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Economics Paper

1646 words - 7 pages

The city of Los Angeles has been without an NFL team since 1994 when both the Rams moved to St Louis and the Raiders relocated to Oakland. It has been proposed that a new stadium should be built to help attract teams that to come back to one of the biggest U.S. city’s without an NFL league franchise. In past years L.A. has been one of the largest media market in the country. With L.A. being second to none as the media capital, why not bring “Sports Entertainment” back to the city of angels. Los Angeles did just that when they decided and took a major step toward building a downtown stadium to lure an NFL team back to the nation's second-most populous city, despite questions about how a ...view middle of the document...

A. as one of the nation’s premier destinations for sports, entertainment, and conventions after completion.

The cost of building a new sport facility is the first concern that a company as a whole will tend to have. A city poll that was conducted stated that 72% supported the project. Many of the residents were happy to confirm that the project would be funded by private funding and not cost them any money that they were safeguarded with assurance that AEG will be held accountable for any and all costs that overrun with the project.

Fiscal accountability, no cost to tax payers and job creation are viewed as the most important aspects of the project (Citywide Poll)

For those in the community the benefit associated with the construction of a new sports facility that is sure to bring jobs in a primary concern. The project would create between 20,000 and 30,000 temporary and permanent living wage and union jobs ( The first jobs created would be construction. Then of course everything from hospitality, concessions and tickets to stadium operations and convention center event management positions would need to be filled. ( AEG executives expect 30% of the projects construction workers and 50% of its permanent workers to live within 5 miles of the facility (Zahniser and Linthicum 2012). So, some concessions have been taken into consideration with the creation of jobs. More jobs in the community leads to more revenue for the city.

The most obvious benefit is the revenue that will come from increased tourism in the city. This stadium is expected to be state of the art which allows for money to come from outside the community. “It has been argued that more spending has a “multiplier effect”. In other words, as income within the community increases, there will continue to be more new spending and, as a result, more jobs will be created (Feng and Humphreys, 2008).

Another factor that tends to be overlooked is the location of the new site and the economic impact that it will have on the community. Many believe that affordable housing would and will become obsolete in the surrounding neighborhoods. According to a study performed by Feng and Humphrey’s a new facility constructed in a large city might possibly cause residential property values within one mile of the facility to increase hundreds of millions of dollars.

The economic impact of sports facilities and teams does not rely upon projection. Rather, it compares the local economic performance of areas with and without stadiums, arenas, and teams, controlling for other variables that affect local economic conditions. The activist group, Play Fair at Farmers Field Coalition, has suggested that AEG should pay $60 million toward affordable housing, or $2 million over 30 years to assist the lower income families in the community.

Among cross-section studies, for example, Robert Beade, in...

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