Cities Paying the Most for Sports Teams

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On February 3, New Orleans will host Super Bowl XLVII in one of the biggest television and tourism events of the year. Cities across the nation hope to host the game, which brings potentially hundreds of millions of dollars to the local economy. According to a July study by Rockport Analytics, last year’s game contributed $277.9 million to the gross domestic product of the Indianapolis metro area, last year’s host.

Click here to see the 10 cities paying the most for sports teams

In order to attract a professional sports team, a city must have the right venue. But because there are a limited number of major league teams, cities must compete for them. To encourage teams to relocate or stay, cities often subsidize the costs of building stadiums. Based on a new book on the history of how sports stadiums are built and paid for, 24/7 Wall St. analyzed the cities where the public has spent the most to attract or keep major league teams.

Most major league stadiums and arenas are built using a combination of private and public money. In some cases, it is the team that pays the vast majority, or sometimes all of the building costs. Only 17% of the $558 million used to build Gillette Stadium in Foxboro, within the Boston metro area, came from taxpayers. In contrast, 90% of the cost of building Paul Brown Stadium, $547 million of the $609 million spent, was covered by Cincinnati area taxpayers.

Regardless of the size of the market, most major sports stadiums are going to cost several hundred million dollars. As a result, a number of the cities that spend the most per capita on sports stadiums are relatively small markets for major league sports franchises. A majority of the cities spending the most per capita have relatively small populations, including Indianapolis, Milwaukee and New Orleans.

Green Bay had a population of just over 300,000 in 2011, and was the 152nd most populous metro region in the country. Because the area has so few residents, Green Bay’s per capita spending on its football stadium, Lambeau Field, was $1,114 — nearly double any other sports city.

Over the years, the price tag of major sports stadiums has skyrocketed. The cities on our list are examples of this, with most having built or renovated a major stadium in the past 10 years. Completed in 2008, Lucas Oil Stadium cost nearly $750 million to build. In comparison, San Diego’s Qualcomm Stadium, built in 1967, cost just $229 million when adjusted for inflation.

Cities that pay more to win major league franchises often argue that keeping teams is good for the economy by attracting jobs and creating tax revenue. But the author of the book, Dr. Judith Grant Long told 24/7 Wall St. that “the general consensus amongst economists, is that [stadiums are] not a good investment, simply because they don’t create enough net economic benefits in the way of job creation or tax revenues to warrant the scale of the investment.”

The cities that spend a high proportion of public money on stadiums are often low-income areas. In the New Orleans metro area, the median household income was $44,004 in 2011 versus $50,502 for the U.S. as a whole. Similarly, in the Cleveland metro area, the median household income was $45,936. Cities with low household income tend to pay more because, according to Long, they are less desirable locations for franchises. She explained “when the market fundamentals are good, the public sector pays slightly less.”

While many city planners and team owners might argue that sports teams also provide cities emotional and social benefits, Long still doesn’t think they’re worth it. “Even if we acknowledge those benefits exist — and I believe personally they do — I don’t think they are generally speaking anywhere in the ballpark of the average contribution to a sports facility from the public, which is in the neighborhood of $200 to $300 million,” she said.

To identify the 10 cities that spend the most money per capita on sports stadiums, 24/7 Wall St. relied on “Public/Private Partnerships for Major League Sports Facilities,” a book on municipal stadium spending by Judith Grant Long. To calculate the total per capita expense that each city bore, Long included financing costs for all sports stadiums that were in operation as of 2010. In addition to data on stadiums, 24/7 Wall St. used the U.S. Census Bureau for metropolitan statistical area population and median income, as well as gross metropolitan product from the U.S. Conference of Mayors. Ticket sales data is from ESPN.com, and team records were obtained from Sports Reference, an online sports statistics database .

These are 10 cities paying the most for their sports teams.