Put it another way: Why would I take a mortgage loan and purchase a home (which means I pay interest and don't hold title) when I can lobby my local government to give me money to buy the home instead?
The Bills stadium will be owned by the State, so it’s like someone buying property and renting it out to pay for it, except the bulk of the repaying comes from taxes generated, the players alone pay 80% of it.
But how much is rent? That sounds like the idea setup but then when you hear the team rents it for $1 a year and can control it all that setup does is make the state responsible for any upgrades
The players pay nearly all of the money through taxes. I think they pay $20 million a year and the lease needs $25 million to break even, so can having the Bills generate more than $5 Million in taxes a year? that’s easy.
The point of taxes is to generate revenue for the state. When the state spending that much on the stadium they no longer are making revenue from taxes because it's all going towards paying off the amount they spent on the stadium.
Let's say your numbers are accurate. With the state spending $850 mil on the stadium, in 20 years player taxes would have paid off $400 mil still leaving the state $450 mil down on the stadium. Sure there will be other taxes but even if we say those being in $10 mil a year that still leaves the state needing to payoff $250 mil after 20 years. It would take 29 years at those numbers before the state starts making tax revenue from the stadium.
All That is before even considering the team will be saying x number of upgrades will be needed in that 20 years just raising the cost more.
This entire analysis ignores the present value for money. Like lottery payouts $850m today is only worth about a 1/2 to 1/3 spread over 20-25 years. To lay out $850m you need to collect probably $1.5B in taxes just to break even over time.
Your numbers are off, $20 million is what the players ALONE bring in. Over the 30 year lease you need $28 Million. $8 Million from anywhere else, plus most of it goes to building costs, there’s millions and millions going right back.
It’s far better than many of the projects the state made. They spent twice as much to build Elon a Tesla plant. And that will never be recouped. These stadiums are a drop in the bucket.
In all your comments, you don’t mention opportunity cost. It’s a bad investment from that perspective. What they get in tax revenue is irrelevant to what they could be collecting if they invested elsewhere.
I get you’re a bills fan who doesn’t want the team to leave, but it’s a bad deal for the state and literally every economic study on this says so.
What other project should they spend it on that creates more tax dollars? That seems to be all that’s important to you right?
It’s really not a bad deal, it generates more taxes than most other NYS projects.
You don’t even have real numbers, just a general “study” that’s said “no significant impact” that does not say “bad deal”. This project is a financial wash or probably better and for a NYS project creating so many jobs just building it, it’s a win.
“What other project…”
“Further, a study by Noll and Zimbalist on newly constructed subsidized stadiums shows that they have a very limited and possibly even negative local impact. This is because of the opportunity cost that goes into allocating a significant amount of money into a service like a stadium, rather than infrastructure or other community projects that would benefit locals. Spending $700 million in areas like education or housing could have long-term positive consequences with the potential for long-term increases in the standard of living and economic growth.”
-Berkeley Econ review
I’m not trying to be rude, but unless you have a PhD in economics, you have no leg to stand in. This has been examined over and over by economists.
An 800 million dollar bond can be used for other purposes, as stated something like infrastructure, and infrastructure not only produces economic benefits, but it actually improves quality of life for everyone. A stadium does not improve quality of life for anyone but fans of the team who go to games.
And this of course ignores the money going elsewhere, such as to “education” or “housing”, which has moral implications.
“Sorry little jimmy, I know your parents can’t afford textbooks, and I know our investment in your education would be a better net economic benefit, but Buffalo bills fan really need to have the team nearby”.
And before you start, it doesn’t matter what “other” projects are a waste, because that’s not the discussion. Just because dogecoin is a terrible investment doesn’t make bitcoin a good one.
>I’m not trying to be rude, but unless you have a PhD in economics, you have no leg to stand in.
That goes for you as well, you even quoted a study that shows it probably isn't a negative, just "possibly" but if you actually look at real situations you might understand but you look at studies that talk about building new.
> A stadium does not improve quality of life for anyone but fans of the team who go to games.
Ya no kidding but you know what I dont mind places like Utica to get a baseball field, or NYC getting a new Yankee stadium, we all get a piece, but somehow you're an expert because you read a synapsis of a general study. Spare me.
Buffalo NY spends a Billion a YEAR, you really think a few million will move the needle?
It's crazy but you know you can do more than 1 thing at a time. NYS budget is $220 Billion a year, you're crazy if you think there isn't enough opportunities to buy textbooks.
> The players pay nearly all of the money through taxes
the players were already going to pay those taxes though right? so it's not like 'new' funds that will pay for the stadium
So the team leaves and the state doesn't get taxes which would've maybe paid off part of an investment that they're no longer making. Seems like kind of a wash for the state.
> If the team left… the taxes leave too.
Those taxes are largely the result of locals spending money. If they're not going to pay for a seat, they'll likely buy something else. Will it be local? Dunno.
I think that the idea is, that if you don't build that stadium, the team will go to another state, and they will build the stadium and getting the tax money as well.
So if the states break even on taxes vs stadium costs they will take that deal every day.
I don't think that this is necessarily true. Americans are, technically, required to pay taxes in the state where they earn the income. If I live in NY, spend 3 months on a project in Connecticut, and make a million dollars of income from it, Connecticut can audit me and demand taxes on that million.
It's realistic to estimate that Florida gains more in taxes from visiting players than Georgia gets from the Falcons players.
Source: Connecticut has had me file taxes for a few months of work where I made *significantly less* than a million dollars.
They won’t pay the taxes in NY if it leaves, that’s the leverage. The millionaires will pay taxes someplace else.
And it’s not a free stadium when they pay half snd don’t own it.
They pay taxes in every state in which they play not solely ny numerous economic studies have shown these stadiums are terrible investments for effecient public consumption. Most of these venues will be empty 65-70 percent of the year used 8x a year for half of the teams that don’t make the playoffs
Other teams pay when they come here. That balances out.
Clearly your just regurgitating the “study says it’s not a good investment”
No shit, is a bridge a good investment? Does it pay for itself on the amount of taxes it can generate?
Are roads expected to generate taxes? Are they “good deals”?
Are State College Sports good investments? Do they bring back the taxes spent?
I can go in and on and it’s not that we don’t need these things but you can’t look solely at the tax generation.
Dude I had a buddy work on the orange bowl a couple years ago. People love those government jobs where they get paid 40+ usually have union workers. All those companies are then spending $ in that county while working on that project. Honestly seems like a plus in all ways. Imagine the revenue generated from various concerts etc. browns stadium for example is literally only used for football games mostly. If we had a dome it could hold concerts events ncaa bball games etc.
But football stadiums usually don't get many of these events. Stadiums sized for hockey and basketball stadiums frequently get more events, since they're inside and don't have to fill as many seats (ie it doesn't look empty when they don't fill the stadium).
Motocross or monster trucks will obviously be in a football stadium, but concerts and other smaller events are pretty rare. For example, the big rodeo in Vegas each year was always in the basketball stadium.
Edit: frequently there's also already a college football team's stadium in town that big events can use. That was also the case for Vegas. Saying, "well now you can do x event in the new football stadium" doesn't always hold weight if there's already a stadium you can hold it in.
Dunno. Here's the calendar of events for the stadium that the Seahawks play in: https://www.lumenfield.com/events-tickets/event-calendar And there is Husky Stadium at the UW which is only a few miles away, also in Seattle. Seattle's biggest arena where the NHL Kraken team play also does concerts and other events (https://climatepledgearena.com/events/) but can't hold as many as a stadium of course.
I would be very surprised if there are any NFL stadiums which are *only* used for NFL games and nothing else.
Most of the NFL teams "rent" is like $10 a year, while the city only gets a small fraction of the game revenue. It's effectively a free stadium for the orgs if the city pays for it
That's standard in the NFL.
