Dive Brief:
- Spending on the construction of sports stadiums and arenas will reach nearly $6 billion in 2019, with more than $11 billion allocated for venues set to open next year or later, according to the Chicago Business Journal.
- Sports construction spending in 2018 is expected to total $4.1 billion, a nearly $3 billion drop from 2017. That amount represents just one year in a three-year period that should reach almost $17 billion spent for new venues and renovations. The cost of new construction and upgrades to college sports facilities should add up to $1.5 billion this year.
- Aside from the decline that can be expected when coming off a big year of spending, this year's projected dip can also be attributed to the fact that many of the projects underway are soccer stadiums, which typically cost less than professional football and baseball venues. However, according to vendors, the trend toward the installation of better security and wireless systems should add to sports construction costs.
Dive Insight:
The sports venue construction segment hit temporary turbulence last year when it almost lost what has become a key source of funding under the House GOP tax reform bill. Lawmakers included a provision that would have eliminated the option to fund future sports arenas and stadiums with tax-exempt bonds.
States and cities often use this tool to help finance modern projects that will keep a lucrative professional sports franchise from moving or draw one in. In fact, tax-exempt bonds are helping taxpayers contribute $750 million to the construction of the new $1.9 billion Las Vegas Raiders stadium. Team owners said they would consider looking for another location if state and local officials hadn't agreed to contribute such a large share.
According to a report from The Wall Street Journal, the Atlanta Falcons' new $1.5 billion Mercedes-Benz Stadium used $200 million of public bond financing.
Axios reported that public agencies have used $13 billion of tax-exempt bonds since 2000 to finance sports construction. Still, it's not likely that success stories of projects using this financing mechanism influenced House lawmakers to put the exclusion in their bill. According to the Brookings Institution, the federal government lost out on $3.2 billion in tax revenue from 2000 to 2014 on 36 projects using tax-exempt funding.
In the final tax reform bill, however, the Senate was successful in striking that provision.
