Imagine for a moment that you run a successful business – in fact, the most successful business in your industry. You want to expand. You could issue equity or borrow the funds, but both of those options come with a hefty amount of risk. So why not just lobby government to pony up most of the costs:
“Tasmania is requesting $240 million in funding from the federal government in order to build the stadium to house the 19th AFL club from 2029.
…
Tasmania’s current proposal sees the state government committing $375 million, the AFL $15 million, the federal government $240 million and private investors $85 million. Combined with $26 million already spent, the total cost would reach $741 million.”
Welcome to Australia, where corporate welfare is the name of the game. At least the journalist covering the story was honest about some of the claims that are always churned out by ‘independent’ consultants to justify their brazen rent-seeking:
“The business case claims the stadium would generate $85 million in economic activity each year - though the numbers on those sorts of studies are always fuzzy - with an optimistic claim 44 events would be held at the stadium each year.”
Fuzzy is right. These kind of studies almost always fail to mention that the economic benefits cited are rarely the result of net new spending for the region. What tends to happen with sporting events, even recurring events that a new stadium brings in, is that they redistribute preexisting local spending. New spending at the stadium and adjacent restaurants or bars likely comes at the expense of some other form of spending elsewhere in the city.
The consultants conveniently omit the cost of that forgone spending in their impact assessments, and they also tend to exclude many other potential costs associated with a new stadium such as the opportunity cost of the public funding; traffic congestion; the disruption of residents' lifestyles; etc.
So by all means, build a new stadium in Tasmania. But please ask the primary beneficiaries – the AFL and Tassie sports fans – to pay for it, not the rest of us.