La-La Land Stadium Deal

Reports of financial problems in California appear to be greatly exaggerated.  What else can explain the recent news out of California that The Governator signed legislation that will permit the construction of a new football stadium in City of Industry, an LA suburb.  The stadium will cost an estimated $800 million (subject to the usual cost over-runs, so better make that a billion or so by the time it’s all said and done) and will be “green.”  Of course it will.

It also appears that someone in the governor’s office has been drinking the economic impact Kool-Aid.  According to the press release put out by Governor Ah-nold, this new stadium will “generate 18,000 jobs and $760 million in annual revenue.”  I think that the last 30 years of economic research showing no tangible economic benefits from professional sports stadiums has not yet reached California.

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2 Responses to La-La Land Stadium Deal

  1. Roger says:

    You do realize that this stadium will be mostly privately financed and any public money allocated to it will be paid back through parking and concession revenues? All Schwarzenegger has done is cut the red tape associated with construction of any big project and signed an environmental waiver allowing construction to get ahead with minimum fuss. All this hot air you’re blowing about costs is irrelevant.

  2. brhumphreys says:

    You do realize that the first number made public in new stadium projects bears little relationship to the final cost and subsidy?

    I recommend that you read this paper

    http://jse.sagepub.com/cgi/content/abstract/6/2/119

    before making claims about how much the new LA stadium will cost and how large the actual subsidy will turn out to be. From the abstract …

    “Governments pay far more to participate in the development of major league sports facilities than is commonly understood due to the routine omission of public subsidies for land and infrastructure, and the ongoing costs of operations, capital improvements, municipal services, and foregone property taxes. Adjusting for these omissions increases the average public subsidy by $50 million per facility to a total of $177 million, representing a 40% increase over the industry-reported average of $126 million, based on all 99 facilities in use for the “big four” major leagues during 2001. For all 99 facilities, these uncounted public costs total $5 billion.”

    Brad Humphreys

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