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Super Bowl Shines Spotlight On Stadium Subsidies

Long after the Super Bowl is over, the people of Arizona will still be paying for the stadium that will host the game on Sunday.

This year’s Super Bowl will be played at the University of Phoenix Stadium, which was completed in 2006 with the help of significant taxpayer subsidies. Of the stadium’s $455 million cost, the facility’s website claims, “The Arizona Sports & Tourism Authority provided $300.4 million,” or nearly two-thirds of the overall cost.

To finance the deal, the state planned to use revenues from a rental car tax that voters approved by referendum in 2000, which was expected to raise about $1.2 billion for stadium financing and tourism promotion over 30 years, according to the Arizona Republic.

Last June, however, a county judge struck down the tax, ruling that it “violated the state Constitution because the revenue was being used for the wrong purpose.” Specifically, Maricopa County Superior Court Judge Dean Fink ruled that the rental car tax constitutes a type of vehicle tax and that under the state constitution, revenues from such taxes must be spent on transportation projects.

As a result of the ruling, “Arizona could be forced to pay back as much as $150 million” in previously collected taxes, and will certainly need to find alternative sources of revenue. (RELATED: Berkeley’s New Stadium Put it $445 Million in Debt)

Nor is the University of Phoenix Stadium the only arena that Glendale has subsidized. “In the last decade,” The New York Times reports, “the city spent hundreds of millions of dollars to build a hockey arena for the Coyotes and a spring training complex for the Chicago White Sox and the Los Angeles Dodgers,” as well.

Those investments failed to yield the hoped-for boost to economic development, at least partly due to the onset of recession in 2008, contributing to a municipal debt in Glendale “equal to 4.9 percent of its tax base, nearly four times the national median and twice the average rate for cities in Arizona.”

Some city officials are hoping that the Super Bowl will help to alleviate that burden by providing an infusion of tourism-related tax revenues, not only from the event itself, but also from the free advertising that could attract future tourists. (RELATED: Illinois: Sweet Land of Stadium Subsidies)

However, a 2010 paper by Prof. Victor Matheson of the College of the Holy Cross found that the economic benefits of hosting the Super Bowl “while generally positive, are a fraction of those claimed by the league and sports boosters.”

One study Matheson reviewed, for instance, determined that from 1973 to 1997, the Super Bowl generated “an average economic impact of roughly $30 million, or approximately one-tenth the figures touted by the NFL.” (RELATED: Should Cities Buy Teams Instead of Subsidizing Stadiums?)

Moreover, the impact of this year’s game on Glendale’s economy could be even smaller, The Associated Press claims, because “most Super Bowl revelers aren’t even staying in Glendale, opting to stay and enjoy the nightlife in nearby Phoenix and Scottsdale instead.”

In fact, Glendale Mayor Jerry Weiers told the AP that he predicts the Super Bowl will ultimately cost the city “a couple million dollars,” because Glendale is assuming the full expense of providing security at the game, while the economic benefits will be spread across the region.

Follow Peter Fricke on Twitter

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