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CASE: SPM-6

DATE: 11/24/03

DALLAS COWBOYS: FINANCING A NEW STADIUM

[The proposed Cowboys stadium complex] will bring millions of visitors and billions of dollars in
economic growth to Dallas County.
— Rob Allyn, Dallas Cowboys spokesman1

The current stadium construction craze may not be worth it. The only reason I even write down
the obvious is because it is being ignored by nearly every major city in America.
— Economist Rodney Fort2

On May 28, 2003, Texas Governor Rick Perry signed Senate Bill 1111 into law. The legislation
provided for the voters of Dallas County to decide whether to raise taxes to pay for a stadium
complex for the Dallas Cowboys of the National Football League (NFL).

At the time, the Dallas Cowboys were preparing to play their 32nd season in Texas Stadium.
Only six NFL teams played in older stadiums. Of these, three had recent major stadium
renovations (Chicago Bears, Green Bay Packers, and Oakland Raiders), while one (Arizona
Cardinals) had a new stadium under construction. The San Diego Chargers and the San
Francisco 49ers, along with the Cowboys, were still seeking a “solution” to the economic
handicap of playing in a stadium that was more than 30 years old.

The Cowboys had long been one of the league’s most successful, and highest profile teams.
They had competed in eight Super Bowls, winning five, including three Super Bowl wins during
the 1990s. The team was also financially successful, with the second highest estimated revenue
of all NFL teams. The Cowboys’ brand was rated the second highest in all of sports, behind the
New York Yankees, and the highest in the NFL.

1
Natalie Gott, “Senate Approves Cowboys Stadium Bill,” Associated Press Newswires, April 3, 2003.
2
Rodney Fort, “Stadiums and Public and Private Interests in Seattle,” Marquette Sports Law Journal (Vol. 10, 2000), p. 310.
Emphasis in the original.

Research Associate David Hoyt prepared this case under the supervision of Professor George Foster as the basis for class
discussion rather than to illustrate either effective or ineffective handling of an administrative situation.
Copyright © 2003 by the Board of Trustees of the Leland Stanford Junior University. All rights reserved. To order copies or
request permission to reproduce materials, e-mail the Case Writing Office at: [email protected] or write: Case Writing
Office, Stanford Graduate School of Business, 518 Memorial Way, Stanford University, Stanford, CA 94305-5015. No part of
this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any
means –– electronic, mechanical, photocopying, recording, or otherwise –– without the permission of the Stanford Graduate
School of Business.

This document is authorized for use only by Victor Vazquez ([email protected]). Copying or posting is an infringement of copyright. Please contact
[email protected] or 800-988-0886 for additional copies.
Dallas Cowboys: Financing a New Stadium: SPM-6 p. 2

By 2003, however, the economics of football strongly favored a new stadium. The NFL’s
lucrative national television contract was divided evenly among all teams. The home team kept
just 60 percent of ticket sales, with the balance shared with the other teams. This revenue
sharing helped maintain competitive parity among teams, but inhibited financial results for the
most successful teams. The most direct way to increase team income was to increase stadium-
related revenue from luxury boxes, parking, and naming rights, which the team could keep to
itself.

The Cowboys’ owner Jerry Jones wanted a new stadium, which would hold approximately
100,000 spectators. The stadium was estimated to cost about $650 million, but was expected to
provide substantial new revenue opportunity for the team – particularly if Dallas taxpayers
picked up the cost to build the facility.

Despite success in the legislature, Jones knew that there was still work to be done. Although
most recent stadium construction had been financed with large amounts of taxpayer money,
many jurisdictions had recently resisted using taxpayer dollars to build sports stadiums.
Lobbying groups opposed to public financing of stadiums had become increasingly well
organized. The Cowboys would have to make the case to the voters in support of the stadium.
They would also have to negotiate a lease agreement if the stadium were built. And, if the voters
turned down the proposal, Jones would need to consider other options, some of which would
require the Cowboys to take on sizable debt.

DALLAS COWBOYS

The Dallas Cowboys were formed as an NFL expansion team in 1960, becoming the 13th team in
the league.3 The team lost all its games in the 1960 season, but by 1965, had became a
competitive force, finishing second in their conference and making the playoffs for the first time.
The following year they won their conference, with a 10-3-1 record before losing the NFL
championship game to Green Bay. This was just the first of a string of division championships,
leading to the team’s participation in the Super Bowl V at the end of the 1970 season.4 The
Cowboys won their first Super Bowl the following year. The team became a powerhouse in the
league, appearing in three more Super Bowls in the 1970s (winning two), and winning the Super
Bowl three times in the 1990s.5 The team’s on-field performance had suffered during 2000 to
2002, however. During each of these three seasons, the Cowboys posted records of just five
wins and 11 losses, finishing last in their conference. The team hired a new coach, Bill Parcells
for the 2003 season, raising hopes for return to their past dominance. Parcells was a long-time
NFL coach, and had led the New York Giants to two Super Bowl victories.

The Cowboys initially played in the Cotton Bowl, located in the city of Dallas. On January 25,
1969, they broke ground in suburban Irving, nine miles from downtown Dallas, for the new
Texas Stadium. They played their first game at the new stadium on October 3, 1971. The
stadium had a capacity of 65,675, and was built at a cost of $35 million, financed with general
3
http://nflhistory.net/museum/dallas-cowboys/inaugural.html (July 31, 2003).
4
The NFL merged with the rival American Football League (AFL) in 1966, taking effect with the 1967 season. The Super Bowl
had begun as a competition between the NFL and AFL champions, and evolved into the NFL championship game, played
between the winners of the National Football Conference (NFC) and American Football Conference (AFC).
5
Team history from Dallas Cowboy website: http://lb.dallascowboys.com/history_main.cfm (July 31, 2003).

obligation bonds. Part of the financing was in the form of personal seat licenses (PSLs), which
were sold as bonds in 1968, priced from $1,000 to $15,000. The PSLs gave holders the right to
buy season tickets, and expired at the end of the Cowboys’ lease in 2008. The stadium was
owned by the City of Irving.

Building from their on-field success in the 1970s, the Cowboys successfully developed an
identity that transcended Dallas, becoming an American icon, known as “America’s Team,” and
cultivating both a national and international following. One opposing player commented:
“There’s no way you can tell me anybody else is America’s Team but the Cowboys. They’ve
got the most beautiful cheerleaders in the world. They’ve got that star on their helmet. They’ve
got that hole in the top of Texas Stadium so God can watch them play. It’s America’s Team.”6
Commentator and former coach John Madden said,

I probably see it more than most, because I travel the country by bus. The
America’s Team thing is very real. I see Cowboys fans – and a lot of them –
wherever I go. It doesn’t matter if it’s the middle of nowhere or right there in
another NFL city. Dallas fans are everywhere.7

The Cowboys on-field success, as well as the cultivation of the “America’s Team” image, gave
the team an extremely valuable brand. In a report entitled “The Most Valuable Brands in
Sports,” published in 2003, FutureBrand ranked the Cowboys’ brand value second only to the
New York Yankees. The Cowboys were by far the highest valued NFL brand, at $300.5 million.
The second highest valued NFL brand was the Washington Redskins at $191.6 million, followed
by the New York Giants ($167.4 million) and Green Bay Packers ($152.9 million).8 A poll
conducted in 2002-2003 by ESPN asked NFL fans to name their favorite team. The Cowboys
ranked highest, at 10.8 percent, far ahead of the next team, the Green Bay Packers at 7.1
percent.9

Estimates of the Cowboys’ financial performance and team value for the 1995 to 2002 seasons,
as published in business magazines (Financial World and Forbes), are presented in Exhibit 1.
As a privately owned team, the Cowboys did not publicly release their financials, nor did they
correct published estimates. However, the team was viewed by many as one of the league’s most
financially successful franchises, despite playing in an aging stadium. For the 2002 season,
Forbes estimated team revenues at $198 million (second only to the Washington Redskins, with
estimated revenue of $227 million), and operating income of $52.3 million (third in the league,
behind the Washington Redskins at $87.8 million and New England Patriots at $67.3 million.
Forbes estimated the value of the Cowboys at $851 million, second only to the Washington
Redskins at $952 million.10

6
Tampa Bay defensive tackle Warren Sapp, quoted in Dallas Cowboys’ promotional publication. “The Dallas Cowboys,” p. 5.
7
ibid. p. 1.
8
“The Most Valuable Brands in Sports: The 2002 Report,” FutureBrand, 2003, p. 2. Valuations were based on team financials,
fan base, stadium operations, on-field performance, and a global survey of sports fans.
9
“The Back of the Book: You’re a Shining Star: NFL’s Five Points are Fans’ Favorites,” SportsBusinessDaily.com, September
5, 2003.
10
Kurt Badenhausen et al. “Showing You the Money,” Forbes Magazine, September 15, 2003, p. 82. Operating income was
earnings before interest, taxes, and depreciation.

The Cowboys’ owner, Jerral (“Jerry”) Jones, had made a fortune in the oil and gas business in
Texas, part of which he used to purchase the Cowboys (and the right to operate the stadium) for
$140 million in 1989. In 2002, Jones was listed as the 272nd wealthiest American by Forbes
Magazine, with a net worth of $875 million. Nine other NFL owners joined Jones on Forbes’
list of the 400 wealthiest Americans.11

THE DALLAS COWBOYS’ SITUATION IN MID-2003.

Under their contract with the city of Irvine, the Cowboys controlled all Texas Stadium operations
and retained all revenue except parking. The team paid rent of the greater of $950,000 per year
or 8 percent of stadium revenue. Texas Stadium had 381 luxury suites, for which the Cowboys
charged between $250,000 and 1.5 million for the term of the lease (which expired in 2009 with
an option to renew for 25 yrs).12

The stadium capacity was 65,846, and average attendance for the previous three years had been
just over 63,000. In 2002, the average Cowboys’ ticket cost $50.06, and the team planned to
increase ticket prices to an average of $53.06, slightly above the league average of $52.95.13 The
highest average price in the league, $75.33, was charged by the New England Patriots.14 (See
Exhibit 2 for information about Texas stadium tickets and seating.)

To replace the aging Texas Stadium, Jones proposed building a stadium, entertainment, and
business complex that would cost up to $1 billion, of which $650 million would be needed to
build a 100,000 seat stadium. Jones said that the team would be willing to pay an undisclosed
portion of the money required.

