IF YOU BUILD IT, THEY WILL RELOCATE PUBLIC PRIVATE PARTNERSHIPS IN SPORT STADIUM FINANCING

• Published in: Public contract law journal Vol. 46; no. 4; pp. 853 - 872
• Main Author: Irizarry, Alejandra M. Hernández
• Format: Journal Article
• Language: English
• Published: Chicago American Bar Association Section of Public Contract Law 22.06.2017; American Bar Association
• Subjects: Agreements; Build operate transfer; Business relocation; Case studies; Cities; Construction costs; Debt service; Evaluation; Finance; Government contracts; Infrastructure; Local finance; Management; Methods; Operations management; Partnership agreements; Private sector; Project finance; Public private partnerships; Public sector; Public-private sector cooperation; Responsibilities; Risk sharing; Roads & highways; Sports facilities; Sports franchises; Stadiums; Subsidies; Toll roads; Los Angeles California; Chicago Illinois; Indiana; United States > US
• ISSN: 0033-3441; 2162-8181

[...]Part IV offers a solution to better balance the risk involved with sport stadium financing.[...]Part IV.C evaluates possible amendments to contract clauses that can further benefit municipalities while still providing appropriate contracts and amenities to professional teams."107 Although not necessarily a failure in the agreement, this concern extends to the funding and management of sports stadiums because taxpayers often do end up footing the bill.108 Based on facts and current situations discussed below, the government and professional sports team partnerships, structured in a combination of Design-Build, DBOP, and BOT Agreements, best benefit the sports franchises.[...]opportunity costs109 are the fundamental social issue associated with government spending on sports facilities since taxpayer funds are involved.110 Tax dollars spent on sports stadiums could be expended on other government-provided services or retained by the taxpayer.111 Without sport stadium contracting expenses, the most likely alternative would be rescinding tax increases associated with the stadium contract rather than authorizing the increase and redirecting the funds to other services and community needs.112 A. The Facts: Sport Stadium Financing In 2013, stadium investment totaled an estimated $12.9 billion, of which public tax funds contributed $6.7 billion.113 In addition to venue construction costs, many nuanced costs, such as property taxes and costs for maintenance and operations, remain under the radar when contracts are first negotiated for these stadiums.114 Furthermore, the expense goes beyond the stadium itself: teams also contract for parking facilities, luxury boxes, dedicated highway ramps, and other amenities.115 The overburden on local governments to cover these costs demonstrates the need for a solution to the asymmetric risk involved in contracts between municipalities and professional sports teams.[...]they] hold a great amount of sway over localities.