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Citation: Moulard, J.; Lang, M.;
Dermit-Richard, N. Soft Budget
Constraints in French Football
through Public Financing of
Stadiums. Sustainability 2023,15, 135.
https://doi.org/10.3390/su15010135
Academic Editor: Luca D’Acierno
Received: 15 November 2022
Revised: 13 December 2022
Accepted: 16 December 2022
Published: 22 December 2022
Copyright: © 2022 by the authors.
Licensee MDPI, Basel, Switzerland.
This article is an open access article
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4.0/).
sustainability
Article
Soft Budget Constraints in French Football through Public
Financing of Stadiums
Jérémy Moulard 1, * , Markus Lang 1and Nadine Dermit-Richard 2
1Institute of Sport Sciences, University of Lausanne, 1015 Lausanne, Switzerland
2Faculty of Sport Sciences, University of Rouen, 76821 Rouen, France
*Correspondence: jeremy.moulard@unil.ch
Abstract:
Several football stadiums were built or renovated in France for hosting the 2016 UEFA
European Football Championship. This study examines to what extent financial support by local
governments for stadium construction or renovation induces soft budget constraints (SBC) for
professional sports clubs. We address the research question based on a quantitative case study in
the context of the construction and renovation of eight football stadiums that took place in France
between 2012 and 2016. Our data shows that the public sector financed on average 78% of the new
stadiums’ total construction or renovation costs, and local governments paid on average 60% of
the total annual rental costs. The results indicate that local governments in French professional
football are “supporting organizations” and help to ensure the financial sustainability and viability of
the clubs by allowing them to benefit from financial flexibility, which are typical characteristics of
SBCs. In total, we identify 32 forms of public aid that we classified according to different categories
of “softness” and whether these aids appeared ex ante or ex post. Public aid constituted financial
support that was sometimes very substantial, amounting to several million euros in each case. This
financial support is often not taken into account by the regulatory authorities and thus could be
interpreted as hidden government subsidies to professional clubs, which in some cases exceeded the
subsidy allowance of €2.3 million.
Keywords: soft budget constraints; professional football; stadium; public aid
1. Introduction
Since the early 2000s, the sixth generation of stadiums has emerged in Europe [
1
].
These stadiums are multifunctional, multi-activity, commercial facilities that were con-
structed thanks to the hosting of major sporting events such as the FIFA World Cup 2006
in Germany. The construction or renovation of 12 stadiums for hosting the competition in
Germany helped stem a significant loss of competitiveness in the German football league
and stimulated strong economic development among its clubs [
2
]. Most of the new German
football stadiums (nine out of 12), which had long been publicly owned, were privatized.
In addition, out of
€
1.4 billion in stadium financing, 61% came from the private sector
(€852 million) compared with 39% from the public sector (€548 million).
In 2008, this sixth generation of stadiums did not exist in France and the average age
of French stadiums was 65 years old. The possibility of France hosting the UEFA Euro
2016 tournament on its territory might have constituted a powerful accelerator for the
emergence of multifunctional stadiums beneficial to the economic development of French
professional clubs [
3
,
4
]. However, unlike the German model, almost all stadiums (12 out
of 13) that were built or renovated for the tournament in France remained the property of
the cities involved, and only four clubs participated financially in the project. Thus, the
majority of the new French football stadiums were financed via public funding. Moreover,
in 90% of the cases, the resident clubs were merely tenants of their stadiums and were
rarely the main driving force of its construction or operation [5,6].
Sustainability 2023,15, 135. https://doi.org/10.3390/su15010135 https://www.mdpi.com/journal/sustainability
Sustainability 2023,15, 135 2 of 19
This public funding of a new economic resource intended for private professional
clubs, which are very often in deficit, recalls the concept of soft budget constraint (SBC).
The concept of SBC was initially introduced in the context of socialist economies [
7
,
8
] but is
now widely used in describing similar phenomena in market economies, such as financial
instability [9] and softness in the banking sector [10].
In the 2010s, the concept of SBC has been applied to sports, in particular European
football. Ref. [
11
] were one of the first to use the SBC framework to explain how a majority
of clubs can continue their activity despite persistent losses and sometimes high levels
of debt [
12
–
14
]. These clubs are able to continue their activity despite losing money,
thanks to the support of certain stakeholders. This support, either direct or indirect, is
often of a financial nature and comes from shareholders, banks, or the state to soften the
budget constraints of clubs, using various types of “softness” either ex ante or ex post [
15
].
Refs. [
16
,
17
] argues that the introduction of the Financial Fair Play (FFP) regulations by
UEFA in 2011 hardened the budget constraints of clubs and contributed to the financial
recovery of European club football. Ref. [
18
] proposes other possibilities to harden the
budget constraints at the “micro, meso, and macro” levels in professional team sports.
So far, the existing literature has neglected to examine the relationship between SBCs
and the public funding of stadiums. This gap in the literature was also recently pointed
out by [
19
], who suggest that “future research should also focus on [
. . .
