Taxpayers Are Paying Billions for the Renovations and Construction of NFL Stadiums. Here's How

The Tennessee Titans, an NFL team, announced their plans to build a new stadium in Nashville's heart in 2022. The stadium, which covers 1.7 million square feet, can accommodate 60,000 screaming football fans. It is expected to cost $2.1billion. The state would contribute $500 million to the project and $760 million through revenue bonds from Nashville's Metropolitan Sports Authority. More than half of the stadium's cost would be paid by the public.
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Public funds used to build professional sports arenas and stadiums have cost taxpayers $4.3Billion since 2000. Economists and urban planners disagree with the NFL and its owners, who claim that building stadiums will bring economic growth to a city. Cities end up paying for stadiums because they are able to issue tax-exempt bonds from local and state governments, which the federal government has approved for decades. These tax exemptions lower the debt burden through low-interest municipal bonds that cities and teams use to finance stadiums.
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Municipal bonds have been a popular funding option for schools, hospitals, roads and airports since 1913. These bonds could be accessed by private entities, but they were limited to the number of public bonds that are issued each year. Stadiums were not subject to this cap.
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1986's Tax Reform Act sought to eliminate exemptions for private use. The bill instead created a loophole that allowed stadiums to be backed with tax-free bonds. This loophole creates an artificial financing structure by using tax-exempt municipal bonds to finance it.
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Private companies must pass one of the two requirements set forth by the Tax Reform Bill. Private use-case tests state that no private entity may use more than 10% of a bond's money, which is a test that NFL teams will pass. There's also the private-payment test, which says that the stadium must guarantee no more than 10% debt service.
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If a state or local government is willing and able to finance at least 90%, the stadium fails the private-payment test. The stadium will then be eligible for tax-exempt financing through municipal bond. To maintain the tax exemption, bonds must be repaid using revenue from the stadium and rent collection. These bonds are paid for by cities using taxes such as hotel levies.
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These taxes have different recoupments. These municipal bond commitments are paid for by cities like Chicago and Las Vegas using tourism taxes. Las Vegas is home of the Raiders and its $1.9 Billion Allegiant Stadium.
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Nearly 40% of the stadium's financing came from $750 million in bonds that were backed by hotel taxes. We're collecting 50 million dollars more through a hotel tax, which is almost entirely paid by tourists. The real key is that the stadium itself is producing more revenue than the $50m," Steve Hill, Chairman of the Las Vegas Stadium Authority told CNBC about net-positive spillovers since the Raiders moved from Oakland, California to Las Vegas.
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Chicago's tourism taxes have not worked in its favor. The spillover benefits the city has seen thus far have been negative. Soldier Field, Chicago Bears' home, needed urgent upgrades in 2002 to make it more modern. It was built in 1924. Total renovation costs totalled $587 million
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The NFL and Bears organizations contributed $200 million to the project. Chicago also funded $387 million using municipal bonds that were levied by a Chicago tourism tax. NBC Chicago News found that Chicago owes $640m on its original $387 million bonds 20 years later, after deferring payments for years. The city declined to comment on NBC Chicago's inquiry. As both sides have expressed an interest in closing the 10% loophole, reining down public spending on professional stadiums has been a bipartisan issue since 2015.
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The Obama administration proposed in 2015 that the 10% loophole be closed for private projects and sports. 2017 Sens. In 2017, Sens.
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The Trump administration also proposed eliminating tax-exempt bonds to support NFL stadiums via its tax reform bill. The finalized tax reform bill did not include language regarding NFL stadiums. Recently, Rep
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Earl Blumenauer (D-Ore.) introduced a bill called the No Tax Subsidies for Stadiums Act 2022. These proposals have not been passed into law, but there hasn't been any significant movement. Fans are not likely to feel strongly about this issue. They just want their team to stay put.
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Over the years, protests by fans have erupted when their teams were taken over by other cities. NFL teams and their fans share a common identity. A team can be a reflection of a city's personality. All 30 major cities have die-hard fans who will fight for their teams, even if it means paying the bill. You can see the video to see how American taxpayers spend billions of dollars to finance NFL stadiums.