The stadium that the Cowboys envisioned would have about 70,000 to 80,000 seats with open
end zones that could house more people, bringing the total capacity to about 100,000. One of the
open end zones would cater to people with families that wanted to play or picnic during the
games rather than sit in seats. It would also feature attractions such as a half-pipe for skating.
The other end would have attractions for adults, such as stores, bars, and restaurants. The
stadium would have a retractable roof.15 The complex would also include stores, facilities for
hotels and conventions, and an athletic field for children, with the unifying theme of the
Cowboys football team. The Cowboys said that the public subsidy, however, would only be
used to build the stadium.16 The team described the complex as:

Dallas Cowboys Park. Not just a stadium, but a destination attraction with a
sports-themed town center offering shops, retail and entertainment, a branded

11
Forbes.com: http://www.forbes.com/forbes/soo3/0915/nfl_2.html (September 15, 2003).
12
Roger G. Noll and Andrew Zimbalist, “’Build the Stadium – Create the Jobs!’” in Roger G. Noll and Andrew Zimbalist, ed.
Sports, Jobs & Taxes: The Economic Impact of Sports Teams and Stadiums (Washington, D.C.: The Brookings Institution
Press, 1997), (hereinafter “Sports, Jobs & Taxes”) p. 44.
13
Katie Fairbank, “Cowboys Rush for Sales: Tickets Are Moving, but Not as Quickly as Some Might Expect,” Dallas Morning
News, September 6, 2003, p. 1D. Average ticket prices were determined by Team Marketing Report, and published as an
annual Fan Cost Index.
14
“Ticket Prices Up Around League,” San Jose Mercury News, September 5, 2003, p. 5D.
15
“Cowboys’ Planned $650M Stadium Part of Entertainment Complex, SportsBusiness Daily, March 24, 2003.
16
John Moritz, “Dallas Cowboys Stadium Bill Goes to Texas Governor,” Fort Worth Star-Telegram, May 9, 2003.

hotel, community sports facilities including competition fields for local youth and
adult leagues, and other Cowboys branded attractions.17

The complex was envisioned as a five-pointed star, each point representing one element of the
Park, with the stadium at the center, providing the unifying theme (see Exhibit 3 for a description
of each element of Cowboys Park). The star theme for the Park recalled the team’s star logo.
The team cited five benefits of Dallas Cowboys Park:18

1. Economic growth and jobs: “a year-round destination attraction drawing millions of

visitors, thousands of new jobs, and billions in economic impact,”
2. Revenue for roads, schools and police from new sales taxes paid by businesses in the
park,
3. Convention and tourism revenue resulting from attracting new visitors to the Dallas-Fort
Worth area,
4. Sports fields for local youth, and
5. Hosting Super Bowls and international events.

The two likely sites for the complex were quite different. One was in an industrial area of
downtown Dallas known as “South Industrial.” While an environmental cleanup of the site
would likely be necessary due to a long history of polluting industry in the area, this was not
seen as an insurmountable problem. Locating the stadium complex at South Industrial would
bring new vitality to the downtown industrial area. The second site was Las Colinas in Irving,
the suburb that was home to Texas Stadium.19

The bill Governor Perry signed into law on May 28, 2003 proposed that voters authorize an
increased Dallas County hotel tax and rental car tax. Imposing the tax on the county rather than
the city of Dallas increased the amount that could be collected, as it spread the tax over a larger
population. The population of the city of Dallas was 1.2 million in 2000, while the county
population was over 2.2 million, including cities such as Carrollton, Garland, and Irving, the
home of Texas Stadium (Exhibit 4).20 A countywide sports authority would issue debt, to be
repaid by the new taxes. The hotel occupancy tax would increase by 3 percent, from 15 to 18
percent. The rental car tax would be increased from 5 to 6 percent. The Legislative Budget
Board estimated that the new taxes would raise approximately $36.4 million in 2004, increasing
to $41.9 million in 2008. The tax money would be used to service bond debt of up to $400
million issued to pay for stadium construction.21

Gaining taxpayer approval was not something that could be taken for granted. Dallas mayor
Laura Miller, a vocal opponent of the plan, made the following comment after the legislature had
turned down the city’s top priority (a new convention center hotel) but passed the stadium bill: “I
find it ironic that some of the legislators I talked to said they had problems with using tax money

17
“Five Points of Dallas Cowboys Park,” Dallas Cowboys, p. 3.
18
ibid.
19
Randy Lee Loftis, “Potential Dallas Cowboys Site Has Gritty Industrial Past,” The Dallas Morning News, May 27, 2003.
20
Rand McNally 2003 Commercial Atlas & Marketing Guide (Rand McNally & Company, 2003), pp. 524, 525.
21
Gott, loc. cit.

to fund a hotel, but now they have used much more tax money to fund a stadium that we don’t
need.”22

In general, cities in 2003 were struggling in an economic environment dramatically different

from that of the 1990s. Citizens were not as receptive as they had previously been to taxpayer
financing of sports facilities. Los Angeles, which lost both its NFL teams in 1995 (the Raiders
returning to Oakland, and the Rams relocating to St. Louis), was believed by many to be
reluctant to use taxpayer money to build a stadium or otherwise attract a new team.

Los Angeles had many professional teams in other sports, two major college sports powerhouses,
and a wide range of other entertainment options for its residents. How different was the Dallas
community from Los Angeles? The Cowboys believed that many people associated Dallas with
the team, and that the Cowboys were the most recognized NFL franchise internationally —
factors that bound the team and the city together, and that argued for taxpayer support of the
team.

The proposal to tax hotel visitors and rental car customers had the appeal of not directly taxing
the people who would vote on the measure. Cowboys political consultant and spokesman Allyn
commented, “That’s the great wisdom of this [plan]. It will draw millions of visitors every year
without any burden on local taxpayers.”23 This financing approach had been used successfully in
1998, when Dallas increased its hotel room tax by 2 percent, and imposed a 5 percent tax on
rental cars in order to finance $125 million in bonds to help pay for the $435 million American
Airlines Center used by the Dallas Mavericks NBA basketball team and Dallas Stars NHL
hockey team.24

However, there were indications of local resistance beyond that expressed by the mayor. Rental
car companies were already struggling. Hotel occupancy was only 52 percent in 2002, lower
than in other Texas cities. One columnist cited a study of a projected increase in hotel bed tax
from 14 percent to 16 percent in Atlanta, a city similar in size to Dallas. The study concluded
that such an increase would lead to a 5 percent reduction in hotel revenue and visitor spending,
leading to the loss of more than 8,000 jobs. A hotel occupancy tax of 18 percent would be one of
the highest such rates in the country.25 Additional citizen comments (albeit non-random)
regarding the tax measure is provided in Exhibit 5. A survey of Dallas County voters conducted
in early April 2003 showed overwhelming opposition, with 87 percent stating that providing
funding for the stadium was not “the proper role for government,” 61 percent disagreeing with
the assertion that a stadium would stimulate the economy, and 83 percent saying that the county
should not build a football stadium with public tax dollars.26 A Web site — NoJonesTax.com —
was set up to provide a forum for opponents of public financing of a new Cowboys stadium.

22
Gromer Jeffers, Jr. “Dallas Cowboys Stadium Plan Gets Legislature’s Approval, But New Hotel Sacked,” The Dallas Morning
News, May 27, 2003.
23
Michael Schurman, “Gilding Visitors Could Backfire on Us All, Mr. Jones,” Fort Worth Star-Telegram, March 12, 2003.
24
Richard Alm, “City Ahead of the Game In Collections for AAC,” Dallas Morning News, May 17, 2003, p. 3D. Tax receipts
exceeded those required to pay off the debt as of May 2003. If the trend continued, the debt would be retired ahead of its 2008
due date. The arena tax was passed by less than 1,700 votes.
25
Schurman, loc. cit.
26
Survey of 1000 voters conducted by Wilson Research Strategies, April 9, 2003.

Would Dallas voters support the tax increase to build a new home for the team? If not, what
should the team do? The available options included: staying at Texas Stadium, renovating Texas
Stadium to meet the Cowboys’ future needs, building a new stadium without public funding, or
relocating to a city that would provide the kind of facility that Jones wanted.

APPENDIXES

Additional information useful in considering the issues facing the Cowboys are provided in three
Appendixes.

Appendix A: Stadium Financing, Construction, and Revenue Generation provides information on

the various methods that had been used to finance stadiums, with particular focus on public
financing. Arguments for and against public financing of stadiums are discussed, as well as the
various methods that have been used to provide public financing. Exhibits 6 though 9 provide
further information on stadiums where NFL teams play, and public financing sources for those
stadiums.

Appendix B: Economics of NFL Teams, outlines the economic pressures placed on individual
teams that lead to a desire for new stadiums. Exhibits 10 and 11 provide Financial World and
Forbes estimates of revenues and valuations for all NFL teams.

Appendix C: Financing the Cincinnati Bengals’ Stadium, provides details about another new
stadium that may provide lessons for Dallas.

Appendix A
Stadium Financing, Construction, and Revenue Generation

The United States has seen three great waves of stadium construction. During the “golden age of
baseball park construction,” 1909-1915, nearly two-thirds of major league baseball teams moved
into new stadiums.27 This was largely driven by technology, as reinforced concrete and steel
structures replaced wooden stadiums, enabling increased seating capacity.28

The second wave of construction occurred during the 1960s and early 1970s, driven by the need
to replace old facilities, and the expansion of football. Stadiums built during this period tended
to be dual use facilities, shared by a football and baseball team. These stadiums also
incorporated technological improvements, primarily in lighting and television capabilities.

In the late 1980s a third wave of stadium construction began. The driving force for this
construction boom was economics. New stadiums provided enhanced revenue opportunities,
such as luxury suites and non-sports activities. Teams found themselves competing for fans’
entertainment time and money, and fans demanded an improved experience at the ballpark.
Changes in tax laws also provided incentives for stadium construction – particularly if new
stadiums were financed by the taxpayers. In professional football, revenue sharing of national
television fees and ticket sales caused owners to seek revenue sources that were not subject to
sharing — generally stadium-related revenue such as naming rights (Exhibit 6),29 personal seat
licenses (Exhibit 7),30 and luxury boxes. In response to these factors, it has been estimated that
within a few years of 2000, 80 percent of professional teams would be playing in stadiums built
since 1990.31

The new stadiums built during this period were single-purpose facilities, not shared between a
football and baseball team. Since major league baseball teams played 81 regular season home
games, and football teams just eight, the ideal size of the facility was quite different. Owners
wanted to fill the stadiums, and for tickets to be scarce in order to support high ticket prices.
Fewer tickets could be sold to the large number of baseball games than to the relatively few
home football games. Thus, newly constructed baseball parks had a capacity of around 45,000,
in an intimate environment optimized for baseball. New football stadiums had capacities of
70,000 or more.