] financing
stadiums, as these are of a substantial financial character.” Our article contributes to the
literature on SBCs in sports by examining the extent to which financial support from local
government for stadium construction or renovation induces SBCs for professional sports
clubs. We address this research question based on a quantitative case study in the context
of the construction and renovation of eight football stadiums in France for the UEFA Euro
2016 tournament.
Our study shows that the public sector financed on average 78% of the total con-
struction or renovation costs of the eight new stadiums, and local governments paid on
average 60% of the total annual rental costs. These results indicate that local governments are
"supporting organizations" in French professional football and help to ensure the financial
sustainability and viability of clubs by allowing them to benefit from financial flexibility,
which is a typical characteristic of SBCs. In total, we identified 32 formsof public aid that we
classified according to different categories of softness and whether these aids appeared ex
ante or ex post. Public aid constitutes financial support that is sometimes very substantial,
amounting to several million euros in some cases. This financial support is often not taken
into account by the regulatory authorities and thus could be interpreted as representing
hidden government subsidies to professional clubs, in some cases exceeding the subsidy
allowance of €2.3 million.
The remainder of this article is structured as follows: In the next section, we present
the literature relevant to our study. Section 3describes the data and the methodology,
Section 4presents the results of our analysis, and Section 5concludes with a discussion of
the study’s limitations and its implications for future research.
2. Literature Review
In this section, we first present the context of our study. Second, we introduce the
concept of SBC in general and then show how it applies to professional football in Europe.
2.1. Context
In anticipation of France’s bid to host the UEFA Euro 2016 tournament on its territory,
the French government commissioned two reports to evaluate existing stadiums [
4
] and to
analyze the competitiveness of French professional football [
3
]. The two reports concluded
that France was severely lagging in the process of modernizing its major stadiums, and
that this handicapped French sports, particularly football.
At the same time, the reports suggested that the renovation of existing stadiums or
the construction of a new sixth generation of stadiums could have strong leverage effects
Sustainability 2023,15, 135 3 of 19
on the revenues of football clubs and could trigger a virtuous circle that would benefit
the sports economy, because a new stadium not only improves the share of ticket sales
in overall revenue but also generates higher ancillary revenue (e.g., merchandising and
catering). According to [
4
], the German example in the context of the 2006 FIFA World Cup
in Germany “provides tangible proof” of these positive effects.
The perspective of the French government was that new stadiums would generate
higher revenues for the corresponding clubs, making it possible to reduce public subsidies,
or even “should enable resident clubs to do without public funding in the future” [
20
].
However, none of these objectives has been achieved in France because the operation of
the new stadiums has failed to create more resource to increase the competitiveness of the
clubs, and therefore local governments have been unable to remove their subsidies [6].
2.2. The Concept of Soft Budget Constraints
The concept of budget constraint is associated with the market economy, in which an
individual is limited by the amount of income available to him or her. This constraint is
synonymous with financial discipline and represents a so-called “hard” budget constraint.
Refs. [
7
,
8
] was the first to observe that in the context of socialist economies a state-owned
enterprise is not subject to this budget constraint, because it can count on state aid in
the event of serious financial difficulties. This aid was not limited to one-off interven-
tions: firms suffering chronic financial losses were rescued regularly. In other words,
the socialist-operated enterprise enjoyed a guaranteed ability to survive. Such direct or
indirect financial support helps to ease the budgetary constraints of companies in socialist
economies, thus enabling them to continue their activities while accumulating negative
financial results. Ref. [
21
] identified five main groups of instruments leading to soft budget
constraints during post-socialist conversion: budgetary subsidy, tax relief, bank and trade
credits, and non-payment of social security contributions.
This aid can be provided at different stages in the life cycle of an enterprise. Ref. [
22
]
describes the existence of a “preliminary” (ex ante) SBC, which allows companies to benefit
from negative balances in their accounts before financial balance sheets are prepared. Based
on this notion, preliminary softness can be defined: “The budget of an economic unit is
soft in a preliminary sense if it has non-market-type incomes obtained under the force of
contracts concluded before the start of the fiscal period, as a result of bargaining with the
institutions disposing of these incomes. (The non-market type incomes in these contracts
can be subsidies, tax relief, preferential loans, rescheduling of enterprise debts, favorable
setting of purchasing or selling prices of the unit concerned, etc.)”.
Kornai’s main work focuses on the second type of SBC, which [
22
] calls “incremental
budget constraint.” In this case, even if the company does not benefit from ex ante relief, it
could derive an ex post advantage. The budget of an economic unit is soft in an incremental
sense “if it has incomes obtained through non-market bargaining during the fiscal period,
as a result of revisions of original contracts or new contract(s) concluded during the period
in question with the institutions disposing of such incomes.” It is important to highlight
that the concept of the fiscal period is essential to Szabófor the definition of a time frame;
without it, notions of budget constraints are also meaningless.