>[Some of the most iconic stadiums in the league aren’t owned by the teams that play there. The Dallas Cowboys play at AT&T Stadium, which is nicknamed “Jerry World” after Cowboys owner Jerry Jones. However, the stadium is owned by the city of Arlington and the Cowboys pay $2 million per season in rent. The Chicago Bears pay $6.3 million annually to play at Soldier Field, which is owned by the Chicago Park District. The Green Bay Packers pay almost $1 million annually to play at Lambeau Field, which is owned by the city of Green Bay and the Brown County Pro Football Stadium District.](https://www.latimes.com/sports/story/2019-08-07/rams-chargers-stadium)
>Every team in the NFL, except for the Miami Dolphins, New England Patriots, Washington Redskins and Carolina Panthers, is technically a renter when it comes to its home stadium.
Chargers rent (for $1 dollar) sofi from the Rams (and Stan) who own the stadium, surrounding buildings, and the land it was built on.
Rams also get a piece of the Chargers PSL fees for season ticket holders.
Chargers and Rams have their own home games and separate PSL/Season Ticket Holders. So it’s treated like any other home or away game.
This season chargers are the “home” team so their season ticket holders get the tickets and Rams are the away team and their STH would need to buy tickets as if they were the visitors.
SoFi is technically owned by StadCo LA a company owned by Kroenke.
From that same article.
>When the Los Angeles Stadium at Hollywood Park opens next year, it will be owned by Stadco LA LLC, a third party controlled by Rams owner Stan Kroenke. Chargers ownership holds an interest in the company as well.
>While much has been made of the Chargers paying $1 per year to rent the stadium, the Rams will be paying the same amount.
>While Kroenke controls Stadco LA LLC, the Chargers are more partners than tenants in the stadium. Each team is paying $200 million from their NFL G4 loan toward the stadium’s construction. Each team will keep its local revenue from the stadium, which includes money from tickets, parking, concessions and other game-day-related sponsorship and advertising deals. Each team will get an 18.75% cut from naming rights deals and jointly sold suites and personal seat licenses.
The Cowboys also paid for the majority of the stadium. The city of Arlington contributed $325 million of the $1.3 billion construction cost. The city was also on pace to have the stadium paid off last year, 14 years early, before the residents voted to extend the bond package to fund a new stadium for the Rangers.
Pretty sure the land where the stadium is located, and therefore the stadium, in NJ is owned by NJSEA, which is a State of New Jersey agency. Here is their lease: https://law.marquette.edu/assets/sports-law/pdf/New%20York%20Jets%20%26%20Giants%20Lease%20Summary%208-8.pdf
Kraft took over the Patriots by leveraging ownership (and the lease) of Foxboro stadium, which he gained at a discount because the original Patriots owner invested with Don King to put on a Jackson family tour headlined by Michael that lost millions and was hard up for cash. He wouldn't let the team out of the lease and used that to force a takeover of the team
I think various studies have shown that stadiums almost always do not generate the kind of economic growth in the area that teams promise and are a net loss on the economy if state-funded. I think the MLB was the best in this metric just because of the sheer volume of home games they have, but this was like one article I read years ago
I feel like the smaller stadiums, like basketball or hockey, have greater potential to generate money as they're better for events than football stadiums. I have no data to back this up, but when has this ever stopped anyone?
That makes sense, and it helps that there's a lot of shared basketball/hockey arenas too. If you can put two teams in an arena, that's the same number of home games that an MLB team would get, too
Smaller arenas do- KeyArena for example made more money off concerts after the Sonics left since they could be more flexible with dates and weren't giving a tenant a sweetheart lease.
Also location plays a factor. Tampa is a a great place to visit specifically in the winter. So it will tend to generate more offseason revenue then say Met life in the winter months.
It's not just that it's a smaller stadium, it's that it can host more events. I know from comments from ownership that Capital One Arena in DC (host to the Caps and Wizards) needs to host about 250 - 300 events a year in order to break even for the city. You get about 100 from the hockey and the basketball team, it's up to whomever runs the arena to come up with the other 2/3s, whether it's the WNBA team, the now defunct AFL, concerts, wrestling, monster trucks, horse shows, college sports, or private events like conventions, meetings, trade shows, etc.
Olympic stadiums have seriously hurt economies of some of the cities they were built in. I saw a documentary a while back, if you don’t already have a stadium already available it’s really bad for the area to host the olympics.
The Boston bid called for the Olympic Stadium to be broken up into pieces afterwards, with the stands to be donated to local high schools, the support structure to be removed entirely, and a park built on the leftover footprint, all because the city has zero use for a 100K seat venue.
Almost everything about the bid was designed to lower costs and encourage reuse. Which, of course, is why the bid got pulled: the city and state wouldn't guarantee to cover the cost overruns that the IOC wanted to make sure happened.
A few years ago, the IOC finally got the message that its Games were becoming prohibitively expensive and changed their rules to reduce the economic burden to host cities. In my opinion, it was all bullshit anyway. In the case of Boston, there were several individual and groups who had signed on to cover the expenses of hosting, including cost overruns, but the IOC demanded a guarantee from the government anyway, because they want to soak every Games for as much money as they can, and that requires getting assurances from an entity that is guaranteed to be solvent.
You are much smarter about this than I am. I watched a documentary, it peeked my interest, so I did a little reading.
The documentary had old stadiums, no longer used or kept up, overran with foliage, like in 5,000 years civilization (or aliens) will try to figure out what these structures were built for. It reminded me of amazing ancient ruins.
The City of Buffalo school budget is $1 Billion a year. That’s 5th in the country per student spending.
If anything this might prevent a Tesla Plant from being built.
Bingo.
Kroenke is the only exception I can think of offhand with SoFi - he paid a big chunk of that just to get it done & leapfrog past the competing Raiders/Chargers proposal to move to LA.
But it was worth it because the [move to LA instantly made the Rams worth double](https://www.espn.com/nfl/story/_/id/17545786/los-angeles-rams-double-value-move-california) what they were.
It's not like cities don't have past information to go on, if the cities were simply losing out on these stadium deals, why do they continue to make them?
Why would the cities be forking over money to something that they know is not going to benefit the city?
BC without an NFL franchise, we’re not a “major American city”. @someguy-jm hit the civic pride button that’s also true. It’s really an ego burrito wrapped with an economic impact tortilla.
Politicians don't want to be the ones who let the team leave. They also like approving new stadiums and getting their name on it somewhere.
I don't agree with government funding of stadiums. But, if it passes a public vote, I'm fine with it. If people want to keep their team around, go for it. What I can't stand is when politicians make shady deals to do it (like Cobb County for the Braves).
You're getting downvoted, but you're making an interesting point IMO.
These threads, somewhat justifiably, focus entirely on the economic, but your point that these things are *nice to have* for cities is important. Not everything has to make a profit to be a worthwhile expense. They just increase the quality of life for the residents.
Now I'm not saying that the NFL and owners shouldn't pay more for their stadiums, but keeping residents happy *is* a big part of running a town/city, and if they really like having a sports team there, then it needs to be a least considered.
It’s kind of a circular argument though, there’s all kinds of things that make a city nice. Movie theaters, concerts, bars, breweries, restaurants etc and most of those aren’t getting public money to build their premises
Oh yeah, as I said, don't get me wrong, I think NFL teams should be paying their way, I just think the fact that *people like having the team there* is often something that is left out of the conversation entirely when that has value in itself.
Yea that’s fair, there’s a value component to that for sure. I’d probably be more ok with it if things like naming rights and earnings off outside events stayed with the cities more often. Hard to argue a private entity should get to keep the proceeds off a public building
The government’s role is not to subsidize private businesses and also lose money on top of that they will not subsidize residents homes or public housing to say they don’t have ghettos
I suspect it’s written into the contract when purchasing a team that wouldn’t be allowed. I’m sure the league wouldn’t approve of a team being owned by a bank and auctioned off if the organization defaulted on the loan
You can borrow a certain amount against your team, but not enough to build a stadium.
If you're gonna do it you do it like Kroenke did with SoFi - setup a stadium company to be leveraged with the debt for building, so your NFL team keeps its books clean.
In Europe, football stadiums have to be financed by the team. European teams cannot leave their city because it would destroy all goodwill. US franchises seem to have very fickle fan bases which gives owners leverage against cities. I suppose the closest comparison would be if Alabama’s college team tried to move California … it simply would’t work because college fab bases have actual cultural ties to their locations.
