In this article, I will imagine being the owner of the National Football League’s (NFL) Oakland Raiders. In this simulation, I will be appealing to Oakland city officials to justify public subsidization of a new facility. As part of my argument, I will address how a new football stadium benefits the community, both structurally and socially. I will include the primary sources of public sector funding that I am recommending, while comparing public and private sector funding. I will conclude the article with a plan to move forward when the venture is agreed upon.
The Oakland Raiders
Established in 1960 as part of the American Football League (AFL) the Oakland Raiders have had a tumultuous history, having multiple stints in both Oakland and Los Angeles. No strangers to victory, the Raiders have won multiple championships, including the 1967 AFL Championship, and the 1976 and 1980 NFL Super Bowls. The Raiders have also won 12 divisional championships and three conference championships. The Oakland Coliseum has been home to the Raiders from 1965-1981, when the franchise left for Los Angeles, then again from 1995-201 when the franchise returned to Oakland.
Since the early 2000s, rumors have swirled about another potential move out of Oakland. Fueled by the need for a new stadium, Oakland ownership has searched for Possible destinations included San Antonio, Las Vegas, Los Angeles, or retaining the Oakland name but sharing a stadium with the San Francisco 49ers in Santa Monica. As stated in the introduction, instead of assuming the position that the Raiders franchise will move to Las Vegas, I this proposal is designed t0 keep the franchise in Oakland. However, I will utilize a potential relocation to strengthen my proposal, as the threat of a franchise leaving often compels a city and its citizens to action (Beisner, 1988).
Benefits of a Football Stadium
The two key elements of the successful construction of a major sports facility are to control costs and to keep the project on schedule (Aicher et al., 2016). By keeping costs low and production moving quickly, fewer tax dollars are used and the community will see financial benefits sooner. Aside from these two benefits, new sports stadiums can create a significant impact on the local community through increased jobs in the short-run and increased spending through tourism over the long-run (BER, 2019). SoFi Stadium, located just outside of Los Angeles in Inglewood, provided around 3,500 construction jobs in addition to 10,000 additional positions by the time it was completed (BER, 2019). The general idea behind this position is that the increased local income created through these construction jobs could lead to further spending, investment, and job creation, thereby creating a long-term benefit for the local economy (BER, 2019).
Additionally, Community Benefits Agreements (CBA) can be worked into the agreement for public subsidization of a new facility. A CBA is a binding contract between a community group and a real estate developer that requires the developer to provide specific amenities and mitigations to the community (Porterfield, 2021). Possible benefits from a CBA include living wage requirements for future employees, hiring locally, minority employee initiatives, green building requirements, and funding for community programs, among others. In 2018, the city of Nashville negotiated a CBA that provide affordable housing and childcare, a $15.50 minimum wage, and workforce development programs when investors were looking to build a new stadium to attract a Major League Soccer franchise (Porterfield, 2021).
Despite the many benefits that a new football stadium could bring to a community, many taxpayers are understandably hesitant to commit prodigious amounts of public funds to subsidize the interests of billionaire ownership groups. The benefit principle of taxation requires that those who pay for a public investment should receive commensurate benefits from it (Howard & Crompton, 2018). Solely examining a community’s economic net gains reveals that, in many cases, the net gains are too small to justify a public investment in an NFL stadium. However, an NFL stadium brings significantly enhanced structural and social capital into the community (Howard & Crompton, 2018). The term structural capital refers to the actual sport facility, the complementary development associate with it, and the community infrastructure improvements the facility stimulates (Howard & Crompton, 2018). The term social capital refers to a community’s social interactions and the development of mutually beneficial relationships that enable action and create norms (Howard & Crompton, 2018).
Public Subsidization
Subsidized sports facilities are a very common occurrence these days. As explained by Zimbalist and Noll (1997), a subsidy for a sports facility starts with the federal government, which allows state and local governments to issue tax-exempt bonds to help the facility. Tax exemption lowers interest on debt, which reduces the amount that cities and teams must pay for a stadium. Because this stadium will be jointly financed (private and public), the budget will be substantially smaller. Instead of a more luxurious facility like Los Angeles’ SoFi Stadium that cost $5 billion of private funds (Bernstein, 2020), a jointly financed stadium would have a budget in the $1-2 billion range. The majority of these funds would still come from private investors, as this proposal requests only $750 million of public funds.
The $750 million subsidy that we are requesting from the city of Oakland to help with the construction of a new stadium would be patterned after the tax package embraced by Oklahoma City in 2008 when the city was looking to attract an NBA franchise. This tax package was a 15-month, $.01 sales tax that was used to generate $120 million to renovate the Ford Center arena. This tax package raised approximately $8 million each month. From the first stages of a stadium proposal of Las Vegas’ Allegiant Stadium to the date it hose=ted its first event was just over 48 months (Velotta, 2020). In 48 months, a $.02 sales tax would generate approximately $768 million, exceeding the needed subsidy.
Moving Forward
I believe a $750 public subsidy would have been enough to keep the Raiders in Oakland. Construction of this new facility would enable the Raiders to call Oakland home for the foreseeable future. It would also avoid a situation like the city of Seattle experienced when the Super Sonics left for Oklahoma City. A current NFL-caliber stadium wouldn’t just keep the Raiders in Oakland, but it would also enable the city to attract major events to the community to further strengthen its structural and social capital.
References
Aicher, T. J., Newland, B. L., & Paule-Koba, A. L. (2016). Sport facility and event management. Jones & Bartlett Learning.
Beisner, J. (1988). Sports Franchise Relocation: Competitive Markets and Taxpayer Protection. Yale Law & Policy Review, 6(2), 429–448.
Berkley Economic Review Staff. (2019, April 4). The economics of sports stadiums: Does public financing of sports stadiums create local economic growth, or just help billionaires improve their profit margin? Berkeley Economic Review. Retrieved February 10, 2022, from 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/
Howard, D., & Crompton, J. (2018). Financing sport. FIT Publishing.
Noll, R., & Zimbalist, A. (1997). Sports, jobs, and taxes: The economic impact of sports teams and stadiums. Brookings Institution Press.
Porterfield, D. (2021, January 26). Building people power through a community benefits agreement. Dare to Reimagine. Retrieved February 10, 2022, from https://www.daretoreimagine.org/case-studies/nashville-community-benefits-agreement#:~:text=In%202018%2C%20Nashville%20became%20the,on%20a%20new%20private%20project.&text=Community%20members%20also%20expressed%20frustration%20with%20the%20city’s%20priorities.
Velotta, R. N. (2020, August 31). Here’s a look at the finances behind $1.9B Allegiant Stadium. Las Vegas Review-Journal Sports. Retrieved February 11, 2022, from https://www.reviewjournal.com/business/stadium/heres-a-look-at-the-finances-behind-1-9b-allegiant-stadium-2106708/
Hayden Coombs 