For [
21
], certain conditions must be present to identify an SBC in a particular en-
vironment: “If the organization in question holds a key (socioeconomic) position in the
broader society providing important goods and/or services, the likelihood of softness is
potentially high.” The concept of SBC is not only an economic phenomenon, but depends
also on cultural, political, and social factors [
8
]. These characteristics are present within
professional football in Europe [11,14–17].
2.3. Soft Budget Constraints in European Professional Football
The application of the SBC concept to professional sports leagues is based on the
observation that despite the chronic deficits of many European football clubs, surprisingly
few bankruptcies have occurred [
23
]. The importance of football, and therefore of clubs, in
Sustainability 2023,15, 135 4 of 19
society means that they almost always find financial support to avoid bankruptcy because
the shutdown of the club would be accompanied by collateral damage to the local economy
and community, which a rational state must weigh against the bailout costs.
Many elements may combine to cause collateral damage [
24
]: Fans and supporters
lose their joint object of identification in case of a shutdown and therefore have to write
off emotional and social capital at least temporarily, leading to a “wave” of unhappiness
with potential spillover to the local economy. Additionally, employees of the club lose
their jobs, thus raising unemployment in the city, suppliers’ bills remain unpaid, which
might cause other bankruptcies, the municipal stadium loses its most important tenant,
an important leisure opportunity disappears at least temporarily, the image of the city
deteriorates, which might discourage investors, and so on.
Ref. [15] identify the following six forms of softness as characteristics of SBCs:
•
Soft pricing (S1) takes place when a public stadium and/or training facility is made
available to football clubs at below-market fees.
•
Soft taxation (S2) refers to all types of tax exemptions granted by the public authorities
and permitted by law or various political decisions in favor of the clubs.
•
Soft subsidies (S3), which come in either open or hidden forms, are provided by
governments or include support from clubs’ shareholders and investors to reduce
deficits and pay off debts to keep clubs running during severe financial situations.
•
Soft credit conditions (S4) refer to the liberality of banks when granting loans, knowing
that wealthy investors behind the club can reimburse the debt.
•
Soft investments (S5) exist when the government or other sponsors pay part or perhaps
all of the costs when a club builds a new stadium.
•
Soft accounting (S6) refers to the idea of adopting questionable or even illegal practices
to circumvent the rules for obtaining credit, with the effect of deceiving lenders.
Over time, club support has taken the following forms in the context of Euro-
pean football:
In Italy, several clubs have benefited from the partial or total release of their debts to
the state or local authorities (S2). For example, the Salva Calcio scheme set up by the Italian
government reduced the debt of Serie A clubs from
€
1.32 billion to
€
400 million for the
2003/2004 season [
25
] and S.S. Lazio was saved from collapse in a major rescue operation in
2015 through a relaxation of its tax obligations [
26
]. In addition, S6 is often accepted or even
encouraged by the Italian government, which has even occasionally changed legislation to
facilitate softer accounting [26].
Spanish clubs have benefited from the support of banks, in the case of the most
popular clubs in the form of S4, as well as generosity from the government in the form of
S2 and S3 [
27
]. On two occasions, in 1985 and again in 1991, the government intervened to
facilitate debt relief and refinancing; however, this had no lasting effect on clubs’ financial
situations. A law was even introduced in Spain, known as the “Concursal” law, which
allowed Spanish clubs to obtain 50% debt relief and debt write-off plans while avoiding
relegation to a lower division. In total, 21 clubs benefited from the law in the 2010/2011
season [
28
]. This support may also come from clubs’ shareholders (S3), many of whom will
never be able to recover the money they have invested [
29
,
30
]. Such shareholders are often
referred to in the literature as “sugar daddies” [31,32].
The behavior of continued investment despite the accumulation of debts and deficits
seems irrational in a market economy. It can be justified considering that a football club can
meet social and emotional expectations of fans, investors, and communities. Ref. [
33
] come
to this conclusion concerning German football, citing the cases of Schalke and Borussia
Dortmund, clubs that were on the verge of bankruptcy and saved by public grants (S3).
Another source of refinancing can come from increased broadcasting rights (S3),
enabling clubs to meet future salary costs under multi-year employment contracts [
34
].
Operating in this way leads to a vicious circle in which an increase in television rights
induces an increase in player salaries and potentially an increase in deficits.
Sustainability 2023,15, 135 5 of 19
3. Data and Methods
In this section, we present the data used in our analysis. To examine the relationship
between public funding of stadiums and SBCs, it was necessary to consider a sufficient
number of stadiums of the same generation that were built or renovated in the same country
and within a similar time frame. France offers such a recent field of analysis, thanks in large
part to the stadiums built or renovated for UEFA Euro 2016. In our study, we sometimes
use the short name of a club. Table 1displays the full club’s name as well as the short name
and the corresponding city of the club.
Table 1. Club names and corresponding short names.