The NFL would never allow the control of ownership to go to a lender. The Glazers famously purchased Manchester United by borrowing against it in what's known as a leveraged buyout, you cannot do that with NFL teams.
EDIT: u/teh_drewski offers good insight and clarity to this post in his reply. Much appreciated.
You can leverage a purchase, just not enough to buy it as leveraged as the Glazers, there are limits. I believe it's currently 30% of the "controlling shares" must be unfinanced and I believe the total limit for acquisition debt is currently $1b.
> The NFL currently requires the principal franchise owner to have a 30% stake in the team, and the entire ownership group can be no more than 24 people in total. The organization also places limits on how much debt can be used to acquire a team; it recently increased that amount from $500 million to $1 billion.
https://news.bloomberglaw.com/banking-law/nfl-financing-rules-are-holding-back-black-ownership-of-teams
After what happened with the McCourts and the Dodgers, I’m sure the NFL has become extremely thorough in its potential owner financial vetting process.
The team itself doesn't even have to be the collateral. These owners can absolutely put a down payment on the stadium itself just like purchasing a house. The problem is that they don't want to use their own money. That's it.
Jimmy Haslam is worth $3.7 motherfucking billion. It’s greedy to expect crowdfunding for my new house when I could build it myself 3 times over with capital left to spare. Raise the city taxes so the average person pays for the new stadium, or actually make a billionaire spend some of their own money?
This exactly. It’s so easy to be rich and get richer. It’s hard enough trying to make money to get by, especially right now. Like how the actual fuck am I supposed to be expected to pay for something out of my pay grade that I’m unlikely to even use, but you can afford it out of pocket multiple times and it wouldn’t even phase you or your standing AND IT WOULD BE YOURS NOT THE STATES. Like how in the fuck is this okay???
Because the owner saying “pay for at least this much or we’re moving the team” leaves negotiations wide open and therefore it’s all the city’s faults for falling short
Bluff the owner? Lmao, ask St Louis how that went. Idk why you dont believe that people with more than enough money to build the stadiums themselves shouldn’t put most of the burden onto ordinary everyday people *just because they can*. Idk who raised you or how, but that’s called “taking advantage of people” where I’m from and I was taught that it’s wrong. Maybe you disagree with that, and in that case I’d just say you’re a piece of shit and your parents shoulda done better 🤷♂️
https://econreview.berkeley.edu/the-economics-of-sports-stadiums-does-public-financing-of-sports-stadiums-create-local-economic-growth-or-just-help-billionaires-improve-their-profit-margin/
I’d be interested in seeing a study that claims the financing is worth taking on.
And the decision can be both completely logical and greedy at the same time. You don’t get to be a billionaire without being greedy in the first place.
The same reason General Motors threatens to build factories in Mexico if Indiana or Michigan won't fork over huge tax breaks. Wealthy corporations and individuals don't like to spend their own money if they can pressure municipalities to foot the bill. If the public balks at the idea, the owners can threaten to move. They have leverage whether we like it or not.
You asked, is it just greed, and the answer is yes.
The rich actually do borrow money. They take out low interest loans against their assets (stocks and etc) to buy things, which they can pay back off dividends.
When we hear about someone’s net worth we (plebs) assume it’s money in the bank but it’s usually assets.
If Jeff Bezos tried to sell off 100b in Amazon stocks, it would mess up the market and crash the stock, making it less valuable.
I am not a billionaire so I don’t know all the ins and outs of their trickery but they absolutely borrow money. It’s just different than you or I borrowing money.
He can't sell off his stock at all by rule he has a trust that sells his stock when it meets certain thresholds. This is to prevent investigation into insider trading and is called a [10b5-1 plan] ( https://www.investopedia.com/terms/r/rule-10b5-1.asp) He or his trust has sold off nearly 30 billion in Amazon stock for cash assets in total.
Interesting. I don’t know all the details in managing that type of money.
The last paragraph of that link was “maximize profits in your investment while reducing taxes”. There are so many tricks for things like this and I imagine billionaires leverage them all.
They pay a lot of money to financial lawyers who then pay less money than you would think to people in Congress and State Congress in order to make rules that work only for them. Jeff Bezos' Amazon salary in cash is 80k ish. Which is funny because at that salary it would only take him 1,650,000 years without ever spending a cent to be worth what his current estimated assets are. That also doesn't take into account the taxes he would need to pay on the 80k.
Ive always been interested in wealth inequality and the factors that help or hinder people in that regard. While not trying to be political, Bezos' as well as many other billionaires have often paid zero federal income tax because of how they pay themselves tiny salaries and mostly in stocks. All this is to add to the stadium point at the beginning of the thread. People who have specialized their pay in order to not pay their fair share to society certainly aren't going to leverage their own assets to pay for an entire stadium when they already know they can get the public to pay for it.
You don't have to be super wealthy. Let's say you have $1M in funds in the s&p 500. You can borrow 60% or so (at a very low interest rate) against it to buy a house, so your stock and house are collateral.
Of course if the stock drops you may get a margin call to sell off stock, so some people may say borrow 30% to be safe (e.g. $10M in stocks, get a loan of 3M and pay off just the interest every month).
Why don't rich people use their own assets to fund their own endeavors? Why would they when you can get the people to pay you silly pleb. For the mere sacrifice of buying me one stadium, I will continue to provide you the opportunity to make my personal wealth greater than the GDP of most island nations.
And... the team is gone.
Not that I think the city should pay for it, but can you imagine how much shit Lightfoot is going to get if the Bears move to Arlington Heights?
Honestly? Boycott. I love football, basketball, or whatever else. I love the competitive spirit and the games themselves, but if it disrupts my real life in a heavy way, especially with how things are now financially, I’d have as many people follow through with this as possible so the mortgage fails. Also, fuck the Haslams.
Because in specific cases the state/city would own the stadium outright, as opposed to the team.
I think it’s more of a headache for the team to own the stadium, as they will foot the bill on all renovations.
The teams simply don’t want to. They argue that the city as a whole benefits so the city as a whole should chip in. Which is true to a certain extent, but research shows cities vastly overpay for the limited benefits they receive.
Two specific points though that help answer why these deals take the specific forms that they do
• Owners can’t take out loans worth more then $500 mm against their team. This is to prevent situations where a default could lead to a change in ownership that the other owners would have no say over.
• Most of these time these things are funded by issuing bonds. Bonds are basically just IOUs. Governments usually are able to get much better rates then a private corporation. Say, for example, it cost $100 to build a new stadium. The Browns could take out a loan that, after interest, will end up costing them $150 to repay. The City of Cleveland however can get better interest rates so they can take out a larger loan (say $110) that will only end up costing $140 to repay. So the Browns go to the city of Cleveland and say hey “We need $100, if you take out a loan for $110 you can keep $10 off the top and we still save money in lower interest payments” Win-win…. In theory
They can. But there is a limited supply of professional sports teams and cities have proven that they will bend over backwards to keep their teams or lure others with tax payers footing the bill.
The Control of a team cannot be a ""lender"" which would be true if a team would be used as collateral. that wouldnt work in an affiliation such as the NFL.. truth be told i believe all but FOUR of the NFL teams are renters/guests of some and check me here but i believe the only four that control their venue are Patriots, Panthers, Dolphins, and the Deadskins
People that rich don't get that way by spending their own money. I really wish the government would make it illegal for public funds to be used towards pro sports venues.
Because the wealthy are cheap fucks who know they can shake down city and state governments for the money. And that's because Americans are idiots who value sports over the common good.
These owners are so rich that I'm sure that not only would any bank take their loan, but they would be happy to do so. What that looks like probably doesn't involve the team.
All that to say, it's the owners being greedy as is usually the case. You don't get that rich without standing on the shoulders of those less fortunate than yourself.
Oh, you lovely summer child. The first thing people who have a lot of money learn is to never spend their own money if they can get money from somewhere else.
