CONSTRUCTION CEO: You make basically no money when building sports stadiums
The economics of stadiums also has a new, unexpected critic - a construction CEO.
Ronald Tutor, CEO of contractor Tutor Perini, said that building stadiums is not as big a financial boon as one would expect.
After an analyst claimed that building sports facilities was a "high margin" business, Tutor said that is not the case.
"No. There is no money in the sports," said Tutor during a conference call Monday. "I can say there is none, consistent with rest of our building operation. They track the same level of margin in the 3% to 4% range. So that doesn't make it high margin by any stretch in our book."
Margin is what's left of the contract revenue after all of the costs and expenses.
Tutor knows what he's talking about. Not only is his company one of the largest construction companies in the US, but it also has worked on a wide variety of sports complexes, from the Philadelphia Eagles' Lincoln Financial Field to the Chicago White Sox's US Cellular Field.
This follows a lot of negative outcry over tax subsidies and public funding for stadiums, as studies have shown that the promises of economic spillover from constructing new stadiums are, at best, inconsistent. This has led to a pile on against public money for stadiums from politicians, sports commentators, and TV personalities.
Tutor's remarks stemmed from his company's desire to be involved with a possible stadium to house one (or two) of three NFL teams attempting to relocate to Los Angeles.
He also had some insights on the timetable, and cost, for the NFL to award the LA site to the Oakland Raiders, San Diego Chargers, or the St. Louis Rams.
"The only sport facility we're looking at is the NFL stadium at Los Angeles," said Tutor. "We will talk to both of the participating teams, whichever one wins. We will hope to talk to then to be a builder for their stadium. Both have preliminary drawings. They are both $900 to $1 billion jobs. My assumption is, as I believe everyone's is, by end of the year January, the NFL will anoint one."
Tutor may get his wish to build the next NFL mega-stadium, but it doesn't sound like he'll make massive amounts of money off of it.