In the late 1990s and early 2000s, it appeared that a new era in stadium construction might be
starting, with stadiums serving as the center of a larger complex that included hotels, conference
centers, and shopping centers. The San Francisco 49ers had proposed such a project, in which a
new stadium would be part of a larger shopping center complex. The City of San Francisco in
1997 voted $100 million of public financing towards this project. The project was subsequently
27
W.S. Miller, “What Do You Mean My Facility is Obsolete?: How 21st Century Technology Could Change Sports Facility
Development, “ Marquette Sports Law Journal (Vol. 10, 2000), p. 337.
28
Sanderson, op. cit., p. 183.
29
Naming rights were fees paid by companies to place their names on the stadium. For instance, the Oakland Raiders played in
“Network Associates Coliseum,” for which Network Associates paid $13.7 million over five years.
30
Personal seat licenses (PSLs) were purchased by fans to which gave them the right to buy season tickets. The terms of PSLs
varied widely, but generally involved a multi-year commitment on the part of the fans.
31
Allen R. Sanderson, “In Defense of New Sports Stadiums, Ballparks, and Arenas,” Marquette Sports Law Journal (Vol. 10,
2000), p. 173.

put on hold following a change in team ownership. The Phoenix Coyotes of the National
Hockey League were planning to move into a new arena in December 2003 that was part of a
complex that included 6 million square feet of retail, entertainment, office, hotel and residential
facilities.32

Financing Stadium Construction

The average cost of an NFL stadium built during the 1990s was $232 million. The cost
increased to an average of $391 million for stadiums built between 2000 and 2003. Raising the
money to pay for expensive new stadiums typically required contributions from both the teams
and local taxpayers. Teams paid an average of 30 percent of the cost of NFL stadiums built
between 1995 and 2003.33 The construction cost of new stadiums completed between 1999 and
2003 for professional teams in all sports was estimated at $13.5 billion, with taxpayers paying
more than $9 billion.34

The issues related to public versus private financing have been debated by team owners, local
politicians, taxpayer advocates, and academics. The following discussion highlights some of the
important considerations.

Public Financing of Stadiums

Stadiums in the United States were generally paid for by the teams that played in them until the
building boom that started in the 1960s. During this period, professional sports became national,
as leagues expanded and existing teams relocated from the north-east into the south and west.
Cities competed to attract professional sports teams, often by providing facilities for the teams.
(See Exhibit 8 for details of stadium construction, ownership and costs.)

One reason cited by cities for wanting professional sports teams was to improve the cities’
images – to become a “big league city.” As Wisconsin state legislator Marlin Schneider said,
“Without the [Milwaukee] Brewers, without the [Milwaukee] Bucks, without the [Green Bay]
Packers, we ain’t nothing but Nebraska.”35

From a financial perspective, public stadium financing proposals generally cited several
economic benefits to the city. One benefit was job creation during the construction and
subsequent operation of the facility. A second was tax revenue from ticket and concession sales.
A third was increased business for hotels, restaurants, and other local companies, together with
their sales taxes. It was not uncommon for a team or chamber of commerce to claim large
annual economic benefits flowing to the community as the result of a new stadium.

Academic economists, typically with a free-market perspective, launched into the stadium
financing debate with gusto. Some research studies of the economic impact of stadiums on

32
http://www.glendalearenaaz.com/index.php (September 4, 2003).
33
Matthew T. Brown, Mark S. Nagel, Chad D. McEvoy, Daniel A. Rascher, “Revenue and Wealth Maximization in the NFL:
The Impact of Stadia,” working paper, pp. 6-7.
34
Andrew H. Goodman, “The Public Financing of Professional Sports Stadiums: Policy and Practice,” Sports Lawyers’ Journal
(Vol. 9 2002), p. 174.
35
“Sound Bites,” The Sporting News, Oct. 16, 1995, quoted in Rodney Fort, “Stadiums and Public and Private Interests in
Seattle,” Marquette Sports Law Journal [Vol. 10 2000] p. 324.

communities reported little, if any, economic benefit. Construction jobs for building the facility
were short-term, and only increased employment to the extent that the workers were otherwise
unemployed. Stadium workers were generally part-time and poorly paid. Consider the case of a
proposal to build an NFL stadium in Baltimore. Proponents claimed that the facility would
provide 1,394 full-time jobs. However, each of the jobs created would have cost taxpayers
$127,000. An independent assessment estimated that 534 jobs would be created, at a cost to
taxpayers of $331,000 per job. By contrast, one of the state’s existing funds for economic
development had created 5,200 jobs with each job costing taxpayers just $6,250.36 If the purpose
for spending public money was job creation, the study concluded that stadium construction was,
at best, an inefficient method of accomplishing this objective.

The net impact of tax revenues generated by the facility were sometimes overstated, since a part
of the spending on sports was substitution of spending from other forms of entertainment and
leisure activities. A study of 30 cities with new stadiums showed no impact on growth in 27
cases, and decreases in the remaining three.37 In addition to the local considerations, publicly
financed stadiums were often built using bonds that were exempt from federal taxes. Thus,
federal taxpayers were also subsidizing these stadiums, as a result of forgoing taxes from interest
on exempt bonds.

As one economist commented in introducing a paper on stadium financing: “The current stadium
construction craze may not be worth it. The only reason I even write down the obvious is
because it is being ignored by nearly every major city in America.”38 Another wrote, “Team or
Chamber of Commerce estimates of a …facility contributing several hundred million dollars
annually to an urban area are likely to be off by at least a decimal point (that is, then percent of
the announced dollar figure may be much closer to financial reality than that touted publicly).”39

Proponents of the use of public financing asserted that the free-market economists ignored many
benefits of stadiums. Many more people benefited from a local sports team than actually paid to
attend games. While a relatively small number of people bought tickets, many people watched
games on television, listened on the radio, or followed the team in the newspaper sports pages.
Thus, consumers of the sports product were not limited to those who paid the team for the
benefits received.

Local teams played a role in the community’s identity, as the earlier quotation from the
Wisconsin legislator illustrated. This led cities to compete for teams – either to retain an existing
team that desired a new facility and threatened to relocate, or to attract a team from another city.
Because there were a limited number of professional sports franchises, and there were more
cities that wanted teams than there were available teams, team owners had a strong negotiating
position. This has been described as a “prisoners’ dilemma” in which cities could avoid paying

36
Dennis Zimmerman, “Subsidizing Stadiums: Who Benefits, Who Pays?” in Sports, Jobs & Taxes, p. 123.
37
John R. Dorocak, California Statue University, San Bernardino, “Tax Advantages of Sports Franchises,” unpublished paper,
2002, p. 18.
38
Fort, loc. cit. Emphasis in the original.
39
Sanderson, op.cit., p. 174.

for sports facilities if they all refused, but if one city agreed to pay, all must pay or risk losing
their teams to other cities.40

Taxation Law Impacts

Tax law also played a role in public financing. In 1968, during the initial wave of publicly
financed stadiums, Congress passed the Revenue and Expenditure Control Act of 1968 (1968
Act), which intended to reduce federal subsidy of local projects. Interest from local bonds was
taxable if the bonds met two criteria. The first was that more than 25 percent of the proceeds
were used by a nongovernmental entity in a trade or business. The second was that debt service
on more than 25 percent of the proceeds was secured by property used in a trade or business.
Sports facilities, however, were exempted from the 1968 Act, as they were felt to serve the
public, paving the way for the sale of tax-exempt municipal bonds to finance stadiums.

Since they were exempt from the 25 percent rules, stadium revenue, generated by rent, ticket
sales, concessions, and parking could be used to pay the debt. Thus, revenue from users of the
facilities paid for their financing, and general tax revenues were not needed for this purpose.

As large numbers of stadiums were built in the 1970s using tax-exempt financing, Congress tried
to stop the practice. The Deficit Reduction Act of 1984 denied tax-exempt status for bonds used
to finance luxury boxes, marking the first success in reducing public funding.

Congress tried to further reduce the loss of federal taxes from tax-exempt interest paid on bonds
used for expensive stadiums in the Tax Reform Act of 1986 (1986 Act). As Senator Patrick
Moynihan, a strong opponent of publicly subsidized stadiums commented, one goal of the 1986
Act was to “eliminate tax-exempt financing of professional sports facilities [altogether].”41

The 1986 Act removed the exemption for sports stadiums from the two tests required by the
1968 Act. It also reduced the percentages from 25 percent to 10 percent for both the use test and
the debt service test. Ironically, this change had the effect of weakening the bargaining position
of cities, and strengthening that of team owners. Under the 1986 Act, if a city wanted to attract,
or retain, a professional sports franchise by providing a facility paid for with low interest, tax-
exempt bonds, it could no longer use more than 10 percent of stadium-generated revenues to
repay the debt. The 1986 Act set a maximum for the amount that the public could receive from
stadium-generated sources at 10 percent of the value of the tax-exempt bonds issued. For
instance, if a municipality issued $50 million in tax-exempt bonds, it could receive no more than
the amount required to service $5 million of the debt from stadium-generated revenue. Team
owners, therefore, could keep nearly all ticket and other stadium-generated revenue. Cities
needed to turn to other funding sources to repay these bonds.

Many different public funding sources were used to finance stadiums. Exhibit 9 illustrates the
primary public financing sources for new and renovated stadiums in the four major professional
leagues (NFL, NBA, MBL, NHL). These sources of funds for servicing public debt for building
40
Goodman, op. cit. p. 210. The term “prisoner’s dilemma” refers to the situation in which two conspirators are arrested and
interrogated. Each is promised a highly favorable deal if he testifies against the other, but harsh treatment if the other
conspirator takes the deal first. If neither agrees, there is no case, and both will go free. However, the fear that their partner
will talk provides each with a strong incentive to cooperate with police.
41
142 Cong. Rec. S6306 (June 14, 1996), quoted in Goodman, op. cit. p. 182.

stadiums were sometimes criticized for not taxing the people who benefited from the stadium,
and tending to benefit wealthy team owners at the disproportionate expense of relatively low-
income city residents who were unlikely to be able to afford game tickets. The tax money used
to finance stadiums could be used for other city needs. However, not everyone agreed on
priorities for municipal spending. As Art Modell, the majority owner of the NFL Baltimore
Ravens stated, “The pride and presence of a professional football team is far more important than
30 libraries.”42

The National Football League’s G-3 Fund

In 1999, the NFL moved to assist teams in raising private money to help pay for the growing cost
of new stadiums. This was done by creating the “G-3 Fund” which used the league’s $18 billion
national television contract to borrow money that could be lent to teams to help finance new
facilities.43 The loans to teams were amortized on a straight-line basis over 15 years, at 7 percent
interest, which were better terms than the teams could obtain on their own. One of the league’s
rationales for promoting stadium construction was that new facilities helped the NFL compete
for fans’ entertainment spending. Under this program, the league sold bonds to generate cash for
the loans, first in August 2001 for $285 million, and again in a May 2002 sale of $350 million of
15-year bonds paying annual interest of 6.56 percent, 1.41 percentage points more than the10-
year U.S. Treasury note rate at the time.44

By early 2003, the NFL had made loans totaling $650 million to eight teams. Teams receiving
loans repaid them with the money from premium priced club seating. If these repayments were
insufficient to service the debt incurred by the league, all teams were required to pay equal
assessments, with a maximum of $1 million per team. As of early 2003, the maximum
assessment had been $600,000-700,000 per team. The maximum any team could borrow from
the G-3 Fund was originally $125 million, later increased to $150 million.45

The requirements for a team to qualify for a G-3 loan were:46

- the club stays in its existing market,

- the loan was approved by a three-fourths majority vote of team owners,
- each proposed stadium deal was reviewed,
- the club forecast increases in shared revenue,
- the club guaranteed club seat and PSL projections that would be used to repay the loans,
- the stadium was part of a “public-private partnership” and,
- there was union agreement.

All teams were eligible for G-3 loans, with those in the top six television markets eligible for
loans of up to 50 percent of project costs, and all other teams eligible for loans of up to 34
percent of project costs, in both cases capped at $150 million.