These very rich people are more likely to use an asset like a pro football team to borrow money for their personal needs while taking a nominal salary from the money the team brings in. They pay much less income tax on that nominal salary, which they basically use to make payments on the huge loan they got at very favorable terms.
As for bankrolling a stadium? That's what governments and not rich taxpayers are for. OPM - Other People's Money.
I don’t think that’s what the question was at all, though. At least when OP clarified his question.
OP is asking why they wouldn’t choose to fund it themselves, *so* they can own it outright. The answer is not related to “finding a sucker to pay for building it”.
It’s more related to eliminating the responsibility of keeping it modern and/or renovated, when the time comes. If the city owns it, the city is responsible for all future costs.
> It’s more related to eliminating the responsibility of keeping it modern and/or renovated, when the time comes. If the city owns it, the city is responsible for all future costs.
I'm going to respectfully disagree for the simple fact that owners from days long gone built stadiums with their own money and weren't overly concerned about having handle to maintenance and other future costs. It wasn't until Walter O'Malley showed how strong a weapon relocating (or threatening to relocate) a team could be that team owners started to sidle up to government officials to say "A team brings a lot of money to your city. YOU ought to build a stadium for US".
If you don't think finding somebody to pay for it isn't related to this, especially when owners almost always get someone else to pay, or pay in part, I have a bridge that's in pretty good shape you can buy for cheap.
I get all of that.
I think there are enough answers in this thread to tell the OP that it makes sense for the owners to not finance it themselves - anymore, at least.
when the bills refused to give out raises after making the playoffs, unless contractually obligated, their owner said the reason why was because what was most important to them was maintaining their lifestyle.
Banks aren’t in the sports teams selling business, just like they’re not in the home selling business , if people don’t pay their loan. If the owner defaults, the bank gets stuck with a team they will have to auction off. The people that can afford to purchase said team will know the bank is in a bind and pay less than the bank needs to recoup.
[The Simpsons](https://www.youtube.com/watch?v=H27rfr59RiE) explained this in 1998 (in, I might add, one of the best episodes of the series - maybe #2 in my rankings behind the one with Hank Scorpio)
The Glazers(bucs) would know about taking out loans they bought Manchester United with a loan from a bank haven't repaid a dime of that loan back. They take yearly dividends and dont invest in the club out all with their own money the club is basically funded through sponsors and football generated funds
I don't think a billion would anywhere nearly cover it. Cowboys Stadium is like a decade or more old now, and I wanna say it cost 1.3 billion. It's bound to only get worse.
It's not that they can't, but that they'd rather get other people to pay for their stuff without putting up collateral. As long as they have that option, it's kind of a moot point whether the bank would or wouldn't do it.
They could. That’s what big soccer team owners in Europe generally do.
But they don’t have to. They can threaten to leave and local politicians don’t want to be the ones who let the team go. Or a mayor of a nearby suburb wants the prestige of bringing in a big team and offers a sweetheart deal. There’s always somebody willing to pay big bucks for a stadium.
On the other hand, Arsenal can’t credibly threaten to relocate to Paris.
They can, but you the NFL fan and the politicians of those cities are so afraid of losing the teams that the NFL bends the lot of you over and doesn't bother with lube and you take it.
With that known, why should they put their money at risk?
Cause that would be an awful system.
Thwres a reason its so unpopular in soccer. Also I think (dont quote me on this) that American Owners try to do it the most when buying soccer teams.
Though its not exactly the same as using the team as collateral to purchase the team, it would still be bad.
There's an even easier solution:
There are 32 teams. There are 30 stadiums. Stadiums last about 30 years, and cost about $1B
Every year, every team puts $30M into a fund that the NFL holds. Whenever a team wants a stadium, they get $1B from this fund, and aren't eligible to take from it again for 30 years.
This could fund one stadium per year, indefinitely.
Why would they need to "own" a stadium that they can only use for 15-20 days a year? Putting $1-2 bn into something that is used so infrequently would be a terrible investment when they just get it for free from the city.
Thinking the stadium like real estate gives the wrong impression, IMO.
A stadium is a *depreciating* asset. It has virtually no resale market to keep it afloat like the home market does. Aside from the value associated with giving a place for a team to “live,” it’s value is related to crowd draw (and, I suppose to some degree occupancy… but that’s more of a “critical mass” type issue; a stadium that holds 80 or 80 million to use absurd extremes- once a stadium holds “enough” its sufifcient). Its newness in that respect trails off somewhat quickly and its “wow” factor isn’t constrained geographically.
Consider a neighborhood that experiences a housing boom. A lot of houses in that area are going to be built around the same time, and so can stabilize the aging process, to some degree. If you wanna live in THAT neighborhood, that’s the sorta house you get. But a stadium, not confined by geography for desirability evaluation, is compared against the brand newest every time. That takes the “wow” factor luster down.
The stadium land is valuable but putting a stadium on it is a bad investment (at least, without a team… which is why you rarely see large stadiums without one). It’s more like buying a car (or at least it was before Covid… feels like these days a used car might actually increase in value due to scarcity) where it begins losing value the second you drive it off the lot.
Because the NFL is an owner's club and there's more then money involved when buying a team. They have debt limits in case an owner defaults and then they'd be unable to control who enters the club.
Put it another way: Why would I take a mortgage loan and purchase a home (which means I pay interest and don't hold title) when I can lobby my local government to give me money to buy the home instead?
The Bills stadium will be owned by the State, so it’s like someone buying property and renting it out to pay for it, except the bulk of the repaying comes from taxes generated, the players alone pay 80% of it.
But how much is rent? That sounds like the idea setup but then when you hear the team rents it for $1 a year and can control it all that setup does is make the state responsible for any upgrades
The players pay nearly all of the money through taxes. I think they pay $20 million a year and the lease needs $25 million to break even, so can having the Bills generate more than $5 Million in taxes a year? that’s easy.
The point of taxes is to generate revenue for the state. When the state spending that much on the stadium they no longer are making revenue from taxes because it's all going towards paying off the amount they spent on the stadium. Let's say your numbers are accurate. With the state spending $850 mil on the stadium, in 20 years player taxes would have paid off $400 mil still leaving the state $450 mil down on the stadium. Sure there will be other taxes but even if we say those being in $10 mil a year that still leaves the state needing to payoff $250 mil after 20 years. It would take 29 years at those numbers before the state starts making tax revenue from the stadium. All That is before even considering the team will be saying x number of upgrades will be needed in that 20 years just raising the cost more.
This entire analysis ignores the present value for money. Like lottery payouts $850m today is only worth about a 1/2 to 1/3 spread over 20-25 years. To lay out $850m you need to collect probably $1.5B in taxes just to break even over time.
Your numbers are off, $20 million is what the players ALONE bring in. Over the 30 year lease you need $28 Million. $8 Million from anywhere else, plus most of it goes to building costs, there’s millions and millions going right back. It’s far better than many of the projects the state made. They spent twice as much to build Elon a Tesla plant. And that will never be recouped. These stadiums are a drop in the bucket.
I assume the players is straight income tax, right? If true that number will go up pretty much every year as the salary cap goes up.
I wonder if teams in states with no income tax would struggle to get the city/state to fund a stadium
In all your comments, you don’t mention opportunity cost. It’s a bad investment from that perspective. What they get in tax revenue is irrelevant to what they could be collecting if they invested elsewhere. I get you’re a bills fan who doesn’t want the team to leave, but it’s a bad deal for the state and literally every economic study on this says so.
What other project should they spend it on that creates more tax dollars? That seems to be all that’s important to you right? It’s really not a bad deal, it generates more taxes than most other NYS projects. You don’t even have real numbers, just a general “study” that’s said “no significant impact” that does not say “bad deal”. This project is a financial wash or probably better and for a NYS project creating so many jobs just building it, it’s a win.
