With all the discussions surrounding the “Stadium of the Future” announced by the Jacksonville Jaguars, here are six things Duval County citizens should know about the proposed project.
One, building a new stadium will have little economic impact on our city, no matter how much we love the Jaguars. Dozens of economic studies have confirmed that stadiums (and, for that matter, the presence of an NFL team) do not have any meaningful impact on jobs, economic activity, business relocations to the host city, property values or household income. Likewise, cities like San Diego and St. Louis losing NFL teams suffer little economic effect per those same studies.
Two, city funding for the stadium is an enormous wealth transfer to owner Shad Khan, as NFL teams are valued at 30 to 45 times EBITDA cash flow (earnings before interest, taxes, depreciation and amortization. A leaked investment proposal for the Washington Commanders suggests that a new stadium and a sportsbook — a company that accepts bets on sporting events — could add up to $80 million to $100 million to the Jaguars’ annual cash flow.
Even at $50 million, the new stadium would increase the net worth of the team by $1.5 billion. That helps explain why the Chicago Bears are building a stadium at their own expense and suggests that Khan would still benefit even if he fully funded the new stadium.
Three, taxes raised to generate city funding for a new stadium have real economic consequences for the community. Any tax other than a ticket surcharge or in-stadium sales tax violates the benefit principle of taxation, meaning that the people paying the tax aren’t the people benefiting from the stadium. Moreover, any tax reduces the disposable income of those paying the tax, reducing economic activity in the city.
Four, city funding for the stadium carries a significant opportunity cost. Jacksonville is burdened with pension debt and unfulfilled promises and seems unable to be able to even build a park or to open public pools in the dead of summer. We must rethink our priorities and make economically sound decisions if we want to be a great city.
Five, taxpayer-funded subsidies for billionaires are unjust and anti-capitalist, as libertarians and progressives generally agree. There are good reasons why our Florida and federal governments have moved away from subsidizing sports stadiums.
This is a leadership moment for Mayor Donna Deegan and the City Council. I urge residents to share with them their views.
Daniel B. Nunn, Jr., is a Jacksonville-based attorney specializing in mergers and acquisitions.
This guest column is the opinion of the author and does not necessarily represent the views of the Times-Union. We welcome a diversity of opinions.
This article originally appeared on Florida Times-Union: Khan may still benefit even if he funds Jaguars' new stadium entirely