42
Philip Siekman, Sports Pork: Tax-Paid Stadium-Building Madness Makes Sports Moguls Rich, 6 American Enterprise, 80
(May/June 1995), quoted in “Tax Advantages of Sports Franchises,” op. cit. p. 10.
43
The term “G-3” referred to the NFL resolution number authorizing the program.
44
“It’s All About Good Credit: NFL’s Rating Nets $350M in Bonds,” Sports Business Daily, May 24, 2002.
45
Daniel Kaplan, “G-3 Fund Lives On, but Terms Get Tougher,” SportsBusiness Journal, March 31-April 6, 2003, p. 44.
46
“National Football League G-3 Overview,” presentation by National Football League, August 2003.

Private Financing
While in most cases the public paid the majority of stadium construction costs, there were cases
in which team owners paid most of the cost, with only minimal public support. For instance,
Pacific Bell Park, home of major league baseball’s San Francisco Giants, was primarily financed
from private sources. Critics of public stadium financing argued that the primary economic
beneficiaries of new stadiums were the team owners, and that if stadium revenues (from ticket
sales, parking, concessions, personal seat licenses, naming rights, etc.) are sufficient, owners
would self-finance. From the owner’s perspective, while this might have been true, increased
debt service might take up much (or even all) of the increased revenues. Even if the business
case for private financing was persuasive, the team was even better off financially if it didn’t
need to pay hundreds of millions for new facility construction. The few team owners that
privately financed new stadiums had chosen that path when public financing was unavailable due
to local resistance.

Appendix B
Economics of NFL Teams

The NFL maintained “competitive balance” as a fundamental cornerstone of its decision-making.

If a few teams continually dominated the league, and there was little chance that other teams
could win, or could develop into winners, fan interest might be expected to decrease. The NFL
promoted competitive balance in multiple ways, including:
- sharing a sizable amount of the total league revenue among all teams,
- establishing both a minimum and a ceiling on the total salary that any team can pay to its
players (the “salary cap”), limiting the difference between the highest and lowest team
salary, and
- conducting a player draft in which the teams with the worst records in the previous years
had highest priority in the choice of new players.

Revenue sharing and the salary cap had important impacts on the economics of NFL teams.

Revenue Sharing

NFL teams shared revenues in two basic ways. First, proceeds from the league’s national
television contract, valued at $2.2 billion per year over the 1998-2005 period, were evenly
divided among the teams. In 2002, this generated approximately $69 million for each team.

The second primary source of shared revenue came from ticket sales. The home team retained
60 percent of ticket sales, and the remaining 40 percent was paid to a “visiting team” pool that
was shared equally among all teams. Thus, disparity in revenues from ticket sales was reduced.
Premium prices charged for club seats and luxury suites were not subject to sharing.

One paper estimated that each franchise was receiving about $94 million in shared revenue for
the 2002 season.47

Salary Cap

The NFL salary cap was instituted as part of the 1993 collective bargaining agreement (CBA)
between the league and its players, following years of severe labor unrest. The CBA provided
for players to have free agency, a major objective of the players, allowing them to negotiate with
other teams after their contracts expired. In exchange, teams got a cap on total salary. Teams
also had to have a minimum team salary based on league revenues, which had the effect of
increasing overall player salaries. This agreement was successful in addressing the concerns of
both teams and players, and had been extended three times by 2003. The NFL’s labor harmony
was an important consideration in the league’s ability to negotiate their national television
contract.

The salary cap is based on a percentage of “defined gross revenues (DGR).” Revenues from
television (network, local, and satellite), ticket sales, local radio, and other specified sources

47
Brown, op. cit. p. 8. This figure includes shared revenue from licensing. Beginning in 2003, the teams took greater control
over their own licensing deals.

were reported to the NFL by each team. These were then averaged, and a negotiated percentage
(64 percent in 2002, rising to 65 percent in 2006) established as the cap. No team was allowed to
pay its players more than this amount. When a player contract called for a large signing bonus,
the bonus was amortized over the life of the contract for salary cap purposes.

The CBA also specified a minimum team payroll, which was a percentage of DGR. In 2002, this
minimum was 50 percent. Thus, for the 2002 season, all team payrolls had to be between 50 and
62 percent of DGR, enabling each team to field a competitive team. Under this arrangement, the
highest possible team salary could be just 24 percent above that of the team with the lowest
salary cost. By contrast, the lowest team salary in major league baseball as of July 15, 2003 was
the Tampa Bay Devil Rays, at $31.7 million. The highest was the New York Yankees, at $180
million — $148.3 million more (or 467 percent higher) than that of the Devil Rays.48

The success of the salary cap program depended on sharing a sizable amount of total revenues.
Without such revenue sharing, the salary cap for a poor team might be far higher than it could
financially sustain. Shared revenue enabled teams to pay players competitive salaries. The
salary cap program also aligned player and owner interests to increase total revenues. Rather
than divide a fixed-size pie, there was an incentive to increase the size of the pie, providing more
money to both players and owners. The success of this could be seen by the salary cap growth,
from $34.6 million in 1994 to $71.1 million in 2002.49

Stadium Revenues

After moving into a new stadium, teams generally raised ticket prices. To the extent that teams
filled their stadiums, making tickets a scarce commodity, teams had the opportunity to raise
prices. The enhanced user experience provided by the new stadium helped make higher ticket
prices more acceptable to fans. Average attendance increased by 26.8 percent after NFL teams
moved to new facilities, and the average ticket price for all major sports franchises increased by
46.8 percent after moving to a new facility.50 Furthermore, new stadiums were built with far
more luxury suites and premium-priced club seating, providing substantially increased revenue.

Since ticket revenues were divided 60/40 between home and the “visiting team pool” in the
league revenue sharing plan, team owners sought other revenue sources that were not shared.
There were several sources for this revenue, including naming rights for the stadium (such as
“Network Associates Coliseum” in Oakland), personal seat licenses, advertising signage around
the stadium, luxury boxes, concessions, parking, and non-football events such as concerts.51

Some of this potential revenue was enhanced by a new facility, which could be designed to
provide such opportunities. While the outside dimensions of new stadiums tended to be smaller
than the stadiums they replaced, new facilities often included greatly increased interior space that
48
“Luxury Tax Payrolls,” San Jose Mercury News, July 22, 2003, p. 8D.
49
Salary cap information from presentation by Bill Polian and Peter Ruocco, “Salary Cap Management,” at NFL Program for
Managers, Stanford Graduate School of Business, June 24, 2003.
50
Dennis R. Howard and John L. Crompton, “An Empirical Review of the Stadium Novelty Effect,” Sports Marketing Quarterly
(Vol. 12, Number 2, 2003) p. 115.
51
Teams did not have to share local radio and pre-season television revenue, but these typically did not change dramatically
when teams moved to a new stadium in the same city. For premium priced club seating and luxury boxes, teams shared only
the price associated with the basic ticket. The pricing premium associated with additional services was kept by the team.

could be used for conventions and other revenue generating activities. For instance, the Denver
Broncos’ new stadium opened in 2001 with a seating capacity of 76,125, a capacity virtually
identical to the stadium it replaced. However, the interior square-footage increased from
800,000 to 1.8 million, providing a substantial amount of space for non-football revenue
generating opportunities.

Overall, it was estimated that moving to a new stadium could increase a team’s revenue by as
much as 40 percent.52

Stadium Leasing, Management, and Operation

When a city built and owned a stadium, it leased the facility to the team. Since the purpose for
building the stadium was to attract or retain the team, lease terms were generally not onerous. In
the case of the Carolina Panthers, Charlotte, North Carolina had never had an NFL franchise, and
badly wanted one. When the expansion Panthers were formed, the city charged $1 per year for
rent and gave the team 100 percent of revenues from all sources, including non-football events.
The public was responsible for all capital improvements and more than half of maintenance
costs. However, the team owners contributed the $200 million expansion fee required by the
NFL, as well as $187 million for stadium construction.53

A lease agreement for a well-established team, which had to pay no expansion fee, and a new
stadium built primarily with public money, might have very different terms from that of the
Panthers, requiring substantial rent and payment of revenues to the city (subject to the limitations
imposed by the 1986 Act).

Another important issue was stadium management. In some cases, the city was responsible for
stadium operations; in other cases the team assumed the responsibility. Running a stadium
involved a wide range of activities, such as janitorial service, security, parking, and concessions.
These could either be staffed directly or contracted out to experienced service providers. In
2003, 27 NFL stadiums were publicly owned, and 17 of these were publicly operated (Exhibit 8).

Stadium maintenance was also an important consideration. Routine maintenance of an NFL

stadium could cost $1 million or more per year. Capital improvements could add another million
dollars or more per year. Thus, in negotiating a lease contract, the issues of operations,
maintenance and improvements were critical issues.

New Stadiums and Team Valuation

Team valuation, as estimated by business magazines, was closely related to revenues, and thus
was enhanced by a new stadium. One study of the economic effect of new stadiums on NFL
teams concluded:

52
“Tax Advantages of Sports Franchises,” op. cit. p. 2.
53
Kevin Clark Forsythe, “The Stadium Game Pittsburgh Style: Observations on the Latest Round of Publicly Financed Sports
Stadia in Steeltown, U.S.A; And Comparisons with 28 Other Major League Teams,” Marquette Sports Law Journal, October
2000, p. 245.

Value for an NFL franchise in a new facility is increased as cash flow improves
and the risk and uncertainty of future cash flow diminish. Importantly, of the
teams examined for this study, unshared local revenue increased an average of 85
percent. This increase in franchise revenue coincided with an average increase in
franchise value of 35 percent.54

Another illustration of the impact of new stadiums on team value could be seen in the case of the
expansion Houston Texans, which played their first NFL season in 2002. Forbes estimated the
2002 revenues of the Texans to be $193 million, with a team valuation of $791 million. Critical
components of the Texans’ revenue were premium seating, which was expected to generate $38
million for the Texans compared to $32 million for the Cowboys, and a lucrative naming rights
deal, providing $300 million over 30 years.55 (Exhibits 10 and 11 provide estimates of NFL
team revenues and valuations from 1995 to 2002.)

54
Brown, op. cit. p. 12.
55
Badenhausen, “Showing You the Money,” loc. cit. Premium seating data from “Texas Sized Payoff,” Forbes Magazine,
September 2, 2002, p. 73. Naming rights data from “Revenues from Sports Venues,” Mediaventures. Online at
http://www.sportsventures.com/info.htm#NRights (August 6, 2003).

Appendix C
Financing the Cincinnati Bengals’ Stadium

In 1993, the Cincinnati Reds baseball team and Cincinnati Bengals football team shared
Riverfront Stadium, which had a capacity of 60,000 for football and 53,000 for baseball. The
stadium, which had been built in 1970, was owned by Hamilton County, where Cincinnati is
located. It did not have the revenue-generating features of new stadiums, such as luxury suites
and club seating. As a dual-use facility, the fan experience was not optimized for either football
or baseball.