Club Name Short Name City
AS Saint-Étienne ASSE Saint-Étienne
OGC Nice OGCN Nice
LOSC Lille LOSC Lille
FC Girondins de Bordeaux FCGB Bordeaux
Olympique de Marseille OM Marseille
Le Havre AC HAC Le Havre
Paris Saint-Germain F.C. PSG Paris
Olympique Lyonnais OL Lyon
Source: Own creation.
Of the 13 French football stadiums built between 2008 and 2016, we excluded the
stadiums of Le Mans FC and Grenoble Foot 38 from our investigations following the filing
for bankruptcy by these clubs just two years after they began using their new stadiums.
For example, Le Mans FC underwent compulsory liquidation in October 2013, leaving
behind an empty 25,000-seat stadium, and the city was forced to pay the operator Vinci
€
2.1 million a year for its upkeep. The demise of the club resulted in a 209% increase in the
council tax of the city of Le Mans between 2010 and 2017; such an increase had never been
seen before in France. The club returned to the second elite division in 2019, six years after
its bankruptcy. It was able to use its new stadium once again, without having contributed
to its financing for more than five years.
Even though these two examples seem good examples of SBC syndrome, the lack of
economic data on these clubs and the difficulties identifying the stakeholders of the new
stadium projects within the two organizations were major obstacles. When a professional
club goes bankrupt in France, it is no longer considered professional; thus, the DNCG no
longer oversees and monitors the financial operations of the club [
35
]. As a result, the club’s
accounts are no longer published and reliable financial information on the club is no longer
publicly available.
In addition, the minor stadium renovations in Toulouse and Lens did not seem sig-
nificant enough to warrant analysis. A major renovation in our study was considered to
be a major upgrade to the current facility in terms of improved fan experience to increase
the revenue-generating potential of the venue. A major renovation could also include an
alteration of the facility’s layout. In general, a major renovation of a soccer stadium can
include the following elements: the transformation of the layout by removing standing
areas and adding more seated areas, expansion of the number of business seats and VIP
lounges, improvement of the catering service (restaurants and bars), adding video screens
and improvement of sound and lighting systems, integration of Wi-Fi and 5G connectivity,
addition of elevators, integration of a (retractable) roof, and increased security standards.
The minor renovations in Toulouse and Lens did not meet these criteria; for example,
the minor renovations in the Toulouse stadium mainly concerned the public reception
area, seating, access to the grass for heavy vehicles, etc. We therefore also excluded these
two cases from our sample.
Sustainability 2023,15, 135 6 of 19
Since we aimed to study heterogeneous stadiums and clubs with different operating
models, the remaining nine case studies seemed to be an optimal sample for our research.
Unfortunately, it was not possible to carry out an in-depth investigation on Valenciennes
FC, due to an inability to gather more detailed data on the club. Consequently, our sample
comprised the eight stadiums presented in Table 2.
Table 2. Summary of the eight stadiums studied in our research.
Club Club Status Stadium City Legal Status
Club’s
Access to
Stadium
Year
Operations
Started
Capacity
ASSE Leaseholder Geoffroy Guichard Saint-Étienne Public domain
concession Game day 2015 42,000
OGCN Leaseholder Alianz Riviera Nice Public–private
partnership Game day 2013 35,624
LOSC Leaseholder Pierre Mauroy Lille Public–private
partnership Game day 2012 49,834
FCGB Leaseholder Matmut Atlantique Bordeaux Public–private
partnership Game day 2015 43,500
OM Leaseholder Orange Vélodrome Marseille Public–private
partnership Game day 2015 67,354
HAC Operator Stade Océane Le Havre Occupancy agreement Always 2012 25,278
PSG Operator Parc des Princes Paris Occupancy agreement Always 2014 47,929
OL Owner Goupama Stadium Lyon Private Always 2016 58,000
Source: French Professional Football League (www.lfp.fr, accessed on 15 October 2022) and own creation.
To collect our data, we used two major sources: The first source is the 2017 Court of
Audit report on public aid for the UEFA Euro 2016 tournament in France. The Court of
Audit (Cour des comptes) is a French administrative court that performs financial audits.
It is mainly responsible for verifying the legality of public accounts of State, national
public bodies, public companies, the social security regime, and private organizations
benefiting from State aid or that seek donations from the public. It reports to parliament,
the government, and the public concerning the legality of those accounts [
36
]. The second
source consists of the eight individual reports on the accounts of clubs provided each season
from 2012 to 2019 by the French DNCG (National Directorate of Management Control). The
DNCG is the organization in charge of monitoring and overseeing all financial operations
of the 44 member clubs of the Professional Football League (LFP). For an analysis of the
relationship between DNCG and UEFA’s Financial Fairplay regulationn, see [
37
], who
demonstrate that DNCG is focused on the solvency of clubs, whereas FFP is concerned with
profitability). Table 3summarizes the data that we collected from these two main sources.