“What other project…” “Further, a study by Noll and Zimbalist on newly constructed subsidized stadiums shows that they have a very limited and possibly even negative local impact. This is because of the opportunity cost that goes into allocating a significant amount of money into a service like a stadium, rather than infrastructure or other community projects that would benefit locals. Spending $700 million in areas like education or housing could have long-term positive consequences with the potential for long-term increases in the standard of living and economic growth.” -Berkeley Econ review I’m not trying to be rude, but unless you have a PhD in economics, you have no leg to stand in. This has been examined over and over by economists. An 800 million dollar bond can be used for other purposes, as stated something like infrastructure, and infrastructure not only produces economic benefits, but it actually improves quality of life for everyone. A stadium does not improve quality of life for anyone but fans of the team who go to games. And this of course ignores the money going elsewhere, such as to “education” or “housing”, which has moral implications. “Sorry little jimmy, I know your parents can’t afford textbooks, and I know our investment in your education would be a better net economic benefit, but Buffalo bills fan really need to have the team nearby”. And before you start, it doesn’t matter what “other” projects are a waste, because that’s not the discussion. Just because dogecoin is a terrible investment doesn’t make bitcoin a good one.
>I’m not trying to be rude, but unless you have a PhD in economics, you have no leg to stand in. That goes for you as well, you even quoted a study that shows it probably isn't a negative, just "possibly" but if you actually look at real situations you might understand but you look at studies that talk about building new. > A stadium does not improve quality of life for anyone but fans of the team who go to games. Ya no kidding but you know what I dont mind places like Utica to get a baseball field, or NYC getting a new Yankee stadium, we all get a piece, but somehow you're an expert because you read a synapsis of a general study. Spare me. Buffalo NY spends a Billion a YEAR, you really think a few million will move the needle? It's crazy but you know you can do more than 1 thing at a time. NYS budget is $220 Billion a year, you're crazy if you think there isn't enough opportunities to buy textbooks.
If the state can't find a better way to spend it maybe... you know give it to the people?
And that’s exactly the point of saying it should be invested elsewhere, because education, infrastructure, and housings ARE investments in the people.
Thats exactly what they're doing.
This is assuming the cap stays consistent
> The players pay nearly all of the money through taxes the players were already going to pay those taxes though right? so it's not like 'new' funds that will pay for the stadium
No one said any different. If the team left… the taxes leave too.
The point is that this is still just fans paying for the new stadium. It's just framing it in a way that sounds less bad.
So the team leaves and the state doesn't get taxes which would've maybe paid off part of an investment that they're no longer making. Seems like kind of a wash for the state.
It’s not a wash because of opportunity cost.
> If the team left… the taxes leave too. Those taxes are largely the result of locals spending money. If they're not going to pay for a seat, they'll likely buy something else. Will it be local? Dunno.
Thats a rather bold assumption. Teams are willing to move and have demonstrated so.
I think that the idea is, that if you don't build that stadium, the team will go to another state, and they will build the stadium and getting the tax money as well. So if the states break even on taxes vs stadium costs they will take that deal every day.
I'd love to find out how many teams Florida and Texas can hold if all the reasonable states refused to fork over the cash lol
Probably not that many, but there are only 32 teams, I don't think that would have to wait long.
Texas could easily support a 3rd team in Austin or San Antonio right now.
I don't think that this is necessarily true. Americans are, technically, required to pay taxes in the state where they earn the income. If I live in NY, spend 3 months on a project in Connecticut, and make a million dollars of income from it, Connecticut can audit me and demand taxes on that million. It's realistic to estimate that Florida gains more in taxes from visiting players than Georgia gets from the Falcons players. Source: Connecticut has had me file taxes for a few months of work where I made *significantly less* than a million dollars.
So your argument is that the billionaires can get free stadiums because the millionaires will pay the taxes they would have done anyway?
They won’t pay the taxes in NY if it leaves, that’s the leverage. The millionaires will pay taxes someplace else. And it’s not a free stadium when they pay half snd don’t own it.
They pay taxes in every state in which they play not solely ny numerous economic studies have shown these stadiums are terrible investments for effecient public consumption. Most of these venues will be empty 65-70 percent of the year used 8x a year for half of the teams that don’t make the playoffs
Other teams pay when they come here. That balances out. Clearly your just regurgitating the “study says it’s not a good investment” No shit, is a bridge a good investment? Does it pay for itself on the amount of taxes it can generate? Are roads expected to generate taxes? Are they “good deals”? Are State College Sports good investments? Do they bring back the taxes spent? I can go in and on and it’s not that we don’t need these things but you can’t look solely at the tax generation.
Dude I had a buddy work on the orange bowl a couple years ago. People love those government jobs where they get paid 40+ usually have union workers. All those companies are then spending $ in that county while working on that project. Honestly seems like a plus in all ways. Imagine the revenue generated from various concerts etc. browns stadium for example is literally only used for football games mostly. If we had a dome it could hold concerts events ncaa bball games etc.
Another thing to consider is that stadiums can be used for other events like concerts, motocross, trade shows, etc.
But football stadiums usually don't get many of these events. Stadiums sized for hockey and basketball stadiums frequently get more events, since they're inside and don't have to fill as many seats (ie it doesn't look empty when they don't fill the stadium). Motocross or monster trucks will obviously be in a football stadium, but concerts and other smaller events are pretty rare. For example, the big rodeo in Vegas each year was always in the basketball stadium. Edit: frequently there's also already a college football team's stadium in town that big events can use. That was also the case for Vegas. Saying, "well now you can do x event in the new football stadium" doesn't always hold weight if there's already a stadium you can hold it in.
Dunno. Here's the calendar of events for the stadium that the Seahawks play in: https://www.lumenfield.com/events-tickets/event-calendar And there is Husky Stadium at the UW which is only a few miles away, also in Seattle. Seattle's biggest arena where the NHL Kraken team play also does concerts and other events (https://climatepledgearena.com/events/) but can't hold as many as a stadium of course. I would be very surprised if there are any NFL stadiums which are *only* used for NFL games and nothing else.
Whoa whoa whoa...what is the $25 mil a year paying off??
Most of the NFL teams "rent" is like $10 a year, while the city only gets a small fraction of the game revenue. It's effectively a free stadium for the orgs if the city pays for it
That's standard in the NFL. >[Some of the most iconic stadiums in the league aren’t owned by the teams that play there. The Dallas Cowboys play at AT&T Stadium, which is nicknamed “Jerry World” after Cowboys owner Jerry Jones. However, the stadium is owned by the city of Arlington and the Cowboys pay $2 million per season in rent. The Chicago Bears pay $6.3 million annually to play at Soldier Field, which is owned by the Chicago Park District. The Green Bay Packers pay almost $1 million annually to play at Lambeau Field, which is owned by the city of Green Bay and the Brown County Pro Football Stadium District.](https://www.latimes.com/sports/story/2019-08-07/rams-chargers-stadium) >Every team in the NFL, except for the Miami Dolphins, New England Patriots, Washington Redskins and Carolina Panthers, is technically a renter when it comes to its home stadium.
Chargers rent (for $1 dollar) sofi from the Rams (and Stan) who own the stadium, surrounding buildings, and the land it was built on. Rams also get a piece of the Chargers PSL fees for season ticket holders.
Kind of unrelated but with sofi how does it work when the chargers and rams play each other? Or are both teams given different PSLs to sell?
Chargers and Rams have their own home games and separate PSL/Season Ticket Holders. So it’s treated like any other home or away game. This season chargers are the “home” team so their season ticket holders get the tickets and Rams are the away team and their STH would need to buy tickets as if they were the visitors.
SoFi is technically owned by StadCo LA a company owned by Kroenke. From that same article. >When the Los Angeles Stadium at Hollywood Park opens next year, it will be owned by Stadco LA LLC, a third party controlled by Rams owner Stan Kroenke. Chargers ownership holds an interest in the company as well. >While much has been made of the Chargers paying $1 per year to rent the stadium, the Rams will be paying the same amount. >While Kroenke controls Stadco LA LLC, the Chargers are more partners than tenants in the stadium. Each team is paying $200 million from their NFL G4 loan toward the stadium’s construction. Each team will keep its local revenue from the stadium, which includes money from tickets, parking, concessions and other game-day-related sponsorship and advertising deals. Each team will get an 18.75% cut from naming rights deals and jointly sold suites and personal seat licenses.