The owners of both teams had claimed for several years that they were losing money. The
owners asked for facility improvements that would bring additional revenues. In 1993, a
redevelopment task force investigated building one new stadium, and upgrading Riverfront to a
single purpose facility, with an estimated total cost of $315 million. Despite that fact that both
teams were committed to long-term leases, they each independently threatened to leave
Cincinnati unless the city built a new single purpose stadium for their team.

While Hamilton County explored ways to fund new stadiums, it also sought to delay the teams’
decisions to leave. It renegotiated the Bengals’ lease, agreeing to pay the team a $2.75 million
annual subsidy and to add luxury suites and club boxes to Riverfront, provided the Bengals
agreed to stay in Cincinnati until 1998. However, the agreement provided an escape clause,
releasing the team if the city was not in the process of building a football-only stadium by the
end of the 1990s. Reds’ owner Marge Schott reacted to this agreement by suggesting that she
would move her team unless it got similar treatment. The city eventually provided a $2 million
annual subsidy to the Reds, with no corresponding obligations on the part of the baseball team.

The story of how the Reds and Bengals both received new stadiums is long and complicated.
The Reds were the team that many residents felt were more important to the image of Cincinnati,
and were the far more successful team on the field. However, in many ways the ultimate
resolution of the issue was more heavily influenced by the Bengals, who took a more active role
in the process and moved more quickly than the Reds.56

Over the two-year period from mid-1993 to mid-1995, the state of Ohio and Hamilton County
investigated ways to pay for new stadiums, including the various sources of tax that had been
used for stadium construction in other cities. None of these received popular support. In March
1995, Mike Brown, majority owner of the Bengals, declared that the renegotiated lease was void
because the city had been three days late in paying its $2.75 million subsidy to the team.
Furthermore, Baltimore, which was eager to attract an NFL team, was trying to attract the
Bengals. Brown threatened to leave if Cincinnati didn’t provide a new stadium. Meanwhile, the
Reds’ owner Marge Schott was looking at properties outside of Cincinnati, intensifying concern
about one or both teams leaving Cincinnati.

56
For a detailed description of the events leading up to the construction of new stadiums for the Reds and Bengals, see John P.
Blair and David W. Swindell, “Sports, Politics, and Economics: The Cincinnati Story,” in Sports, Jobs & Taxes, pp. 282-323,
which is the source for this account.

In June 1995, Hamilton County commissioners presented a plan to increase the county sales tax
by 1 cent, generating $100 million annually, which would be used to finance the stadiums, a jail,
property tax reduction, and several other activities. A stadium task force estimated that stadium-
related costs would be $544.9 million, despite the fact that there were no plans for the facilities,
it was not even known where they would be built, and some cost items were not included. The
city agreed to this plan by a 5 to 4 vote. Following two raucous public meetings dominated by
opponents of the increased tax, and polls showing popular opposition, the Hamilton County
commissioners also passed the tax. In addition, they declined to call for a referendum on the
matter, despite vocal public resistance.

The day the measure passed in the county commission, opponents began a successful petition
drive to force a referendum. Pro-stadium forces quickly moved into action, commissioning an
economic study, evaluating successful tactics in other cities, and establishing a supposedly
“grass-roots” organization to fight for the measure. During the early stages of the campaign, it
appeared that there was little chance that the sales tax increase would pass. In fact, the chief
executive of the pro-stadium group’s advertising agency commented during the job interview
that the referendum was impossible to win.57

During the campaign, Cleveland Browns’ owner Art Modell announced that he was moving his
team to Baltimore. This made the threat of the Bengals moving seem even more real, since the
Bengals could now move to nearby Cleveland, where the city had already decided to build a new
stadium.

The presence of funding for a new jail divided the pro-stadium forces, so this was dropped from
the final vote, and the sales tax increase was correspondingly cut to a ½ cent. The presence of
property tax relief in the bill was popular, and helped the stadium cause. Labor support was
gained by promising that the new jobs created would be union jobs. While stadium advocates
were focused around their cause, opponents expressed a wide range of concerns, which diffused
their impact.

Stadium supporters commissioned an economic study, conducted by the University of

Cincinnati, Center for Economic Education (CEE). The CEE report was intended to provide
economic support for the stadium. Critics of the report argued that it was deeply flawed and
biased – double counting some items and incorporating questionable assumptions and
methodology – but it provided ammunition for the pro-stadium forces. The CEE report showed
that the economic impact was that the net cost of the stadiums would be just $33 per household.
7,645 jobs would be created or saved by building the new stadiums. For a $520 million
investment, this translated into a cost of $68,000 to create each job, more than ten times the cost
per job incurred by taxpayers through the state economic development programs. An evaluation
by academics who criticized the report, attempting to correct the double counting and
methodological errors of the CEE report, argued that the purported benefits were grossly
overstated.58

57
ibid. p. 297.
58
See ibid., p. 298-311 for a detailed discussion of the CEE report and presentation of an alternative economic analysis.

With proponents claiming substantial economic benefits, and opponents pointing to flaws in the
analysis, voters could justify whatever conclusion they wanted to reach. Proponents launched a
vigorous advertising campaign appealing to voters’ emotions, vastly outspending opponents.
While stadium supporters were highly focused and coordinated, opponents had a range of
interests and were less capable of presenting a single, simple case to the voters. Advertisements
in support of the stadiums cited the importance to Cincinnati of being a “major league city.” The
mayor appeared in a commercial saying, “It’s not about sports. It’s about Cincinnati.” Local
newspapers, radio, and television, with strong economic interests in keeping the teams, were also
important supporters of the stadium plan.59

The stadium proponents were successful at the polls, passing the ½ cent sales tax increase with a
61.4 percent majority, to take effect on June 1, 1996. The tax would automatically be rescinded
if neither team signed a lease within one year. 70 percent of the funds were to be used to finance
the stadiums, with the balance offsetting property tax reductions. The amount of new tax that
would be allocated for the two stadiums was estimated to be $35 million per year.

The county and teams still needed to decide where the new parks would be located, as well as to
negotiate the terms of lease arrangements. The Bengals moved more quickly than the Reds, and
continued to use the threat of relocating to another city as a form of negotiating leverage. As the
one-year deadline approached, the Bengals announced a memorandum of understanding (MOU)
for a 25-year lease that provided:

- Rent payments totaling $11.7 million over the first nine years, with no rent for the
balance of the lease term.
- The county received ticket surcharges of $0.25 per ticket, estimated to be worth $4
million over the life of the lease.
- The team got all revenues from tickets (including boxes and premium tickets), parking,
advertising, and concessions.
- The county was responsible for the cost of maintaining the stadium, estimated to be
between $2.5 and $7 million per year.
- The country was to receive the first $5 million in naming rights, which was counted as a
team contribution to the construction cost.
- Between $20 and $24 million of permanent seat licenses (PSLs) went to the county,
which was also counted as a team contribution to the construction cost.
- The Bengals promised not to play anywhere else without the county’s permission, nor to
apply to the NFL to relocate to another city.

The agreement contained two conditions: the county had to sell $20 million in PSLs by April 30,
1997, and the Bengals had to sell 50,000 season tickets and 80 percent of the luxury boxes and
club seats by the same date. If these conditions were not met, the team could cancel the
agreement.60

Both sides met their conditions, and shortly before the one-year deadline signed a 30-year lease
with terms similar to those in the MOU. One important difference was that team owner Mike

59
ibid. p. 313.
60
ibid. pp. 316-317.

Brown had requested the stadium be named for his father, so naming rights would not be sold.
The team thus passed up a substantial revenue opportunity. The county kept $25 million in PSL
revenue, counting it as a team contribution to construction costs. The team contributed another
$25 million toward construction in the form of its rent payments, ticket surcharges, and rent paid
for Riverfront Stadium (renamed Cinergy Field in 1997)61 until the new stadium was completed
in 2000.62 The county agreed to pay for cost overruns — a concession that eventually cost
taxpayers more than $50 million.63

The county sold bonds to pay for the stadium, land acquisition, and associated infrastructure
development. In January 1998, before the lease agreement was finalized, Hamilton County sold
$71.6 million in sales tax revenue bonds to pay for acquiring land and preconstruction costs. The
bonds had terms of 4 to 30 years, with an average interest rate of 4.92 percent.64 In May, the
county sold an additional $273 million in bonds, with an average interest rate of 5.16 percent.65
The state of Ohio also contributed 15 percent of the stadium construction cost, although it did not
increase its contribution to cover cost overruns. In October 2000, the county made a third bond
sale, which had been intended to raise $240 million for the Reds ballpark, but was raised to $350
million to cover cost overruns, including those incurred in the Bengals’ stadium.

When the Bengals’ new facility, Paul Brown Stadium, opened in 2000, it had a seating capacity
of 65,535, with 7,600 club seats and 114 luxury suites.66 By the time it was completed, the
stadium cost $458 million, including land and infrastructure costs, well in excess of the original
estimate. The construction portion cost $51 million more than the “guaranteed maximum price”
of $287 million which taxpayers had been told at the time of the vote.67 The total for both
stadiums, which was estimated at $540 million at the time of the vote, was projected in early
2000 to be $900 million, with the sales tax increase lasting considerably longer than the original
plan of 20 years.68

While taxpayers paid a higher price than expected, the Bengals contribution remained at $50
million. The Bengals’ new stadium and favorable lease agreement provided substantial
opportunities for increased team revenue from increased ticket sales and premium priced seating.
While the team had foregone the opportunity to profit from selling naming rights, this option was
still open for the future. Hamilton County had secured the team for 30 years.

61
In 1997, Cinergy Corporation, a Cincinnati-based utility, purchased naming rights for Riverfront Stadium until 2002 when the
stadium was to be demolished following the Reds’ move to their new facility.
62
Dan Fitzpatrick and Tom Barnes, “Dividing Up the Bill: A Look At Other Stadium Deals Shows How Rooney’s Offer Stacks
Up,” Pittsburgh Post-Gazette, June 14, 1998, p. A6.
63
“Reds Forced to Foot Bill for Overruns,” Dayton Daily News, March 29, 2001, p. 7D. As a result of the Bengals’ experience,
the Reds contract required that the team pay for construction cost overruns. Another consequence of the Bengals’ cost
overruns was that one of the Hamilton County commissioners who had led the campaign for the stadiums was defeated at the
polls, resulting in the first county commission victory for a Democratic candidate in more than 30 years. “Stadium Issue Helps
Democrat Win Commission Seat,” Associated Press Newswires, November 8, 2000.
64
Tammy Williamson, “Bengals’ Deadline Met as Cincinnati, County Reach Pact,” The Bond Buyer, February 3, 1998, p. 1,
Barry M. Horstman, “Lower-interest Bonds Cut $10 million from Stadium Cost, “The Cincinnati Post,” January 14, 1998, p.
10A.
65
“County Sells More Bonds for New Bengals Stadium,” Associated Press Newswires, May 20, 1998.
66
http://www.bengals.com/paulbrownstadium/ (August 7, 2003).
67
Mike Rutledge, “Lawyers to Check Stadium Overruns,” The Cincinnati Post, December 28, 2000, p. 14A.
68
John Nolan, “County Agrees to Put $14.3 Million More into Stadium Project,” Associated Press Newswires, February 16,
2000.