The stadium receipts (sponsors and advertising revenues, match revenues, other
income) and the expenses related to the operation of the stadium of each resident club were
analyzed from the first day of operation of the new stadium until the 2018/2019 season.
We chose to consider only the seasons before the COVID-19 pandemic and did not want to
distort the operating results for stadiums that were empty for several months from 2020 to
2022. In our study, we adapted the time frame defined by [
22
] by using the date of the first
day of operation of the stadium and not the fiscal period. This allows us to distinguish the
public aid received prior to stadium construction and that received after it started operating.
The average of these seasons corresponds to season N+. For example, in the case of HAC,
N+ corresponds to an average over seven seasons (2012/2013 to 2018/2019). N+ represents
three seasons at OL; four seasons at each of ASSE, FCGB, and OM; five seasons at PSG;
six seasons at OGCN; and seven seasons at both HAC and LOSC. This N+ average value
makes it possible to even out exceptional receipts and income (differences in numbers of
matches, and costs due to weather) as well as exceptional match results. It also allows for
what we feel is a longer-term comparison. Moreover, the fact that these N+ averages are not
Sustainability 2023,15, 135 7 of 19
based on a consistent number of years for each case has no impact, because no comparison
in absolute terms is made.
Table 3. Summary of the data collected.
Data Collected
(Court of Audit Report of 2017)
Data Collected
(DNCG Reports on Individual Club Accounts, 2012–2019)
Club status (leaseholder, operator, owner) Sponsor/advertising revenue
Legal status of stadium Match revenue/income
Total cost of stadium projects Revenue from other sources
Total cost of road infrastructure Gross wage costs for personnel
Amount of private investment in projects Other expenses
Amount of public investment in projects Financial result
Annual cost of new stadium expenses
Annual cost of former rent paid by clubs
Annual cost of new rent paid by clubs
Annual cost of rent paid by cities
Calculation of rent and conclusion on low rental fees for stadiums
Conclusion on abolition of certain taxes for the benefit of stadium builders
Role of financial guarantor played by Lyon city government
Source: Own creation.
To conduct our analysis, we proceeded in two steps: In Section 4.1, we seek to answer
the question of whether the public financing of football stadiums has introduced SBCs into
French professional football. We examine this question with the help of different metrics
calculated from our data [38].
In Section 4.2, we classify into different categories the various forms of public aid that
accompany the financing, construction, and operation of the new French football stadiums,
based on a case-study analysis [39].
4. Results
4.1. The Presence of SBC in French Professional Football?
To examine whether public support for stadium construction or renovation induces
SBCs, we proceeded as follows: First, we examined who paid for the construction or
renovation of the stadiums. Second, we analyzed the amount and share of stadium rental
fees met by clubs and local government. Third, considered the operating results of stadiums
with and without public support.
4.1.1. Public and Private Investment
In this subsection, we show that the public sector invested huge sums into the con-
struction of the eight new French football stadiums. Table 4displays the respective amounts
of public and private investment.
The table shows that total investment in the eight new stadiums when the financing
of access infrastructures is included represents approximately
€
2.4 billion. The private
sector invested
€
529 million (including
€
430 million for OL alone), while local governments
contributed more than
€
1.8 billion. Only PSG paid for the entire renovation of its own sta-
dium and did not receive any public aid for its project. It should be remembered, however,
that the stadium is owned by the city of Paris, which financed its original construction.
Meanwhile, while OL did manage the private financing of its stadium, it required city in-
volvement in financing the stadium’s access infrastructures (32% of the project’s financing,
i.e.,
€
202 million). For HAC and FCGB, the respective cities asked the clubs for financial
investment in return for their involvement in the stadium-planning phase. However, the
levels of private financial investment in these two stadiums were very low, with local
Sustainability 2023,15, 135 8 of 19
governments having financed 97.5% and 90% of the projects, respectively. Finally, in the
four other stadiums, the public sector contributed 100% of the investment for ASSE, OGCN,
LOSC, and OM, although the amounts were quite varied. Across the eight cases, we can see
the significance of public funding, which represented on average 78% of the financial cost
of the projects. This proportion is significantly higher than in the successful German case,
mentioned in the introduction, where the public sector contributed only around 40% of the
funding and the private sector contributed around 60% for the renovation and construction
of stadiums for the FIFA 2006 World Cup.
Table 4. Amounts of public and private investment in the eight new stadiums.
Club
Total Cost of
Stadium Project
before Tax
Private Investment Private Investment
(in % of Total Cost) Public Investment Public Investment
(in % of Total Cost)
ASSE €69.4 million €0 0% €69.4 million 100%
OGCN €211 million €0 0% €211 million 100%
LOSC €585 million €0 0% €585 million 100%
FCGB €221.4 million €20 million 10% €201.4 million 90%
OM €474.8 million €0 0% €474.8 million 100%
HAC €154 million €4 million 2.5% €150 million 97.5%
PSG €75 million €75 million 100% €0 0%
OL €632 million €430 million 68% €202 million 32%
Total €2.42 billion €529 million 22% €1.89 billion 78%
Source: Court of Audit report of 2017 and own calculation.
