level of stadium development

The nature of the games held in stadiums, from the Olympic Games to the Commonwealth Games, best exemplifies the level of stadium development. The processes involved in getting these stadiums ready cost a lot of money to taxpayers. In certain cases, like as the FIFA World Cup, new stadiums have been built, while old ones have been restored to meet international safety standards (Alakshendra & Alakshendra, 2016). Government expenditure is focused at enticing athletic events to take place in the same stadiums. Therefore, the paper will highlight in details the key aspects of stadia financial management based on three focal areas which include; the pre-financing stage, the post financing stage and the eminent domain stage.

Pre-financing

The expenditure of the taxpayers’ money on sports facilities has been documented as an international phenomenon and occurs at every level of the government from as low as the municipal council to the national government. Governments spend a lot of money to host international tournaments and this often relies on public money for the construction and the subsequent management of the new sports facilities (Alakshendra & Alakshendra, 2016). Since most of the money comes from taxpayers’ money to bankroll the activities, it has become something of a commonplace to often witness new stadiums proposals involving public financing to get challenged in courts of law. The people who challenge the stadium proposals often make three primary legal arguments are highlighted below.

Facility Financing

The issue of facility funding has elicited numerous legal ramifications for project developers in the past decade especially with private investors and developers joining the fray. Notwithstanding, there has been an increase in the number of professional teams in the major soccer leagues with sports franchising creating a demand for professional teams. In the most recent past, the scarcity of teams has led to investors getting embroiled in bitter bidding wars to sponsor these teams or retain them as professional franchises. In most instances, the investors pledge the construction of new stadiums with bigger capacities. The best-known case is that of Missouri and St. Louis which both tried in vain to keep the NFL Rams from leaving Los Angeles and could have had potential legal ramifications because of the $ 400 million of the taxpayers’ money offered to the NFL Rams.

Health and Safety

During the pre-financing phase the project managers of the construction of the new stadia have to rely on health and safety approval standards by the government and with the involvement of the relevant environmental stakeholders, the issue being raised often entails human health and environmental safety. The construction site must be approved because the environment where construction is to take place can present health risks to the surrounding population and even the workers. It has become evident that when health and safety measures are not taken into consideration, litigation becomes almost unavoidable and could lead to potential ramifications costly to human life and property. A case in point is the Hillsborough disaster that occurred in 1989 killing 97 Liverpool FC fans. The disaster led to several prosecutions against prominent persons tasked with the management of the stadium and was accused of gross negligence while the victims’ families pressed for charges against the stadium establishment.

Planning Permission and Approval

Permission and subsequent approval from the administrative authority are crucial during the pre-financing period. The local government must give permission for such a project to get underway failure of which results into court appeals quashing decisions to grant permissions in instances where the same permission had been denied. For instance, the court of appeal can quash a council’s decision to grant permission for a new football stadium because the municipal council had failed in totality to provide reasons for its decisions. A case is given of Oakley vs. South Cambridgeshire District council. In the case, Mr. Oakley had moved to court to stop the construction of 3000 seat stadium because the Cambridgeshire because the council committee had failed to give reasons for their decision to breach common law which demanded that a reason is given where permission was denied.

Post financing

Once the groundbreaking for the stadium construction is done and construction completed, there still exist numerous challenges that rock a stadium despite its completion especially when teams threaten to quit the stadium for another city with a bigger and better stadium. When such issues occur, it becomes obvious that contractual lease agreements are contravened hence the need for litigation. There are however cases of cities exercising their contractual rights under the stadium and arena lease agreements either to avert potential consequences of a team or tenant leaving and sometimes to slow their departure (Delaney & Eckstein, 2015).

A case in point is the lease agreement between Metropolitan city council and St. Pauli which initially signed a 52-year lease deal for a stadium property at a cost of $556620 annual lease payable to the Metropolitan Council. The plot used by the Metropolitan council to tie St. Pauli to a long term deal was meant to avert financial disputes relating to arrears hence a stable financial security and to slow the tenant from leaving. Another second example is that of Athletic football club located in Spain. The club moved into the SAN Mamés stadium which was constructed largely by the taxpayers’ money. Most of the money came from City of Biscay and the Basque regional government. The current lease agreement is for Athletic club to pay €500,000 a season and will only be eligible to buy after 60 years

Eminent Domain

The concept of the eminent domain holds that the state or the federal government has the powers to take private property so that it can be used for public use while giving considerations for just and rightful compensation to be granted to the original owners. The property can then be legislatively delegated to smaller entities such as municipalities, government corporations. Private individuals and other relevant stakeholders who are then authorized to exercise functions in the public interest (Malloy, 2016). The property can then be taken up by the government or by the delegated state organs or third parties who will then devote it to public use and in most cases towards economic development. In most instances, the common uses of property taken by through the use of eminent domain include government buildings, public utilities, hospitals and even railroads construction. In some instances, eminent domains may be used to construct stadiums for recreational purpose of the community (Malloy, 2016).

The most notable controversy emanating from the eminent domain could be best exemplified by the Susseto Kelo vs. The city of New London. The Supreme Court would make one of the most controversial decisions of the past decade when Kelo’s quest to have the city of New London stopped from using their land for a development plan which sees Kelo and her neighbors lose their residential homes. Kelo and her neighbors held that the government had no mandate to violate the public use component of the American constitution which stated that no private property shall be taken for the use by the public without just and fair compensation. Kelo and her neighbors eventually lost the case.

Reference

Alakshendra, A., & Alakshendra, A. (2016). How are we funding professional sports stadiums? An overview. Managerial Finance, 42(9), 885-890.

Delaney, K. J., & Eckstein, R. (2015). Public Dollars, Private Stadiums, and Democracy. Sociological Perspectives on Sport: The Games Outside the Games, 323.

Malloy, R. P. (Ed.). (2016). Private property, community development, and eminent domain. Routledge.