Exhibit 1
Dallas Cowboys Estimated Financials ($ Millions)

Total Revenues
Year (Season) Dallas Cowboys Rank Highest Lowest
1995 $112.2 1/30 $112.1 (Dallas) $42.9 (Carolina)
1996 121.3 1/30 121.3 (Dallas) 65.7 (Houston)
1997 118.0 1/30 118.0 (Dallas) 66.8 (Jacksonville)
1998* 161.7 1/30 161.7 (Dallas) 90.0 (Tennessee)
1999* 173.9 2/31 176.4 (Washington) 91.9 (Cincinnati)
2000* 181.0 2/31 194.0 (Washington) 107.0 (Arizona)
2001* 189.0 2/31 204.0 (Washington) 110.0 (Arizona)
2002* 198.0 2/32 227.0 (Washington) 126.0 (Arizona)
* 1998-2002 revenues include the increased national television contract revenues.

Operating Income
Year (Season) Dallas Cowboys Rank Highest Lowest
1995 $16.4 2/30 $19.0 (S.F. 49ers) -$18.9 (Carolina)
1996 30.2 1/30 30.2 (Dallas) -8.0 (N.Y. Jets)
1997 41.3 1/30 41.3 (Dallas) -20.9 (Detroit)
1998 56.7 1/30 56.7 (Dallas) 3.4 (Cincinnati)
1999 42.5 2/31 68.7 (Washington) -1.0 (Green Bay)
2000 56.4 2/31 76.3 (Washington) -16.4 (Seattle)
2001 75.4 2/31 79.4 (Washington) 2.7 (Green Bay)
2002 52.3 3/32 87.8 (Washington) 6.0 (Green Bay)

Valuation
Year (Season) Dallas Cowboys Rank Highest Lowest
1995 $272 1/30 $272 (Dallas) $133 (Carolina)
1996 320 1/30 320 (Dallas) 170 (Indianapolis)
1997 413 1/30 413 (Dallas) 227 (Indianapolis)
1998 663 1/30 663 (Dallas) 293 (Detroit)
1999 713 2/31 741 (Washington) 305 (Arizona)
2000 743 2/31 796 (Washington) 338 (Atlanta)
2001 784 2/31 845 (Washington) 374 (Arizona)
2002 851 2/32 952 (Washington) 505 (Arizona)

Sources: 1995-1996 from Financial World. 1997-2002 from Forbes Magazine. Neither the teams nor the National
Football League publicly release financial information or comment on estimates made by others.

Exhibit 2
Texas Stadium Information

Stadium Capacity: 65,846

Average Attendance: 63,141 (2000), 63,187 (2001), 63,090 (2002)

Average ticket price: $50.06 (2002), $53.06 (2003)

Ticket prices (2003):

Individual game ticket prices: $36, $37, $53, $60, $65, $78.
Season ticket prices: $360-680.

Season tickets included 2 preseason games and 8 regular season home games. Season ticket
holders had the right to purchase tickets for home playoff games.

Luxury Suites

Suite Type Annual Lease Per Game

Lease
8 seat Crown I $30,000 $3,500
10 seat Crown I 35,000 4,500
12 seat Circle 45,000 – 75,000 5,500
14 seat Crown II 60,000 6,500
16 seat Crown I&II 65,000 8,000
20 seat Crown I&II 75,000 – 125,000 9,500
40 seat Circle/Crown N/A 18,500

Suite prices included game tickets, parking passes. Up to five additional game tickets can be
purchased for $80 each per suite. There were a total of 381 luxury suites.

Suites contain a refrigerator, counter seating, televisions, bar space, VIP parking, telephones, and
room for mingling. Per-game suites include a fully stocked bar. Per-game lease prices are
higher for premium games. Holders of annual leases can use their suite for any event held at
Texas Stadium, such as concerts, although they must purchase event tickets.

Sources: Dallas Cowboys’ website: http://www.dallascowboys.com. (See the website for a map showing seat
prices at various locations in the stadium.) Attendance data from 2003 Revenues from Sports Ventures, op.cit., p.
121. Average ticket prices from Fairbank, loc. cit.

Exhibit 3
The Five Points of Dallas Cowboys Park

“Cowboys Fields will serve as an outdoor sports field “In the shadows of the stadium will rest the heart of
complex for youth and adult league competition for Legends Square the Park — Legends Square. Designed with a town
football, lacrosse, soccer, baseball, field hockey, and many Retail, Dining center environment, Legends Square will feature
other field sports. Sports clinics, camps and competitions & Family Entertainment high-energy retail stores, many with a sports theme,
throughout the year will further enhance the Fields as an plus restaurants and fine dining.”
invaluable and lasting community resource for families
looking for safe recreational opportunities.”

Cowboys Fields Cowboys Field House

Public-Use Cowboys-themed,
Sports Field Complex Interactive Sports Entertainment
Cowboys Stadium
State-Of-The-Art,
“… a domed, air-conditioned, 75,000-seat facility Retractable Domed Stadium “An innovative recreation center for family entertainment, featuring
with a retractable roof and open end zones linked to live-action, extreme, and participation sports like rock climbing,
fan decks that could increase seating capacity to bowling, basketball, volleyball, virtual sports, inline skating, ice
100,000 with reduced-cost tickets. A technologically skating, and an exciting themed outdoor challenge course for team
enhanced stadium designed to flexibly adapt to a building experiences. The Sports Performance Studio, a state-of-the-
variety of sports and entertainment events – from art fitness center manned by Cowboys’ trainers, will offer the health
Super Bowls to the Pan Am games, from the Cotton conscious the ability to train where the team trains. Anchoring the
Bowl to major concerts.” Field House will be a Cowboys-themed, interactive hall of fame.”
Cowboys Hotel Cowboys Place
Convention Hotel Residential/Business
& Conference Center Mixed-Use Development

“… a destination hotel to support the region’s tourist and convention “A grand, mixed-use development, Cowboys Place will consist of
trade. A Dallas Cowboys branded convention hotel will attract new corporate office and executive space, upscale residential developments of

[email protected] or 800-988-0886 for additional copies.

convention business with state-of-the-art corporate meeting facilities, condominiums, and high-end apartments, each drawing in life and vitality
promote economic growth, and make the region more competitive for from residents and the business community, and all within walking
lucrative corporate gatherings and civic events.” distance of the retail, dining, office, sports, parks and entertainment
amenities offered at Legends Park.”

Source (including quotations): Dallas Cowboys promotional package, “Five Points of Dallas Cowboys Park.”

This document is authorized for use only by Victor Vazquez ([email protected]). Copying or posting is an infringement of copyright. Please contact
Dallas Cowboys: Financing a New Stadium: SPM-6 p. 25

Exhibit 4
Dallas County

(Home of Texas
Stadium)

Exhibit 5
Comment on Dallas Tax Proposal for Financing Cowboys Stadium

The following is a selection of comments regarding the proposal to fund a stadium by increasing
hotel and rental car taxes:

“It’s an improper role for government to even consider doing this. If Mr. Jones wants a new
stadium, he should tax his own ticket holders, his parking lots, and locker rooms.” Dave Capps,
owner of a rental car company, and founder of a Web site opposing the tax (NoJonesTax.com)69

“It is very easy to defeat these things because you have a mixture of sports development and rich
people, just the kind of set-up people love to rail against.” Carol Reed, political consultant who
ran the successful campaign for American Airlines Center.70

One rental car executive said that 90 percent of his company’s business came from local
customers. The president of the Texas Hotel and Motel Association said that the proposed tax
would deter convention and tourist business, resulting in a net loss for Dallas hotels.

“It’s a lousy time to talk about tax increases on hotels and the hospitality industry. Conventions
are down, business meetings are down, and occupancies in the city of Dallas are down…. We
could stand a good chance of not remaining competitive in the hotel and meetings market.”
Consultant to the Hotel Association of Greater Dallas.71

“I’m for keeping the Dallas Cowboys in Dallas County and want to look at all different
opportunities to do that.” Margaret Keliher, Dallas County Judge.72

“We believe we have a legitimate opportunity for success because we’re not talking about using
the customary taxing vehicles that cause heartburn for residents. We’re talking about tourism
taxes.” Herb Gears, Irving Councilman.73

“It will definitely hurt us in already hard times. … There are very few people here that are in
favor of raising the hotel tax to a world record.” Greg Elam, Dallas Convention and Visitors
Bureau.74

“This is an opportunity for us to create a great, year-round destination that will help the hotels by
attracting visitors.” Brett Daniels, Cowboys’ spokesman.75

69
Dave Michaels, “Signing Signals Stadium Kickoff,” Dallas Morning News, May 29, 2003.
70
ibid.
71
Dave Michaels, “Bill Raises Cap on Taxes to Fund Cowboys Home,” Dallas Morning News, March11, 2003.
72
Eva-Marie Ayala, “New Idea Proposed for Cowboys,” Fort-Worth Star Telegram, March 3, 2003.
73
ibid.
74
ibid.
75
ibid.

Comments posted on the NoJonesTax.com Web site guestbook:76

Since the only larger markets in the world would be London, Mexico City or Tokyo, the
chance of the Cowboys moving on is nil, so don’t try that threat.

I guess y’all would be happier if the Cowboys left Dallas? Then we could be just like Los
Angeles and like Houston was a couple a years ago...without an NFL team!

PLS, PLs notify me if EVER I can sign a petition (online, or whatever) to stop this
insanity w/Jerry’s new playhouse.

Don’t y’all have anything else to do? Dallas needs this stadium to keep up with the other
competitive markets out there. Where’s your civc [sic] pride? I’m for this stadium to get
Dallas back on the map!

Go Jerry. Let’s just get that out of the way first. I saw this site and thought what stupid
people y'all are. Example: there was [a] guy saying, "If this tax is approved, we're moving
outta Dallas." See ya Rodger!

Why don't we ask the Cowboys to give up part of their money, they are highly overpaid,
and let them build the dang place if they want it.

The people in Dallas County buy every fairy tale Jerry Jones comes up with.

The concept of using public tax dollars to fund or subsidize private enterprise is very,
very wrong. How can our elected public officials not understand this?

I just can't believe that we the people have been duped to believe that these sports
facilities are going to benifit [sic] us. Back in days past owners payed [sic] to have these
stadiums built and have prospered well. My question is to what did it benefit the tax
payer?

There should be a huge public outcry against this thing. Crime is soaring, money is
needed for education, businesses are failing right and left, the city can't even meet the
demands of its own budget, families are struggling, and this egomaniac wants to fritter
our money away on such an unnecessary endeavor? I think not!

76
http://www.nojonestax.com/mod.php?mod=guestbook (September 4, 2003).

