Sports Stadium Subsidies Research Paper

Since 1986, American taxpayers have spent over 4 billion dollars a year on subsidies for sports franchises. The construction of sports stadiums is occurring at immense pace. “The National Football League has opened 17 new stadiums” (Coates). At this incredible rate, is seems as if it is necessary for state and local governments being involved with the financing, managing, and the construction of such venues. The municipal bonds used to fund these new stadiums are typically backed by the federal government to exempt the franchises from income taxes. State and local governments need to eliminate stadium subsidies because the loss of federal tax revenues is higher than the subsidy for high-income taxpayers. Any regulation a government imposes …show more content…
Wulz statement is incorrect mainly because the demand for attending sports games is inelastic. Inelastic demand is when people are willing to pay for a good or service regardless of the cost. This means if the owners of the franchises are worried that they are will not be able to make enough money sustain generating enough revenue to make their investment in their stadium worthwhile. Due to inelastic demand, the franchise owners will be able to place the burden on the consumers. Sports franchises should not have a concern on making enough revenue per seat sold since the venues are considered a monopoly. Once a buyer purchases a ticket to the inside of the stadium, there is no longer competition inside the stadium to drive down prices of other goods, such as refreshments or souvenirs. The concessions inside the stadium does not have any competition. This allows the producers and business owners to operate at marginal revenue equaling marginal costs, forcing the quantity of goods to decrease, while the price of goods increase. Clearly, these franchise owners should not be concerned of not making their investment worthwhile since their business is considered a