4.1.2. Share of Stadium Rental Fees for Clubs and Local Government
The overall annual rental fee—which includes loans, financial costs, and fees for the
maintenance and operation of the stadium—is an indicator of the financial investment
by the club and the local government (city). Measuring the share of the annual cost of
the stadium borne by the club and by the city enables us to gauge the dependence of
professional clubs on local governments for the financing of stadium rental fees. The
comparison between the share of stadium rental fees met by clubs and those by local
government also reveals the amount that the city would have to bear if the resident club
was to disappear, either through relegation or economically as in the case of Le Mans
mentioned above.
In the following analysis, we show that the rent paid by the cities represents an even
greater financial commitment for the public sector in the case of the new generation of stadi-
ums. Table 5reports the amount and shares of stadium rental fees for the clubs and cities.
Although the rent paid by clubs has significantly increased (+540%) between the old
and new stadiums, the public sector continues to cover most of the annual rental costs of
the new stadiums. Specifically, the average rent for clubs rose between the old and new
stadiums from
€
0.78 million to
€
4.5 million. Despite this increase, local governments finance
an average of 60% of the annual rental costs of the stadiums, representing
€
6.45 million per
year. This cost increased significantly with the arrival of the new stadiums. However, the
financial involvement of clubs and local governments depends on the stadium. We can
differentiate two cases:
(i)
The share of the annual rent paid by the club is higher than that paid by the local
government in three out of eight cases: PSG (81% paid by club vs. 19% paid by
city), OL (68% vs. 32%) and FCGB (57% vs. 43%). This calculation was valid before
the relegation of FCGB to the second division in summer 2022. Since then, 100%
of the stadium’s costs have been covered by the local government [
40
]. The larger
participatory shares met by the clubs in the cases of PSG and OL can be explained in
the former by the fact that PSG is the operator of its stadium, and in the latter because
OL is the stadium owner. In the case of FCGB, the club is a tenant of the stadium only
Sustainability 2023,15, 135 9 of 19
on match days. However, for FCGB the club’s financial contribution is much greater
than in the similar settings described below.
(ii)
Local government covers the larger part of the stadium’s costs in five out of eight
cases: HAC (100%), OGCN (86%), LOSC (71%), OM (65%), and ASSE (65%). All these
clubs are tenants of their respective stadiums only on match days, except HAC, where
the club is the operator of the stadium. HAC benefits from operating the stadium
every day of the year, without paying rental fees for at least three years of the contract.
One noteworthy finding is the high cost of rental fees for stadiums built under public–
(iii)
private partnership (PPP) in Lille (LOSC), Marseilles (OM), and Nice (OGCN), oblig-
ing the local authorities to pay more than
€
10 m per year for more than 30 years.
In these cases, the local authorities could be required to bear the annual cost of the
stadium by themselves if the resident club was to disappear. Such a cost would
represent between €13 million and €16 million per year.
Overall, we believe that the resident club should bear at least 50% of the stadium
rental fees to ensure a sustainable business model.
Table 5. Amount and share of stadium rental fees for clubs and cities.
Club Annual Rental Cost
of New Stadium
Former Annual
Stadium Rent
Paid by Club
New Annual
Stadium Rent
Paid by Club
New Annual
Stadium Rent
Paid by Club
(in % of Total
Rental Cost)
City’s Contribution
to Annual Rental
Cost of
New Stadium
City’s
Contribution (in
% of Annual
Rental Cost of
New Stadium)
ASSE €4.91 million €0.8 million €1.7 million 35% €3.21 million 65%
OGCN €13 million €0.2 million €1.87 million 14% €11.13 million 86%
LOSC €16 million €0.9 million €4.7 million 29% €11.3 million 71%
FCGB €6.79 million €0.9 million €3.85 million 57% €2.94 million 43%
OM €15.8 million €1.3 million €5.5 million 35% €10.3 million 65%
HAC €5 million €0.8 million €0 million 0% €5 million 100%
PSG €5.4 million €0.3 million €4.4 million 81% €1 million 19%
OL €21 million €1.1 million €14.3 million 68% €6.7 million 32%
Average €11 million €0.78 million €4.5 million 40% €6.45 million 60%
Source: Court of Audit report of 2017 and own calculation.
4.1.3. Operating Results of Stadiums with and without Public Support
The stadium-operating results of the clubs represent the difference between stadium-
related operating receipts and stadium-related operating expenses since the stadium’s
first day operation. Stadium receipts include sponsors and advertising revenues, match
revenues, and other income (including merchandising, co-branding, and public subsidies).