Exhibit 6
NFL Stadium Naming Rights

Team Rights Buyer Amount Term Expiration

(in millions) (in years)
Carolina Panthers Ericsson Electronics $20 10 2006
Denver Broncos Invesco Funds Group $120 20 2021
Detroit Lions Ford Motor Company $40 20 2016
Houston Texans Reliant Resources $300 30 2030
Indianapolis Colts RCA $10 10 2004
Jacksonville Jaguars Altel Corp. $6.2 10 2007
Miami Dolphins Fruit of the Loom $20 10 2007
New England Patriots Gillette 15 2017
Oakland Raiders Network Associates $13.7 5 2003
Philadelphia Eagles Lincoln Financial $139.6 20 2002
Pittsburgh Steelers H.J. Heinz $57 20 2021
San Diego Chargers Qualcomm $18 20 2017
St. Louis Rams Edward D. Jones & Co. $73.6 23 2025
Tampa Bay Raymond James $32.5 13 2011
Buccaneers Financial
Tennessee Titans Adelphia Commun. $30 15 2014
Washington Redskins Federal Express $205 27 2026

The following teams and stadiums did not have naming rights deals in 2003:

Arizona Cardinals (Sun Devil Stadium)

Atlanta Falcons (Georgia Dome)
Baltimore Ravens (Rights buyer PSINet went into bankruptcy. Team plans sale to new buyer)
Buffalo Bills (Ralph Wilson Stadium)
Chicago Bears (Soldier Field)
Cincinnati Bengals (Paul Brown Stadium)
Cleveland Browns (Cleveland Browns Stadium)
Dallas Cowboys (Texas Stadium)
Green Bay Packers (Lambeau Field)
Kansas City Chiefs (Arrowhead Stadium)
Minnesota Vikings (Hubert H. Humphrey Metrodome)
New Orleans Saints (Louisiana Superdome)
New York Giants (Giants Stadium)
New York Jets (Giants Stadium)
San Francisco 49ers (previous contract with 3Com for $4 million for 5 years not renewed)
Seattle Seahawks (Seahawks Stadium)

Source: 2003 Revenues From Sports Venues – Pro Edition (Milwaukee: Mediaventures, 2003), pp. 117-154.

Exhibit 7
Personal Seat Licenses for NFL Stadiums

The following is a summary of personal seat license policies of NFL teams in 2003.

Baltimore Ravens – 61,000 lifetime, transferable seat licenses, at $250-3,000, to finance stadium.
Program sold out.

Carolina Panthers – 62,000 lifetime, transferable seat licenses, at $600-4,500 to finance stadium.
The program sold out, but 1,700 holders did not renew their tickets for the 2002 season,
forfeiting their rights.

Chicago Bears – Planned sale of 28,000 licenses for $900-$10,000 to finance stadium
renovation. Expected to generate $50 to $60 million.

Cincinnati Bengals – more than 42,000 licenses sold to finance stadium, with prices from $300
to $1,500.

Cleveland Browns – license prices from $250 to $1,500 to finance new stadium. Long-time
season ticket holders received discounts on PSLs, ranging from 50 percent for 30+ years to 10
percent for previous year.

Dallas Cowboys – sold 40,000 PLSs in 1968 to finance stadium, at prices of $1,000 to $15,000.
Licenses are transferable, but expire at the end of the stadium lease in 2008.

Green Bay Packers – sold licenses at $600 and $1,400 to season ticket holders to finance stadium
renovation. More than 93 percent of previous season ticket holders purchased licenses.

Houston Texans – sold licenses for $900 to $4,200 to finance franchise startup and stadium.

Oakland Raiders – sold fully transferable licenses for $225 to $3,600 ($630 to $14,400 for club
seats) to pay for stadium improvements. Licenses good until 2005.

Philadelphia Eagles – planning sales of 29,000 transferable licenses with 30-year rights, with
prices of $1,500 to $3,145. Sale expected to generate $60 million to help finance new stadium.
Previous season ticket holders get 15 percent discount.

Pittsburgh Steelers – planned to sell licenses for just over half of the 65,000 seats in new
stadium, but demand was so high they sold 48,000 licenses for $250 to $2,700. Intent was to
raise $34 million for stadium financing.

Seattle Seahawks – sold 3,800 seat licenses to raise $16-17 million for new stadium. Lifetime
licenses cost $2,000 to $3,000, and are transferable.

St. Louis Rams – lifetime, transferable licenses sold for $250 to $4,500.

Tennessee Titans – sold nearly 57,000 licenses at $250 to $4,500 each. Sale generated $71
million to help finance new stadium.

Source: 2003 Revenues From Sports Venues – Pro Edition (Milwaukee: Mediaventures, 2003), pp. 117-154.

Exhibit 8
NFL Stadium Information as of September
Estimated Estimated
Stadium Stadium Current
2001 Const. Renov. Stadium Estimated Term of
Year Stadium Luxury Club Average Costs Costs Naming Amount Rights
Club Venue Stadium Ownership Opened Capacity Suites Seats Attendance (millions) (millions) Rights Paid Deal
Arizona Sun Devil Stadium Arizona State University* 1958 73,014 68 5,000 38,414 $1 $24 none
Atlanta Georgia Dome Georgia World
Congress Authority* 1992 71,228 203 4,600 54,251 $214 none
Baltimore Ravens Stadium1 Maryland Stadium Authority* 1998 69,084 108 7,900 69,360 $230 none
Buffalo Ralph Wilson Stadium Erie County 1973 73,967 164 10,800 63,092 $22 $286 none
1996-
Carolina Ericsson Stadium Carolinas Stadium Corp. 1996 73,285 158 11,358 72,358 $245 Ericsson $20 2006
Chicago Soldier Field2 Chicago Park District* 1924 66,944 116 None 66,944 $10 $3652 none
Cincinnati Paul Brown Stadium Hamilton County 2000 66,500 114 7,600 56,681 $455 none
Cleveland Browns
Cleveland Stadium City of Cleveland 1999 73,200 147 8,754 72,886 $315 none
Dallas Texas Stadium City of Irving 1971 65,675 381 None 63,187 $35 none
Invesco Field at Mile
Denver High Metropolitan Football Invesco 2001-
Stadium District 2001 76,125 124 8,800 75,035 $401 Funds $120 2021
Detroit Ford Field Detroit/Wayne County Ford Motor 2002-
Stadium Authority 2002 65,000 120 7,000 75,226 $325 Co. $40 2042
3
Green Bay Lambeau Field City of Green Bay 1957 60,890 198 1,920 59,804 $1 $50 none
Houston Reliant Stadium Harris County- Reliant 2002-
Houston Sports Authority* 2002 69,500 165 7,500 N/A $449 Energy $300 2032
1994-
Indianapolis RCA Dome Capital Improvement Board* 1984 56,127 104 4,000 56,343 $82 RCA $10 2004

[email protected] or 800-988-0886 for additional copies.

1997-
Jacksonville Alltel Stadium City of Jacksonville 1995 73,000 90 11,200 60,442 $138 Alltel $6.2 2007
Kansas City Arrowhead Stadium Jackson Co. Sports Authority* 1972 79,451 80 2,400 77,186 $43 none
Fruit of the 1996-
Miami Pro Player Stadium Club Owner 1987 75,540 182 10,184 73,508 $115 $80 Loom $20 2006
Minnesota Hubert H. Humphrey Metropolitan Sports
Metrodome Facilities Commission* 1982 64,121 115 None 64,168 $86 none
New 2002-
4
England Gillette Stadium4 Club Owner 2002 68,000 80 6,000 60,292 $397 Gillette 2017
New Orleans Louisiana Superdome State of Louisiana* 1975 69,082 137 15,584 70,059 $134 $23 none

This document is authorized for use only by Victor Vazquez ([email protected]). Copying or posting is an infringement of copyright. Please contact
Dallas Cowboys: Financing a New Stadium: SPM-6 p. 32

Exhibit 8 (Continued)
Estimated Estimated
Stadium Stadium Current
2001 Const. Renov. Stadium Estimated Term of
Year Stadium Luxury Club Average Costs Costs Naming Amount Rights
Club Venue Stadium Ownership Opened Capacity Suites Seats Attendance (millions) (millions) Rights Paid Deal
New York
Giants Giants Stadium New Jersey Sports &
Exposition Authority* 1976 80,062 119 142 78,498 $78 none
New York
Jets Giants Stadium Same as Giants* 1976 80,062 119 142 78,476 $78 none
Oakland Network Associates City of Oakland & Network 1998-
Coliseum Alameda County* 1966 63,132 143 6,000 59,011 $26 $225 Associates $6 2003
Philadelphia Veterans Stadium5 City of Philadelphia 1971 65,536 89 None 65,899 $52 $40 none5
Sports & Exhibition 2001-
Pittsburgh Heinz Field Authority 2001 65,000 127 6,600 62,398 $281 Heinz $57 2021
Qualcomm 1997-
San Diego Qualcomm Stadium City of San Diego* 1967 72,000 112 7,200 59,355 $28 $89 Inc. $18 2017
San 1995-
Francisco 3Com Park6 City of San Francisco* 1960 69,734 89 None 67,469 $25 $54 3Comm6 2002
Seattle Seahawks Stadium Public Stadium Authority 2002 68,000 82 7,000 60,352 $430 none
St. Louis Edward Jones Dome St. Louis Edward 2002-
Regional Sports Authority* 1995 66,000 124 6,533 66,103 $280 Jones $31.8 2013
Tampa Bay Raymond James Stadium Tampa Sports Authority* 1998 65,655 197 12,000 65,558 $169 none
7
Tennessee The Coliseum City of Nashville 1999 68,500 176 12,000 68,799 $242 none
Federal 1998-
Washington FedEx Field Club Owner 1997 85,407 280 15,000 78,046 $251 $65 Express $205 2025

1. Baltimore - PSI Net originally purchased naming rights in 1999, however the company filed bankruptcy on May 31,2001. Deal was for $105.5 million over 20 years.
2. Chicago - Soldier Field is in the midst of a $365 million dollar renovation. When finished it will have 63,000 seats, 8,600 club seats and 133 luxury suites.
3. Green Bay - Lambeau Field renovation is underway. $295 million dollars will be spent on the stadium, and when finished it will expand to 71,000 seats, 6,260 club seats,and 167 suites.

[email protected] or 800-988-0886 for additional copies.

4. New England - Financial information related to the Gillette naming rights deal were not released. CMGI previously had naming rights from 2000-2020, for $120-million but CMGI filed
for bankruptcy in February 2002.
5. Philadelphia - Currently building $500 million dollar, 66,000 seat stadium.(9,000 club; 117 suites) Lincoln Financial Group has purchased the naming rights until 2022 for $139.6 million.
Will be complete August 2003.
6. San Francisco - 3Com’s naming contract has expired on 8/11/02, and the 49ers are seeking approval from the Board of Supervisors to seek new deal.
A $100-million bond has also been passed for a new stadium.
7. Tennessee - Adelphia Communications held naming rights to the stadium with a 15-year, $30-million deal; Adelphia filed bankruptcy and was released from its naming rights contract in
June 2002.
* Indicates the stadium is publicly operated.

Source: National Football League Players Association, “NFL 2002: Franchise History and Values Stadium Data”. September 2002.

