Joe Walker
SPML 6010
Assignment 3
August 11, 2013

Constructing a Stadium

Sports are the one of the best things that we have in this world. It’s something that everyone can enjoy no matter your age or race. We as fans have become so invested into our favorite teams and players that if they lose then all of a sudden were having a bad day. There are many reasons as to why our favorite athletes perform the way they do. The main reason is that they have God given talent and the other is that they train very hard. Since workout sessions have become something of the norm to compete against the best, we see that in high school, college, and professional sports all have made great strides in building the best facilities. In this paper I am going to take a look inside the process of building a sports facility and its impact professional teams. The debate about building new facilities for professional teams has been a topic for quite some time. There are many arguments for and against it but it’s interesting to hear both sides. “The most common justification for a stadium subsidy is that the team would otherwise leave the city. A second justification is that the subsidy will cause the owner of the team to hire better players and coaches and thus improve its performance” (Sandy, pg. 217). I think new facilities are great because it brings excitement to the city and players want to perform well in their new building but there are some things to consider. Some of the financing tools to pay for a sports facility are: user fees, the Marginal Revenue Product of players, a general tax, and a tax on tourists, a tax on the incomes earned by players, and a tax on consumption that occurs in or near a sports facility. When you own a stadium or you are the operator, there are many different things you have to account for. One of them is a leasing agreement, which “defines the rights and responsibilities of the parties and typically addresses such issues as rent amounts, when access will be provided, and what services are provided by the facility” (Sharp, pg. 437). Owners are trying new ways to fund these facilities and a consumption tax is one of them. Several communities have used ‘sin taxes’, or extra taxes paid for the consumption of alcohol and tobacco products. Sin tax is used for taxes on activities that are considered socially undesirable and the government is going to make those people pay if they want to continue using/doing these sins. I think revenue sharing is the most important factor to consider because knowing what percentage you will get from each entity will determine how successful your stadium will be. Most of revenue sharing comes from user fees. User fees are tax, or payment, direct or indirect, that must be paid to a facility owner/operator by a facility user, as a necessary condition of use of the facility. This means spectators or fans must pay to use/see the entertainment that is shown at the facility. People generally think that paying for their ticket is only user fee that they will pay, but going to a ball game can become quite costly. Another form of a user charge is an extra fee for parking in areas adjacent to a facility. Any fees assessed for advertising within a facility or for consumption of food and beverage inside a facility would also be classified as a user fee as the fans attending games or events pay these charge. If I was given a change to propose a new stadium this would be the best way to go about it. The financial standing of a business can often make or break a company’s ability to succeed. New businesses face significant financial risks. Sports business owners often fail to plan financial projections or create working budgets. It is necessary for new businesses to determine if their product or service is strong enough to support the financial obligations of the business. “A lack of startup funds poses a considerable threat to new businesses. Sufficient capital is necessary to pay for the owner’s