Fact Check: Who Pays for NFL Stadiums

Chargers Stadium

Fact Check: Who Pays for NFL Stadiums

Statement: “The average subsidy in the NFL is
about 65 percent of the costs of a stadium is paid for by the
public,” Chargers spokesman Mark Fabiani said Aug. 17 during a
radio interview with KPBS. Determination:
True.

 

Image: TrueStatement: “The average subsidy in the NFL is about 65 percent of the costs of a stadium is paid for by the public,” Chargers spokesman Mark Fabiani said Aug. 17 during a radio interview with KPBS.

Determination: True

Analysis: As the Chargers begin another season, one major question continues to hang over the team’s nearly decade-long search for a new stadium: Who will pay for a new facility?

The team wants to split the cost of an estimated $800 million stadium in downtown San Diego near Petco Park. It’s offered $300 million toward the project and says other private sources and the public should cover the rest.

City and team officials have suggested increasing taxes, selling city property and tapping redevelopment funds to pay for the stadium, but haven’t outlined a definitive financing plan to the public. They’re aiming to figure that out soon and put a stadium proposal before voters next year.

Discussing the latest stadium search twists on KPBS, host Maureen Cavanaugh asked Fabiani why the Chargers can’t pay more than $300 million. Fabiani said that figure isn’t set in stone and the team’s contribution is still being negotiated. He continued (emphasis added):

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The problem is, of course, our competitors around the league have had their stadiums subsidized by the public. The average subsidy in the NFL is about 65 percent of the cost of a stadium is paid for by the public. So we’ll do what we have to do to get a stadium built, but we have to stay within our market. In other words, if we spend 100 percent private funding for stadium, we’d be in a worse financial position than we are now vis-a-vis our competitors. So we’ve got to stay within the range that our market provides us, but we also have to make it work for the taxpayers.

Fabiani argued that boosting the Chargers’ share of the bill would put the team at a financial disadvantage to other NFL teams, which didn’t pay so much for their stadiums. If San Diego’s businesses and residents paid 65 percent of an $800 million stadium, they would be pitching in about $520 million — nearly the same amount the Chargers have asked from them.

But did Fabiani correctly describe the landscape of stadium financing? We talked to urban planners and found two surveys of NFL stadium financing that back up the 65 percent figure and a third that puts it within the ballpark.

We checked several surveys because researchers disagree which costs should be considered public subsidies and that disagreement can affect the bottom line. A tax increase is widely considered a public subsidy, for example, but costs like lost revenue from tax breaks or new public infrastructure such as roads and traffic lights are more disputed.

Judith Grant Long, a Harvard professor who specializes in urban planning, conducted the most recent and comprehensive analysis of NFL stadiums. The New York Times published the results of her survey last year, showing that the public funded 65 percent of the average NFL stadium.

Though the percentage hits Fabiani’s mark, it’s worth noting that Long’s analysis leaves out many costs that other urban planners consider public subsidies. The excluded costs include land, public infrastructure, foregone property taxes, ongoing operational expenses and municipal services. Long estimates $70 million in these costs can be added to the public’s bill for a new stadium.

The other two surveys we examined were conducted by different consultants hired by the city of San Diego in the last decade. Unlike Long’s survey, which examined all 31 stadiums used by NFL teams today, both consultants only looked at selected groups of stadiums.

The first study, completed in 2002, examined 22 stadiums built since the 1990s and found the average received 62 percent of its funding from the public. The second study, completed in 2010, compared 11 stadiums built in the last decade and found the average received 53 of its funding from the public.

Both partial studies put public funding near Fabiani’s mark but we gave greater weight to Long’s analysis because it examined all 31 stadiums used by NFL today.

Stretching back five decades, Long’s survey shows two shifts in stadium financing over time. Adjusted for inflation, the cost of stadiums has grown from hundreds of millions of dollars to more than a billion dollars each for the two most recent projects in New York and Dallas.

And though the average NFL stadium received 65 percent of its funding from the public, the percentage has dipped slightly in recent years. The public paid nothing for New York’s $1.6 billion stadium and 44 percent for Dallas’ $1.15 billion stadium, lowering the league average.

In New York, the Giants and Jets agreed to completely fund the new stadium after public agencies gave up revenues they previously shared from parking, luxury suites and advertising. The financial plan also benefitted from having two NFL teams to split the construction costs and from having the league to pitch in $150 million for each team. Altogether, the deal set up the two teams to become two of the most profitable in the league, the New York Times reported in 2006.

In Dallas, the public paid a smaller proportion of the total cost than other projects but a greater amount of money than most because of the stadium’s sheer size. The public contributed more than $500 million, which is more money than all but two other NFL stadiums got from the public, according to Long.

In a follow-up interview, Fabiani said increasing the Chargers’ contribution for a new stadium would cut into revenues and make the team less competitive around the league. The team would have less cash to finance star players’ salaries, attract coaches and pay other staff like scouts, he wrote in an email.

“Having a new stadium just to be able to point to the new facility with pride is not the issue,” he wrote. “The only reason to seek a new stadium is to increase revenues so that you can compete economically with the best teams in the NFL. And in this League, the marketplace has dictated the terms of the deal: 65% of stadium [costs] are paid for with public money. And any team seeking a new stadium must find a way to operate successfully within the confines of this marketplace.”

We asked Fabiani if the team would make its financial books available to the public so people could know whether the Chargers actually need to increase revenues to remain competitive. Fabiani didn’t directly respond, saying the team would be prepared to address its revenues if a stadium goes to the ballot.

Among the 31 stadiums surveyed by Long, five received no public money and five were completely paid for by the public. Though Fabiani argued that paying more for a stadium would put the team at a disadvantage, some teams have been successful despite receiving little cash from the public.

The New England Patriots, for example, received no public funding for a $373 million stadium in 2002, according to Long. The team has been the winningest franchise in the past decade with three Super Bowl titles.

At the same time, other teams’ performances support Fabiani’s argument. The Indianapolis Colts, which won the second most games in the past decade, had the public pay 87 percent of the team’s $780 million stadium in 2008, according to Long.

Though what’s considered a public subsidy varies, we’ve rated Fabiani’s statement True since 65 percent accurately reflects the most recent survey by Long. If you disagree with our determination or analysis, please express your thoughts in the comments section of this blog post. Explain your reasoning.

Keegan Kyle is a news reporter for voiceofsandiego.org. He writes about public safety and handles the Fact Check Blog. What should he write about next?

Please contact him directly at keegan.kyle@voiceofsandiego.org or 619.550.5668. You can also find him on Twitter (@keegankyle) and Facebook.

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