July 06, 2007

Private vs. Public

So, a non-major city wants to bring in a minor league baseball team and build a brand new ball-park in the downtown area. No private companies have made this investment so far, because they don't believe that ticket revenues, etc. would make up for the huge cost of the stadium and believe it to be a non-viable investment decision.

What other financial considerations need to be looked at before a city nixes the idea of taking on this project with city money?


Eric Olsen said...

So, the answer is:

If a private firm invests in a baseball stadium, their only revenue is ticket sales, etc.

If a city invests in a baseball stadium, their revenue includes ticket sales along with property tax increases of the nearby properties that may become revitalized, taxes from new bars, restaurants that open up nearby, etc.

So, whereas a new civic opportunity may not be financially smart for a private investor, it still may be smart for the city to invest in.

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