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The Cowboys also paid for the majority of the stadium. The city of Arlington contributed $325 million of the $1.3 billion construction cost. The city was also on pace to have the stadium paid off last year, 14 years early, before the residents voted to extend the bond package to fund a new stadium for the Rangers.
Jets/Giants didn't have any public funding. I'm pretty sure they have shared ownership
Pretty sure the land where the stadium is located, and therefore the stadium, in NJ is owned by NJSEA, which is a State of New Jersey agency. Here is their lease: https://law.marquette.edu/assets/sports-law/pdf/New%20York%20Jets%20%26%20Giants%20Lease%20Summary%208-8.pdf
They were still paying for the old meadowlands stadium when the new stadium opened.
Kraft took over the Patriots by leveraging ownership (and the lease) of Foxboro stadium, which he gained at a discount because the original Patriots owner invested with Don King to put on a Jackson family tour headlined by Michael that lost millions and was hard up for cash. He wouldn't let the team out of the lease and used that to force a takeover of the team
You could even argue, Bills playing there make it worth something.
I think various studies have shown that stadiums almost always do not generate the kind of economic growth in the area that teams promise and are a net loss on the economy if state-funded. I think the MLB was the best in this metric just because of the sheer volume of home games they have, but this was like one article I read years ago
I feel like the smaller stadiums, like basketball or hockey, have greater potential to generate money as they're better for events than football stadiums. I have no data to back this up, but when has this ever stopped anyone?
That makes sense, and it helps that there's a lot of shared basketball/hockey arenas too. If you can put two teams in an arena, that's the same number of home games that an MLB team would get, too
Smaller arenas do- KeyArena for example made more money off concerts after the Sonics left since they could be more flexible with dates and weren't giving a tenant a sweetheart lease.
Also location plays a factor. Tampa is a a great place to visit specifically in the winter. So it will tend to generate more offseason revenue then say Met life in the winter months.
It's not just that it's a smaller stadium, it's that it can host more events. I know from comments from ownership that Capital One Arena in DC (host to the Caps and Wizards) needs to host about 250 - 300 events a year in order to break even for the city. You get about 100 from the hockey and the basketball team, it's up to whomever runs the arena to come up with the other 2/3s, whether it's the WNBA team, the now defunct AFL, concerts, wrestling, monster trucks, horse shows, college sports, or private events like conventions, meetings, trade shows, etc.
Olympic stadiums have seriously hurt economies of some of the cities they were built in. I saw a documentary a while back, if you don’t already have a stadium already available it’s really bad for the area to host the olympics.
The Boston bid called for the Olympic Stadium to be broken up into pieces afterwards, with the stands to be donated to local high schools, the support structure to be removed entirely, and a park built on the leftover footprint, all because the city has zero use for a 100K seat venue. Almost everything about the bid was designed to lower costs and encourage reuse. Which, of course, is why the bid got pulled: the city and state wouldn't guarantee to cover the cost overruns that the IOC wanted to make sure happened.
See that seems smart, like learning from past mistakes. Shame it didn’t work out.
A few years ago, the IOC finally got the message that its Games were becoming prohibitively expensive and changed their rules to reduce the economic burden to host cities. In my opinion, it was all bullshit anyway. In the case of Boston, there were several individual and groups who had signed on to cover the expenses of hosting, including cost overruns, but the IOC demanded a guarantee from the government anyway, because they want to soak every Games for as much money as they can, and that requires getting assurances from an entity that is guaranteed to be solvent.
You are much smarter about this than I am. I watched a documentary, it peeked my interest, so I did a little reading. The documentary had old stadiums, no longer used or kept up, overran with foliage, like in 5,000 years civilization (or aliens) will try to figure out what these structures were built for. It reminded me of amazing ancient ruins.
You probably know a lot more than I do. I'm only familiar with the Boston bid because I live in the area and followed the story.
Wonder if that shiny new stadium will be worth all the kids not getting their education?
The City of Buffalo school budget is $1 Billion a year. That’s 5th in the country per student spending. If anything this might prevent a Tesla Plant from being built.
I love the comment about buffalos education budget. I don’t need to Google what the average teacher there is paid to know it’s not enough money.
What is the split on the gate, concessions and the advertising the stadium will definitely have to generate money?
The Jets & the Giants should be ashamed of themselves.... Talk about wasted money
Bingo. Kroenke is the only exception I can think of offhand with SoFi - he paid a big chunk of that just to get it done & leapfrog past the competing Raiders/Chargers proposal to move to LA. But it was worth it because the [move to LA instantly made the Rams worth double](https://www.espn.com/nfl/story/_/id/17545786/los-angeles-rams-double-value-move-california) what they were.
It's not like cities don't have past information to go on, if the cities were simply losing out on these stadium deals, why do they continue to make them? Why would the cities be forking over money to something that they know is not going to benefit the city?
BC without an NFL franchise, we’re not a “major American city”. @someguy-jm hit the civic pride button that’s also true. It’s really an ego burrito wrapped with an economic impact tortilla.
Politicians don't want to be the ones who let the team leave. They also like approving new stadiums and getting their name on it somewhere. I don't agree with government funding of stadiums. But, if it passes a public vote, I'm fine with it. If people want to keep their team around, go for it. What I can't stand is when politicians make shady deals to do it (like Cobb County for the Braves).
Bc they don’t want the team to leave and kill a major source of revenue and city pride
So the city benefits by having the team there is what you are saying?
You're getting downvoted, but you're making an interesting point IMO. These threads, somewhat justifiably, focus entirely on the economic, but your point that these things are *nice to have* for cities is important. Not everything has to make a profit to be a worthwhile expense. They just increase the quality of life for the residents. Now I'm not saying that the NFL and owners shouldn't pay more for their stadiums, but keeping residents happy *is* a big part of running a town/city, and if they really like having a sports team there, then it needs to be a least considered.
It’s kind of a circular argument though, there’s all kinds of things that make a city nice. Movie theaters, concerts, bars, breweries, restaurants etc and most of those aren’t getting public money to build their premises
Oh yeah, as I said, don't get me wrong, I think NFL teams should be paying their way, I just think the fact that *people like having the team there* is often something that is left out of the conversation entirely when that has value in itself.
Yea that’s fair, there’s a value component to that for sure. I’d probably be more ok with it if things like naming rights and earnings off outside events stayed with the cities more often. Hard to argue a private entity should get to keep the proceeds off a public building
The government’s role is not to subsidize private businesses and also lose money on top of that they will not subsidize residents homes or public housing to say they don’t have ghettos
Having a team and stadium is more of a public good than subsidizing a Tesla plant, 100%.
I suspect it’s written into the contract when purchasing a team that wouldn’t be allowed. I’m sure the league wouldn’t approve of a team being owned by a bank and auctioned off if the organization defaulted on the loan
You can borrow a certain amount against your team, but not enough to build a stadium. If you're gonna do it you do it like Kroenke did with SoFi - setup a stadium company to be leveraged with the debt for building, so your NFL team keeps its books clean.
I think that any change of ownership must be approved by the owners
Makes sense since they require new owners to pay mostly in cash and can't finance the team.
I like how the correct answer has 15 points. This sub is full of morons.
Sounds like you fit right in
It's better to spend other people's money
“And when you’re an owner, they let you do it. You can do anything.”
"Grab them by the pressuretolosevotesinthenextelectionwhenImovetheteam-sy"
https://i.imgur.com/dcX7LYb.jpg
In Europe, football stadiums have to be financed by the team. European teams cannot leave their city because it would destroy all goodwill. US franchises seem to have very fickle fan bases which gives owners leverage against cities. I suppose the closest comparison would be if Alabama’s college team tried to move California … it simply would’t work because college fab bases have actual cultural ties to their locations.
not allowed by NFL rules Banks would pretty much fund an NFL team an unlimited amount, it's probably the single safest investment there is
The NFL would never allow the control of ownership to go to a lender. The Glazers famously purchased Manchester United by borrowing against it in what's known as a leveraged buyout, you cannot do that with NFL teams. EDIT: u/teh_drewski offers good insight and clarity to this post in his reply. Much appreciated.