This document is authorized for use only by Victor Vazquez ([email protected]). Copying or posting is an infringement of copyright. Please contact
Dallas Cowboys: Financing a New Stadium: SPM-6 p. 33

Exhibit 9
Sources of Public Stadium Financing for Stadiums/Arenas
With NFL, NBA, MLB, or NHL Teams

Food & Beverage Tax

Sewer & Water Rev.

Entertainment Tax

Lottery Revenues
Rental Car Tax

Admission Tax

General Fund
Property Tax
Parking Tax

Income Tax
Hotel Tax
Sales Tax

Gas Tax
Sin Tax
League Team
NFL Cincinnati Bengals X X
NFL Denver Broncos X
NFL Cleveland Browns X X X X
NFL Tampa Bay Buccaneers X
NFL Philadelphia Eagles X X
NFL Atlanta Falcons X
NFL Jacksonville Jaguars X X
NFL Detroit Lions X X X
NFL Green Bay Packers X
NFL St. Louis Rams X X
NFL Baltimore Ravens X
NFL Seattle Seahawks X X X X
NFL Pittsburgh Steelers X X X
NFL Houston Texans X X
NFL Tennessee Titans X X
NFL Arizona Cardinals X X X X X
NFL San Diego Chargers X X X
NFL Chicago Bears X X X
NFL Washington Redskins X
NFL Carolina Panthers X
NFL New England Patriots X
NBA Cleveland Cavaliers X
NBA Atlanta Hawks X
NBA Miami Heat X
NBA Orlando Magic X X X
NBA Dallas Mavericks X X
NBA Indiana Pacers X X X X X X
NBA Houston Rockets X X
NBA San Antonio Spurs X X
NBA Phoenix Suns X
NBA Minnesota Timberwolves X X X
MLB Houston Astros X X
MLB Milwaukee Brewers X X
MLB Arizona Diamondbacks X

Exhibit 9 (continued)

Food & Beverage Tax

Sewer & Water Rev.

Entertainment Tax

Lottery Revenues
Rental Car Tax

Admission Tax

General Fund
Property Tax
Parking Tax

Income Tax
Hotel Tax
Sales Tax

Gas Tax
Sin Tax
League Team
MLB San Francisco Giants X
MLB Cleveland Indians X
MLB Seattle Mariners X X X X X
MLB Baltimore Orioles X
MLB San Diego Padres X X
MLB Philadelphia Phillies X X X
MLB Pittsburgh Pirates X X X
MLB Texas Rangers X
MLB Cincinnati Reds X X
MLB Colorado Rockies X
MLB Detroit Tigers X X X
MLB Chicago White Sox X X
NHL Phoenix Coyotes X
NHL Carolina Hurricanes X
NHL Tampa Bay Lightning X X X X X X X
NHL Florida Panthers X X
NHL Nashville Predators X
NHL Buffalo Sabers X
NHL San Jose Sharks X
NHL Dallas Stars X X
NHL Atlanta Thrashers X
NHL Minnesota Wild X

Source: Barrett Sports Group, Preliminary Draft of Report to City of San Diego (2003),
http://www.sannet.gov/chargersissues/pdf/barrettpres030206a.pdf , p. 37 (September 2, 2003). This table was
prepared by the Barrett Sports Group for the City of San Diego as part of the 2003 debate over public financing for a
stadium to be used by the San Diego Chargers football team.

Exhibit 10
NFL Franchise Estimated Revenues
Year
Current Estimated Revenue ($ Million)
Stadium
Opened77 1995 1996 1997 1998 1999 2000 2001 2002
Arizona Cardinals 1958 $66.9 $71.1 $76.9 $100.4 $101.7 $107 $110 $126
Atlanta Falcons 1992 68.2 79.2 77.6 98.7 107.2 113 120 133
*
Baltimore Ravens 1998 71.4 75.8 73.2 120.0 122.9 139 148 155
Buffalo Bills 1973 73.1 77.7 78.7 101.9 114.0 123 131 141
Carolina Panthers 1996 42.9 75.1 83.0 128.5 128.1 144 152 161
Chicago Bears 1924 73.5 79.5 79.0 100.8 102.8 113 124 132
Cincinnati Bengals 2000 62.1 72.1 69.2 91.7 91.9 123 130 141
Cleveland Browns 1999 146.5 153 158 174
Dallas Cowboys 1971 111.2 121.3 118.0 161.7 173.9 181 189 198
Denver Broncos 2001 69.2 73.4 76.3 99.3 107.1 115 159 171
Detroit Lions 2002 61.3 69.4 74.2 97.6 99.5 109 116 159
Green Bay Packers 1957 65.8 74.9 78.8 103.2 108.7 119 132 152
Houston Texans 2002 193
Indianapolis Colts 1994 60.3 69.7 70.9 98.3 107.3 118 127 137
Jacksonville Jaguars 1995 50.0 67.3 66.8 116.4 121.0 132 137 142
Kansas City Chiefs 1972 72.0 82.0 85.6 110.4 114.8 125 138 150
Miami Dolphins 1987 82.2 95.4 103.1 127.5 131.2 141 145 159
Minnesota Vikings 1982 66.7 74.2 77.7 99.7 103.9 112 123 135
New England Patriots 2002 71.1 79.1 84.0 107.6 113.1 128 136 189
New Orleans Saints 1975 71.8 79.0 80.9 101.6 104.6 116 139 146
New York Giants 1976 71.5 80.6 82.3 107.5 110.6 120 134 143
New York Jets 1976 61.1 75.4 76.2 103.6 109.8 121 131 142
Oakland Raiders 1966 70.8 79.3 78.3 99.8 104.9 117 132 144
Philadelphia Eagles 1971 75.2 80.3 83.0 102.5 106.1 118 120 134
Pittsburgh Steelers 2001 62.8 72.5 75.1 96.8 96.4 109 142 152
San Diego Chargers 1967 68.3 75.6 82.5 104.2 109.2 119 131 140
San Francisco 49ers 1960 77.7 85.9 84.7 109.3 111.6 120 129 142
Seattle Seahawks 2002 62.4 71.2 77.1 99.9 101.7 110 119 153
St. Louis Rams 1995 76.0 85.8 91.9 111.3 116.0 124 136 150
Tampa Bay Buccaneers 1998 65.4 72.1 76.8 128.7 132.9 146 151 168
** **
Tennessee Titans 1999 63.0 65.7 71.5 90.0 126.4 134 141 155
Washington Redskins 1997 64.7 70.7 115.1 151.8 176.4 194 204 227

77
Stadium date taken from National Football League Players Association, “NFL 2002: Franchise History and Values: Stadium
Data”, September 2002.
*
Previously Cleveland Browns.
**
Previously Houston Oilers.
Shaded boxes represent first year in a new stadium.
Sources: 1995-1996 from Financial World, 1997-2002 from Forbes Magazine. All franchises except the Green Bay Packers are
privately owned and do not publicly release their financial information, nor confirm estimates made by others.

Exhibit 11
NFL Franchise Estimated Valuations

Estimated Franchise Valuation ($ Million)

1995 1996 1997 1998 1999 2000 2001 2002
Arizona Cardinals $166 $184 $231 $301 $305 $342 $374 $505
Atlanta Falcons 167 191 233 306 321 338 407 534

Baltimore Ravens 201 235 329 408 479 544 607 649
Buffalo Bills 188 200 252 326 365 393 458 564
Carolina Panthers 133 240 365 488 513 574 609 642
Chicago Bears 184 204 237 313 319 362 540 621
Cincinnati Bengals 171 188 311 394 423 479 507 562
Cleveland Browns 557 598 618 695
Dallas Cowboys 272 320 413 663 713 743 784 851
Denver Broncos 164 182 320 427 471 540 604 683
Detroit Lions 150 181 312 293 376 423 509 635
Green Bay Packers 166 186 244 320 337 392 474 609
Houston Texans 791
Indianapolis Colts 145 170 227 305 332 367 419 547
Jacksonville Jaguars 145 239 294 419 460 500 522 569
Kansas City Chiefs 188 204 257 353 367 412 462 601
Miami Dolphins 214 242 340 446 472 508 553 638
Minnesota Vikings 167 186 233 309 322 346 437 542
New England Patriots 165 197 252 460 464 524 571 756
New Orleans Saints 184 199 243 315 324 371 481 585
New York Giants 183 211 288 376 387 419 514 573
New York Jets 153 186 259 363 384 423 512 567
Oakland Raiders 162 210 235 299 315 351 421 576
Philadelphia Eagles 192 209 249 318 329 405 518 617
Pittsburgh Steelers 154 173 300 397 414 468 555 608
San Diego Chargers 169 191 248 323 393 416 447 561
San Francisco 49ers 196 218 254 371 379 419 463 568
Seattle Seahawks 154 171 324 399 407 440 534 610
St. Louis Rams 193 243 322 390 418 448 544 602
Tampa Bay Buccaneers 164 187 346 502 532 582 606 671
** **
Tennessee Titans 159 193 322 369 506 536 551 620
Washington Redskins 184 200 403 607 741 796 845 952

Previously Cleveland Browns
**
Previously Houston Oilers.

Shaded boxes represent first year in a new stadium.

Sources: 1995-1996 from Financial World, 1997-2002 from Forbes Magazine. All franchises except the Green Bay Packers are
privately owned and do not publicly release their financial information, nor comment on estimates made by others.

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Dallas Cowboys New Stadium - HBR

Uploaded by

Dallas Cowboys New Stadium - HBR

Uploaded by

CASE: SPM-6

DALLAS COWBOYS: FINANCING A NEW STADIUM

THE DALLAS COWBOYS’ SITUATION IN MID-2003.

1. Economic growth and jobs: “a year-round destination attraction drawing millions of

In general, cities in 2003 were struggling in an economic environment dramatically different

Appendix A: Stadium Financing, Construction, and Revenue Generation provides information on

Financing Stadium Construction

Public Financing of Stadiums

Taxation Law Impacts

The National Football League’s G-3 Fund

The requirements for a team to qualify for a G-3 loan were:46

- the club stays in its existing market,

The NFL maintained “competitive balance” as a fundamental cornerstone of its decision-making.

Stadium Leasing, Management, and Operation

Stadium maintenance was also an important consideration. Routine maintenance of an NFL

New Stadiums and Team Valuation

Stadium supporters commissioned an economic study, conducted by the University of

Stadium Capacity: 65,846

Average ticket price: $50.06 (2002), $53.06 (2003)

Ticket prices (2003):

Suite Type Annual Lease Per Game

Cowboys Fields Cowboys Field House

[email protected] or 800-988-0886 for additional copies.

Comments posted on the NoJonesTax.com Web site guestbook:76

Team Rights Buyer Amount Term Expiration

Arizona Cardinals (Sun Devil Stadium)

[email protected] or 800-988-0886 for additional copies.

[email protected] or 800-988-0886 for additional copies.

Food & Beverage Tax

Sewer & Water Rev.

Food & Beverage Tax

Sewer & Water Rev.

Estimated Franchise Valuation ($ Million)

Shaded boxes represent first year in a new stadium.

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