Stadiums’ operating expenses include the remuneration of administrative staff (15% of
total gross wage costs of personnel, according to the DNCG), and other expenses (including
the structural costs of the club, such as stadium rent, utilities, security, and stadium
maintenance). The financial result was also calculated, which includes the interest on loans
taken out to finance the investment in the stadium and/or its development.
Measuring the operating results of the stadiums with public support allows us to
highlight the weak economic development that the clubs have experienced since their new
stadiums began operating. The results indicated that stadium operations often resulted
in losses.
Measuring the operating results of the stadiums without public support showed that
the stadium-operating results of clubs are even less significant and make greater losses
if local governments do not finance the stadium rental fees. This metric highlights the
dependence of clubs on public aid and sheds light on the phenomenon of SBC syndrome in
financing French stadiums.
Sustainability 2023,15, 135 10 of 19
We present the operating results of the stadiums with and without public support
in Table 6.
Table 6. Summary of operating results of clubs using new stadiums.
Measure/Club ASSE OGCN LOSC FCGB OM HAC PSG OL
Seasons N+ 4 6 7 4 4 7 5 3
Stadium-related receipts in N+ €26.2
million
€19.3
million
€31.6
million
€34.6
million
€64
million
€7.4
million
€397
million
€99
million
Stadium-related operating
expenses in N+
€27.2
million
€19.9
million
€49.3
million
€39.4
million
€67
million
€9.4
million
€175
million
€132
million
Stadium-related operating result
in N+ with public aid
€−1
million
€−0.5
million
€−17.6
million
€−4.8
million
€−3
million
€−2
million
€222
million
€−33
million
Stadium-related operating result
in N+ without public aid
€−4.21
million
€−11.63
million
€−28.9
million
€−7.74
million
€−13.3
million
€−7
million
€221
million
€−39.7
million
Source: DNCG and own calculation.
The table shows that seven out of eight clubs (all except PSG) had operating losses in
N+, despite the public aid they received. OL and its private stadium had high repayment
costs due to the loan taken out to finance the stadium. Once the investment is repaid,
its business model could be profitable in the long term. For the other six clubs, financial
results have been in deficit since the opening of their new stadiums, and they cannot expect
reductions in their rental costs because of their status. This deficit would be even more
pronounced in the absence of the share of stadium expenses financed by local governments
on an annual basis. In such an event, the clubs of Nice, Lille, and Marseille would find each
themselves in a precarious financial situation. The financial situation of OGCN is nearly
balanced in N+ but would suffer a deficit of
€
11 million per year without public aid, this
figure would be more than
€
13 million for Marseille, and Lille would be most affected with
an annual deficit of almost €29 million.
4.1.4. Public Financing of Stadiums as a Sign of a Soft Budget Constraint
In the previous analysis, we have shown that the public sector financed on average 78%
of the total construction or renovation costs of the eight new stadiums. Ex ante investment
is crucial for building these new stadiums and their access infrastructure, even in the case
of private projects. In addition to this potential public aid that varies according to the city,
we have shown that the local governments pay on average 60% of the total annual rental
costs. Without this public aid, the overall stadium operating deficit of the seven clubs other
than PSG would rise from
€
61.9 million to
€
112.44 million, representing an ex post public
contribution of almost €52 million for seven clubs, and significant financial support.
These examples demonstrate that local governments in French professional football
are indeed “supporting organizations” that help to ensure the financial sustainability and
viability of clubs by allowing them—through the financing of their stadiums in the construc-
tion and operation phases—to benefit from the financial flexibility that is a characteristic
of SBCs.
4.2. Typology and Temporality of SBCs in French Football
The financial flexibility that is made possible by SBCs can be difficult to identify,
because it occurs in different time frames and falls under various typologies. Thus, in
the next section we better identify the various forms of public aid by classifying them
according to the different categories of “softness” defined by [
15
] and their time frame (ex
ante or ex post). The time frame relates to the concepts of preliminary and incremental
SBCs, introduced by [22].
Sustainability 2023,15, 135 11 of 19
4.2.1. Soft Pricing
Soft pricing takes place when a public stadium and/or training facility is made
available to football clubs at below-market fees.
Example 1: Sale of a building plot at a preferential price—ex ante aid (OL)
Within the framework of the Lyon project, numerous legal complaints were filed
arguing that Lyon had allegedly sold the land used for the construction of the stadium
to OL at five to six times cheaper than the market price. The 32 hectares of land were
sold to the club for
€
40 per square meter, compared to a supposed market price of
€
200,
representing savings of nearly €5 million [41].
Opponents of the project lodged complaints against the administrative decisions
and authorizations granted before the start of the work (town-planning decisions and
deliberations on the transfer of land). The revision of the local urban plan was thus delayed
by four years compared to the initial schedule, and the issuance of the building permit and
the sale of the land by two years.