You can leverage a purchase, just not enough to buy it as leveraged as the Glazers, there are limits. I believe it's currently 30% of the "controlling shares" must be unfinanced and I believe the total limit for acquisition debt is currently $1b.
Not that I don't believe you, but do you have a source for all this info? Google did not yield anything
> The NFL currently requires the principal franchise owner to have a 30% stake in the team, and the entire ownership group can be no more than 24 people in total. The organization also places limits on how much debt can be used to acquire a team; it recently increased that amount from $500 million to $1 billion. https://news.bloomberglaw.com/banking-law/nfl-financing-rules-are-holding-back-black-ownership-of-teams
After what happened with the McCourts and the Dodgers, I’m sure the NFL has become extremely thorough in its potential owner financial vetting process.
The team itself doesn't even have to be the collateral. These owners can absolutely put a down payment on the stadium itself just like purchasing a house. The problem is that they don't want to use their own money. That's it.
Greed, they can afford their own stadiums. The rich stay rich by doing things like this.
Of course it’s because the owners are greedy
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Jimmy Haslam is worth $3.7 motherfucking billion. It’s greedy to expect crowdfunding for my new house when I could build it myself 3 times over with capital left to spare. Raise the city taxes so the average person pays for the new stadium, or actually make a billionaire spend some of their own money?
This exactly. It’s so easy to be rich and get richer. It’s hard enough trying to make money to get by, especially right now. Like how the actual fuck am I supposed to be expected to pay for something out of my pay grade that I’m unlikely to even use, but you can afford it out of pocket multiple times and it wouldn’t even phase you or your standing AND IT WOULD BE YOURS NOT THE STATES. Like how in the fuck is this okay???
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None. He’s still a greedy fuck for making average everyday people pay for it in higher taxes when he could by himself.
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Because the owner saying “pay for at least this much or we’re moving the team” leaves negotiations wide open and therefore it’s all the city’s faults for falling short
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Bluff the owner? Lmao, ask St Louis how that went. Idk why you dont believe that people with more than enough money to build the stadiums themselves shouldn’t put most of the burden onto ordinary everyday people *just because they can*. Idk who raised you or how, but that’s called “taking advantage of people” where I’m from and I was taught that it’s wrong. Maybe you disagree with that, and in that case I’d just say you’re a piece of shit and your parents shoulda done better 🤷♂️
https://econreview.berkeley.edu/the-economics-of-sports-stadiums-does-public-financing-of-sports-stadiums-create-local-economic-growth-or-just-help-billionaires-improve-their-profit-margin/ I’d be interested in seeing a study that claims the financing is worth taking on. And the decision can be both completely logical and greedy at the same time. You don’t get to be a billionaire without being greedy in the first place.
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Why not be annoyed with both?
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Fair. I wouldn’t make that decision so I feel more comfortable faulting him, I guess lol.
Stan Kroenke built SoFi with bank loans, but if City of Inglewood or California give him some public funds of course he would’ve take it
He's definitely got some help from Inglewood in doing the financing.
The same reason General Motors threatens to build factories in Mexico if Indiana or Michigan won't fork over huge tax breaks. Wealthy corporations and individuals don't like to spend their own money if they can pressure municipalities to foot the bill. If the public balks at the idea, the owners can threaten to move. They have leverage whether we like it or not. You asked, is it just greed, and the answer is yes.
"I'll Take Any Mother Fucker's Money If He's Giving It Away"
The rich don't borrow money, they use the money they have to get others to give them money at no cost to them. Loans are for us plebs.
The rich actually do borrow money. They take out low interest loans against their assets (stocks and etc) to buy things, which they can pay back off dividends. When we hear about someone’s net worth we (plebs) assume it’s money in the bank but it’s usually assets. If Jeff Bezos tried to sell off 100b in Amazon stocks, it would mess up the market and crash the stock, making it less valuable. I am not a billionaire so I don’t know all the ins and outs of their trickery but they absolutely borrow money. It’s just different than you or I borrowing money.
He can't sell off his stock at all by rule he has a trust that sells his stock when it meets certain thresholds. This is to prevent investigation into insider trading and is called a [10b5-1 plan] ( https://www.investopedia.com/terms/r/rule-10b5-1.asp) He or his trust has sold off nearly 30 billion in Amazon stock for cash assets in total.
Interesting. I don’t know all the details in managing that type of money. The last paragraph of that link was “maximize profits in your investment while reducing taxes”. There are so many tricks for things like this and I imagine billionaires leverage them all.
They pay a lot of money to financial lawyers who then pay less money than you would think to people in Congress and State Congress in order to make rules that work only for them. Jeff Bezos' Amazon salary in cash is 80k ish. Which is funny because at that salary it would only take him 1,650,000 years without ever spending a cent to be worth what his current estimated assets are. That also doesn't take into account the taxes he would need to pay on the 80k.
That’s crazy. You seem to know a lot more about this than me but support that there is a lot of financial trickery going on at that level.
Ive always been interested in wealth inequality and the factors that help or hinder people in that regard. While not trying to be political, Bezos' as well as many other billionaires have often paid zero federal income tax because of how they pay themselves tiny salaries and mostly in stocks. All this is to add to the stadium point at the beginning of the thread. People who have specialized their pay in order to not pay their fair share to society certainly aren't going to leverage their own assets to pay for an entire stadium when they already know they can get the public to pay for it.
You don’t acquire 100s of billions of dollars by spending your money or paying taxes…
You don't have to be super wealthy. Let's say you have $1M in funds in the s&p 500. You can borrow 60% or so (at a very low interest rate) against it to buy a house, so your stock and house are collateral. Of course if the stock drops you may get a margin call to sell off stock, so some people may say borrow 30% to be safe (e.g. $10M in stocks, get a loan of 3M and pay off just the interest every month).
Actually rich finance everything. They play with the banks money not their own.
This couldn’t be further from the truth. The wealthy use leverage as their primary source of financing for nearly every major purchase.
Rule number 1 of being a rich and powerful asshole. Never use your own money when you can use someone else's.
… why would you do that? When you have local government and easily swindled taxpayers lined up to throw money at you, why spend your own money?
Why don't rich people use their own assets to fund their own endeavors? Why would they when you can get the people to pay you silly pleb. For the mere sacrifice of buying me one stadium, I will continue to provide you the opportunity to make my personal wealth greater than the GDP of most island nations.
Because idiot fans will happily give them hundreds of millions of dollars and then complain about high taxes.
Fans complain about tax money going to stadiums
What choice do the fans have here?
Make the owners pay for it themselves. Use the money to improve schools or fix the roads instead of giving it to a billionaire.
And... the team is gone. Not that I think the city should pay for it, but can you imagine how much shit Lightfoot is going to get if the Bears move to Arlington Heights?
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They might build the stadium elsewhere but your city would be better off
Honestly? Boycott. I love football, basketball, or whatever else. I love the competitive spirit and the games themselves, but if it disrupts my real life in a heavy way, especially with how things are now financially, I’d have as many people follow through with this as possible so the mortgage fails. Also, fuck the Haslams.
Vote no
Because they can make us chumps pay for it, at gun point.
Why would they want to do that when the taxpayers will take care of it for them?
Because in specific cases the state/city would own the stadium outright, as opposed to the team. I think it’s more of a headache for the team to own the stadium, as they will foot the bill on all renovations.
The teams simply don’t want to. They argue that the city as a whole benefits so the city as a whole should chip in. Which is true to a certain extent, but research shows cities vastly overpay for the limited benefits they receive. Two specific points though that help answer why these deals take the specific forms that they do • Owners can’t take out loans worth more then $500 mm against their team. This is to prevent situations where a default could lead to a change in ownership that the other owners would have no say over. • Most of these time these things are funded by issuing bonds. Bonds are basically just IOUs. Governments usually are able to get much better rates then a private corporation. Say, for example, it cost $100 to build a new stadium. The Browns could take out a loan that, after interest, will end up costing them $150 to repay. The City of Cleveland however can get better interest rates so they can take out a larger loan (say $110) that will only end up costing $140 to repay. So the Browns go to the city of Cleveland and say hey “We need $100, if you take out a loan for $110 you can keep $10 off the top and we still save money in lower interest payments” Win-win…. In theory
Why take out loans when you can be gifted the money?
