SoFi Stadium, Inglewood, California.

Stadiums: How they are funded and used

The question of who pays to build a new sports stadium or renovate an existing one has been discussed and debated extensively over the past 30 years, particularly in the wake of a wave of new baseball stadiums built in the 1990s and early 21st century. Here in the Chicago area, the White Sox’s Guaranteed Rate Field opened as New Comiskey Park in 1991 with the help of $120 million in public financing.

It’s an increasingly expensive question. Inglewood, California’s SoFi Stadium, opened in 2020 as the home of NFL’s Los Angeles Chargers and Rams, cost $5 billion to build. New stadiums are on tap in Buffalo and Nashville and are expected to cost $1.5 billion to upwards of $2 billion each. 

How is a new stadium built, financed and paid for? SoFi Stadium was entirely privately financed. But often a team will ask for help from the city or state. Sometimes a city simply will give the land to the sports team. Often states and cities help finance the stadium by taking on debt and issuing bonds. Las Vegas’ Allegiant Stadium, home of the Raiders, was financed with $750 million in bonds over 30 years, called the largest upfront public contribution to a stadium project. Cities and states also may choose to implement new or incremental sales taxes, often on hotel rooms or restaurant meals. For their part, teams often sell permanent seat licenses to fans, and naming rights to corporate sponsors. 

In constructing a deal to build a new stadium, teams often have received other tax breaks not included in the official price tag: In Atlanta, the Falcons were given sales tax rebates on construction materials when building Mercedes-Benz Stadium, which opened in 2017. And cities and states often foot the bill for needed infrastructure around a new stadium, including new and improved roads, utilities, transit lines and stations–as has been mentioned in the Bears-Arlington Heights discussions. Creating a Tax Increment Funding district, as also has been mentioned for the Bears-Arlington Heights site, is another potential funding tool that can reduce or freeze a team’s long-term tax liability or divert tax dollars from other areas to support a stadium project within the TIF district.

Conventional wisdom holds that a new stadium, particularly one that houses a new franchise or a team moving from another city, generates jobs and tourism dollars for the local economy. SoFi Stadium generated an estimated 3,500 construction jobs, for instance. There are part-time game-day employees, from concessions workers to parking attendants and ushers. 

But studies and books from economists often dispute that conventional wisdom. Research has found that the economic impact of an NFL stadium is reduced by the fact that an NFL team plays fewer than a dozen games per season, diluting the stadium’s impact as an employer. These economists have found that much of the revenue generated by a new stadium does not stay in the local area. And on the flip side, researchers and urban planners argue that TIFs need to be used judiciously to protect tax revenues needed for public services housed in those TIF districts.

In addition to their primary use, NFL stadiums like the proposed Bears stadium are often used for other teams, leagues and events: concerts, entertainment events, other sporting events, and high school sports as well.

Photo by Troutfarm27 - Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=130317008