Owners of pro teams have monopoly power and use it to extort public money to build new stadiums. There are more cities that want teams than there are teams per sport. This leads cities to compete for teams and allows owners to press their demands on cities and states. Mr. Mayor, give me a new stadium or I am going to leave you, and your voters, high and dry. I will take my team to city X, which has promised me that it will build a lavish new stadium at its expense.
Cities are willing to lure teams with lavish stadiums and economics deals.
From the point of view of many a city-elected official, building a stadium seems to make sense. Having a major- league team in town puts the city on the national map. They invoke images of city grandeur and new corporate headquarters moving to town. Regardless of whether higher player salaries drive increased operating costs and the need for increased revenues, or whether increased revenues drive higher salaries, it is not clear why the public should be put on the hook for stadium funding . Some argue that higher salaries push operating costs upward, while others argue that salaries are rising because of increased revenue.