rent for their stadiums in excess of several million dollars. And they don't necessarily generate the revenues we do. So at the end of the day it's pretty much a wash."

However, if their attendance decreases significantly, they may have trouble servicing the debt. As the Stanford guy mentions, it's very difficult in the long run to see profitability with a stadium - and is why MLB doesn't want them as their liabilities...but are happy to have them as taxpayer liabilities.

Ok now that makes sense. I really wish a baseball team would open their books. They have to be great because every time a team gets sold it is for a ridiculous high price.

[McNulty]

6%

Where do they get their money?

I thought it was 7.

Its my understanding that they make up a lot of the difference through property tax exemptions. Or, if you live here year round, you pay a much lower amount than those people who own winter houses or time shares, etc.

That and the tourism dollars.