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SPORTS ECONOMICS – FINANCING A STADIUMPrologue: The emerging scenario is very clear. Sports events have become big business. Today the revenue generation from gate ticket pricing is in a miniscule proportion. The major areas of income generation are (a) Television rights, (b) Radio broadcasting rights, (c) Sponsorship of individual players and franchises by corporate business houses in order to promote their branded products. Once there was sportsperson personal loyalties and team loyalties. Today loyalties have shifted gear towards financial maximization. Decisions are made by teams and players on the basis of how much they get and not how loyal they are. Salaries of players have gone up by leaps and bounds. Players attract salaries from $600,000 to $8,000,000 per annum. Resource Generation - Options: There used to be a time when stadiums were built by the state as part of public works projects. Today, private funding of stadiums is increasingly taking place. Team owners eagerly come forward to contribute their might towards the cost of construction of stadiums. Let us see some new stadiums built during the decade 1990’s.
If a decision has been made to use tax payers money for a stadium, finance generation is possible through: (a) Government backed bonds (b) Excise duties (c) Personal seat licenses (d) State lotteries (e) Tourism taxes (f) Sales taxes (g) Ticket surcharges (h) General fund revenues, and, (i) Lodging taxes. The local population would love to shift the incidence of taxation to the shoulders of tourists, if the required revenue is generated through tourism tax, and, or, hotel surcharge. |
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