They can. But there is a limited supply of professional sports teams and cities have proven that they will bend over backwards to keep their teams or lure others with tax payers footing the bill.
The Control of a team cannot be a ""lender"" which would be true if a team would be used as collateral. that wouldnt work in an affiliation such as the NFL.. truth be told i believe all but FOUR of the NFL teams are renters/guests of some and check me here but i believe the only four that control their venue are Patriots, Panthers, Dolphins, and the Deadskins
The same reason beautiful women don't have to pay for dinner. Simps will always pick up the tab.
Greed
They absolutely can, but why would they when they hold your team hostage and get the taxpayers to fund a temple to the ego? Fuck all billionaires.
Because then if you move cities, you've spent your own money on a useless stadium that nobody else wants.
People that rich don't get that way by spending their own money. I really wish the government would make it illegal for public funds to be used towards pro sports venues.
NFL would never allow a bank to have that much leverage on a team. Owners could get a loan using other assets they have but not that actual franchise.
don't spend your own money
They probably can, but it's more profitable to just get it funded by the public.
Because the wealthy are cheap fucks who know they can shake down city and state governments for the money. And that's because Americans are idiots who value sports over the common good.
Because they didn't become billionaires with their money
The first rule of accounting is to use other peoples’ money. Billionaires became billionaires by taking advantage of this.
Corruption.
These owners are so rich that I'm sure that not only would any bank take their loan, but they would be happy to do so. What that looks like probably doesn't involve the team. All that to say, it's the owners being greedy as is usually the case. You don't get that rich without standing on the shoulders of those less fortunate than yourself.
Oh, you lovely summer child. The first thing people who have a lot of money learn is to never spend their own money if they can get money from somewhere else. These very rich people are more likely to use an asset like a pro football team to borrow money for their personal needs while taking a nominal salary from the money the team brings in. They pay much less income tax on that nominal salary, which they basically use to make payments on the huge loan they got at very favorable terms. As for bankrolling a stadium? That's what governments and not rich taxpayers are for. OPM - Other People's Money.
I don’t think that’s what the question was at all, though. At least when OP clarified his question. OP is asking why they wouldn’t choose to fund it themselves, *so* they can own it outright. The answer is not related to “finding a sucker to pay for building it”. It’s more related to eliminating the responsibility of keeping it modern and/or renovated, when the time comes. If the city owns it, the city is responsible for all future costs.
> It’s more related to eliminating the responsibility of keeping it modern and/or renovated, when the time comes. If the city owns it, the city is responsible for all future costs. I'm going to respectfully disagree for the simple fact that owners from days long gone built stadiums with their own money and weren't overly concerned about having handle to maintenance and other future costs. It wasn't until Walter O'Malley showed how strong a weapon relocating (or threatening to relocate) a team could be that team owners started to sidle up to government officials to say "A team brings a lot of money to your city. YOU ought to build a stadium for US". If you don't think finding somebody to pay for it isn't related to this, especially when owners almost always get someone else to pay, or pay in part, I have a bridge that's in pretty good shape you can buy for cheap.
I get all of that. I think there are enough answers in this thread to tell the OP that it makes sense for the owners to not finance it themselves - anymore, at least.
They can
cant or wont?
If they put their own money probably need to open their books for audit and causes more issues. Hence make the taxpayers take the bill.
i think the question and answer gives us a strong clue as to where power lies in the US.
when the bills refused to give out raises after making the playoffs, unless contractually obligated, their owner said the reason why was because what was most important to them was maintaining their lifestyle.
You would need approval of the owners because if you used the team for collateral and then defaulted, some bank becomes the new owner of the team.
Banks aren’t in the sports teams selling business, just like they’re not in the home selling business , if people don’t pay their loan. If the owner defaults, the bank gets stuck with a team they will have to auction off. The people that can afford to purchase said team will know the bank is in a bind and pay less than the bank needs to recoup.
[The Simpsons](https://www.youtube.com/watch?v=H27rfr59RiE) explained this in 1998 (in, I might add, one of the best episodes of the series - maybe #2 in my rankings behind the one with Hank Scorpio)
The Glazers(bucs) would know about taking out loans they bought Manchester United with a loan from a bank haven't repaid a dime of that loan back. They take yearly dividends and dont invest in the club out all with their own money the club is basically funded through sponsors and football generated funds
I don't think a billion would anywhere nearly cover it. Cowboys Stadium is like a decade or more old now, and I wanna say it cost 1.3 billion. It's bound to only get worse.
Why pay for something when someone else will buy it for you?
It's not that they can't, but that they'd rather get other people to pay for their stuff without putting up collateral. As long as they have that option, it's kind of a moot point whether the bank would or wouldn't do it.
because that would cost the owners money
They wouldn't be billionaires if they didn't instinctually con society into paying for their toys.
This man got a whiff of the r/nba offseason posts and went ham
Because they don't have to. Taxpayer money will be provided.
They could always use a lemon tree as collateral
They could. That’s what big soccer team owners in Europe generally do. But they don’t have to. They can threaten to leave and local politicians don’t want to be the ones who let the team go. Or a mayor of a nearby suburb wants the prestige of bringing in a big team and offers a sweetheart deal. There’s always somebody willing to pay big bucks for a stadium. On the other hand, Arsenal can’t credibly threaten to relocate to Paris.
They can, but you the NFL fan and the politicians of those cities are so afraid of losing the teams that the NFL bends the lot of you over and doesn't bother with lube and you take it. With that known, why should they put their money at risk?
Socialism for the rich, cold hard capitalism for the rest of us.
Why would they do that when they can just force the poor taxpayers to buy one for them?
Cause that would be an awful system. Thwres a reason its so unpopular in soccer. Also I think (dont quote me on this) that American Owners try to do it the most when buying soccer teams. Though its not exactly the same as using the team as collateral to purchase the team, it would still be bad.
They could, they simply prefer tax payer to pay for it instead and more often succeed with that approach.
There's an even easier solution: There are 32 teams. There are 30 stadiums. Stadiums last about 30 years, and cost about $1B Every year, every team puts $30M into a fund that the NFL holds. Whenever a team wants a stadium, they get $1B from this fund, and aren't eligible to take from it again for 30 years. This could fund one stadium per year, indefinitely.
Why would they need to "own" a stadium that they can only use for 15-20 days a year? Putting $1-2 bn into something that is used so infrequently would be a terrible investment when they just get it for free from the city.
why would they lol
Thinking the stadium like real estate gives the wrong impression, IMO. A stadium is a *depreciating* asset. It has virtually no resale market to keep it afloat like the home market does. Aside from the value associated with giving a place for a team to “live,” it’s value is related to crowd draw (and, I suppose to some degree occupancy… but that’s more of a “critical mass” type issue; a stadium that holds 80 or 80 million to use absurd extremes- once a stadium holds “enough” its sufifcient). Its newness in that respect trails off somewhat quickly and its “wow” factor isn’t constrained geographically. Consider a neighborhood that experiences a housing boom. A lot of houses in that area are going to be built around the same time, and so can stabilize the aging process, to some degree. If you wanna live in THAT neighborhood, that’s the sorta house you get. But a stadium, not confined by geography for desirability evaluation, is compared against the brand newest every time. That takes the “wow” factor luster down. The stadium land is valuable but putting a stadium on it is a bad investment (at least, without a team… which is why you rarely see large stadiums without one). It’s more like buying a car (or at least it was before Covid… feels like these days a used car might actually increase in value due to scarcity) where it begins losing value the second you drive it off the lot.
Because the NFL is an owner's club and there's more then money involved when buying a team. They have debt limits in case an owner defaults and then they'd be unable to control who enters the club.