Introduction
The Cowboys stadium was constructed on the location where the Texas stadium previously stood and was completed on the 27th May 2009. The stadium has a seating of 85000 and this makes it the third largest stadium on seating capacity in the National Football League (NFL). The cost of the construction of the Cowboys stadium was initially projected to be $ 650 million but actual costs of constructing are documented at $ 1.15 billion, making it one of the most expensive sports construction ventures in the United States. The construction was financed both through public and private financing, and this paper seeks to explore the financing options that were utilised in the construction (stadium.cowboy.com 2012).
Financing
The cost of constructing the stadium was initially estimated at $ 650 million, but adjustments in the actual construction rose to an estimated $ 1.15 billion, making it one of the most expensive sporting venues ever built.
The financing of the construction of the stadium came from three major sources; the City of Arlington, the owner of the Dallas Cowboys football team, Jerry Jones and the National football League
Financing from the National Football League (NFL)
The NFL provided $ 150 million as financing towards the construction of the Cowboys Stadium. According to the NFL, of the total project cost of $ 1.194 billion, 63% was financed privately while 33% was financed through public funding. This translates to $ 750 million through private funding and $ 444 million through public funding. The contribution of the NFL at $ 150 million of the total private funding translates to twenty percent of the total funding acquired privately. This amount advanced by the National Football League was in the form of a loan, in line with policy of the NFL to support the construction of new Football sporting venues (stadium.cowboy.com 2012).
Public Financing: city of Arlington
The City of Arlington provided 37% of the financing of the construction of the Cowboy Stadium, estimated at $ 444 million. This was through several measures. Twenty five million dollars were obtained from the county contribution program. This amount was derived from the contribution of the various counties under the jurisdiction of the city, and this means that the amount provided was essentially contribution from the taxpayers since the county contribution program utilises finances derived from public coffers, usually financed by taxpayers (stadium.cowboy.com 2012).
The City of Arlington also utilised a 0.5% sales tax increase towards the construction. This was approved by the voters of the city. This tax was levied of the buyers of goods and services at the end of the supply chain.
A 2.0 percent increase in the City of Arlington hotel tax was another manner in which the city raised its contribution towards the construction. This was also approved by the taxpayers who were convinced that the construction of the stadium would contribute positively towards the reputation and growth of their city.
The city, through an approval of the taxpayers, also imposed an admissions tax of 10 percent, a 3.5 parking tax and an increase of 5.0 percent on car rental tax. These taxes were to be collected purposefully towards the financing of the construction of the Cowboys stadium.
The city of Arlington also issued bond debt instruments meant to contribute towards the financing of the Cowboy stadium. These were issued on the basis of a repayment to occur from the revenues which would be generated by the stadium after its completion (stadium.cowboy.com 2012).
The rest of the financing that was required for the project was raised by the owner and president of the Dallas Cowboys football team, Mr Jerry Jones. From the calculations of the costs used, Mr Jones bore the cost of the project to an estimate of $ 600 million. Since this was private funding, there exist no records on how the president of the Dallas Cowboys raised this amount towards the completion of the project (stadium.cowboy.com 2012).
Project Management
The project was managed by Blue star Development Company. This company was tasked with the management of the all the aspects of the project and coordinating the activities of the various players working towards the completion of the stadium. As such, they had a unique and challenging duty to ensure that all the project timelines were met and the budgeted resources allocated accordingly (stadium.cowboy.com 2012).
The City of Arlington, through its commissioners played a critical part in the completion of the project. They made the initial proposals for funding, and placed the proposals for approval by the voters of the city to ensure that the project proceeded successfully as proposed. It must be noted that the city of Dallas, through its commissioners had previously thrown the project proposal out on the basis that it was impossible to ask for taxpayers to fund a project of such magnitude through tax increases. The City of Arlington commissioners thus played a central role in making proposals for taxes and tax increases, made a point of making a successful appeal for the project to voters and saw the proposals passed and proceeded to implement the proposed tax measures and collect the revenue necessary for the funding of the project (stadium.cowboy.com 2012).
The National Football League also played a key role in the financial success of the project. By offering through its support program for construction of projects a loan of $ 150 million, it gave a high level boost to the project.
The president and management team of the Dallas Cowboys football team also contributed to the financial success of the project. They made financial contributions to meet the deficit that arose after financing by the city of Arlington and the national Football league. They were also central in the provision of the management services that were required during the implementation of the project (Baade 2010).
Stadium Revenues
The Cowboys stadium cost price for an average ticket is $ 159.65. This is very high compared t ordinary ticketing for such events. This high ticket cost is partly due to the need to cover the financing cost that was obtained through loans. The stadium also offers to season ticket holders a requirement for $ 150000 down payment for a thirty year seating which is not inclusive of ticket prices (stadium.cowboy.com 2012).
The stadium offers suites which have a price range of $ 100,000 to $ 500000 per year, a deal which includes tickets to Cowboy games but is exclusive of third party events which may be held in the stadium. The stadium also makes fees from premium parking. It is estimated that it costs $ 75 for parking at the stadium parking during Cowboy games while it costs an estimated $ 40 to park during third party events held at the stadium. The Stadium has not yet made the decision to sell the naming rights and currently goes by the name Cowboy Stadium. A joint business venture by the Dallas Cowboys owner and the New York Yankees owner operates the concessions and merchandising in the stadium (Baade 2010).
Conclusion
The proposal for the construction of the Cowboys stadium was a success because of the commitment of the city of Arlington, the management of the Dallas Cowboys football team and the cooperation of the National Football League. The financing was well shared among the various stakeholders who had interest in the stadium and this contributed immensely to the success since the burden was not borne by one party. The stadium has also recorded a good performance in revenue generation and has been able to meet its financing cost obligations that it had committed to, and has also managed to surpass some of its financial targets.
The success of the project is a testimony of how the private sector can collaborate with the public sector to conduct financing of the construction of sporting facilities. It provides an example of how such cooperation can be successfully utilised to deliver a growth and development in the number of sporting facilities in the country.
References
"FAQ About Dallas Cowboys Project "http://www.ci.arlington.tx.us/citysecretary/pdf/110204/110204_faq_english.pdf (PDF). City of Irving. November 4, 2004. City of Irving. November 4, 2004. Retrieved April 7th 2013.
Baade, R. (2010) “Getting in the Game: Is the Gamble on Sports as a Stimulus for Urban Economic Development a Good Bet?” (Washington, D.C.: The Brookings Institution)
Coates, D. and Depken, C. (2009) “The Impact of College Football Games on Lacal Sales Tax Revenue: Evidence from Four Cities in Texas,” Eastern Economic Journal, Vol. 35, No. 4, pp. 531-547.
Guest Info". Stadium.dallascowboys.com. Retrieved April 7th 2013.
