Quote:
Originally Posted by Strange Brew
Well the accepted thinking seems to be that pro sports teams don’t create new economic activity and tax revenue, they just replace other spending for the most part.
But truly, franchise valuations are not really driven by revenue and profits. It’s more about scarcity.
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Something that I rarely hear about when these things are discussed, but, at least in B.C., roughly 30% of a construction project costs go directly to taxes (mostly income and corporate). And then you have spinoff taxes generated from additional economic activity by folks working on projects of this scale (food, clothes, fuel, staff accommodation), which probably puts about 40-50% of costs of these projects into government coffers.
As these projects are finished, well planned city's can also increase their tax revenues in the longer term, as they can attract more infill buildings for residential and front line businesses in these areas.
Governments do a pretty bad job explaining these benefits (and maybe it's because they'd then be negotiating against themselves), but it's likely why Alberta is dumping $300m in additional transportation and infrastructure improvements into the project, as most of that is simply coming from generated tax revenue from the build.