The challenges concerning the selling price of the land were rejected at first instance
by the Lyon Administrative Court, first for the sale by the city of Décines-Charpieu, then
for the sale by Lyon. In its two judgments, the court validated the price estimate made
by France Domaine, the public agency that at the time monitored state-owned land, be-
cause its estimate had considered the land that was sold to be within a zone classified for
urbanization in the long term and “intended for the building of major sports, leisure or
cultural facilities at the urban-area level” (Tribunal Administratif de Lyon, 18 December
2014, Association Carton Rouge, No. 1201065; judgment challenged before the Lyon Ad-
ministrative Court of Appeal. Tribunal Administratif de Lyon, 6 October 2016, Association
des contribuables actifs du Lyonnais, No. 1302600).
We consider this aid as ex ante, as it was provided before the stadium was built. In
our view, this aid can be characterized as soft pricing, as the price of the land was devalued
because of the new stadium project, and a political decision was made that specifically
reclassified the construction area of the project.
Example 2: Below market price of stadium rental fee—ex post aid (OM, PSG, ASSE,
OGCN, LOSC, FCGB, HAC).
In 2017, the Court of Audit determined that a “rental fee lower than the rental value
of the facility, its maintenance cost, and the commercial benefits it provides constitutes
an irregularity.” This irregularity was observed in seven public stadiums in our study,
“sometimes in significant proportions compared to the required level.” In Marseille, for
example, in the first drafts of the project the rent to be paid by the club was
€
12.8 million.
The local government agreed to lower this rental fee by over 55% to help the club (Court of
Audit report of 2017). The Court of Audit noted that the rental fees for all public stadiums
had been underestimated by about 20% and had not considered the calculation method
recommended by the State. To be considered “fair” and to comply with the European
Commission’s auditing of the financing of UEFA Euro 2016 stadiums, the level of rental fee
(set share) to be paid by the club was supposed to take into account public investment by
applying a minimum rate of 2% per year of investment, corresponding to the occupancy
rate of the resident club calculated based on the number of days the facility is used. This
set share was to be added to a variable share calculated based on the club’s turnover. To
calculate this, France Domaine recommended using a graduated scale of turnover starting
at €2 million, to which progressive rates by turnover level were applied.
We view this aid as ex post, as amounts of the rental fees are often calculated after
the first few months of stadium operation, in order to determine the costs and revenue
generated by the new stadium. In our view, this is soft pricing, because the price is
undervalued by the local government.
4.2.2. Soft Taxation
Soft taxing designates all types of tax exemptions granted by public authorities that
are permitted by law including certain political decisions in favor of clubs.
Sustainability 2023,15, 135 12 of 19
Example 1: Reimbursement of stadium-related taxes—ex post aid (OGCN, FCGB).
In the Bordeaux model, the city reimburses the private partner Vinci (the builder/operator)
each year for the taxes it owes that are not included in the management fee. Elimination
of these taxes reduces the stadium’s operating costs and hence the fee that the club must
pay to the city. The most recently available estimate by the Court of Audit in 2017 stated
that
€
33.7 million in tax refunds had been made by the city of Bordeaux since the stadium
opened in 2015 [
36
]. This same pattern can be seen in Nice. Thus, the local tax, waste
collection tax, and property tax are billed to the city by Vinci. The Court of Audit estimated
the loss of tax revenue between 2013 and 2017 at €72 million.
While such tax reimbursement agreements may be negotiated before construction, we
consider this aid to be ex post, because the tax amounts are calculated and reimbursed after
the construction of the stadium.
4.2.3. Soft Subsidies
Soft subsidies, in either open or hidden forms, are provided by governments or can
include all forms of support from the club’s shareholders and investors made to reduce
deficits and pay off debts to keep clubs running during severe financial situations.
Example 1: Cancellation of the rental fee owed by the club to the local government—ex
post aid (HAC, FCGB).
In the case of Le Havre, for example, the club was granted a full rent waiver by the
local government during the 2014–2017 period, two years after the stadium was built.
The local government has thus borne ex post public financing of
€
5 million per year, not
provided for in the lease contract. To justify this financial involvement, the president of the
metropolitan area government explained that HAC had been at risk of being demoted for
financial reasons by the DNCG at the end of the 2014 season, and that he could not take
the risk of finding himself in charge of an empty stadium without a club. The city thus
chose to help the club by financing the entire cost of the stadium, while allowing the club
to continue to benefit from the stadium’s operating revenues. This aid represents a form
of ex post subsidy via the stadium rent. More recently, during the summer of 2022, this
kind of ex post subsidy was also observed in Bordeaux. The relegation of the FCGB to the
second division led to the payment of €5 million per year from the local government [40].
Example 2: “Payer of last resort” when cities bear the sporting risk—ex post aid (OM,
PSG, ASSE, OGCN, LOSC, HAC, FCGB).
Among the seven cases in which the stadium is owned by the city, the latter would be
required to act as an ex post financial guarantor if its resident club were to disappear for
sporting or economic reasons. Indeed, the city would have to pay the remaining expenses
until the club returned to the professional world, as happened in the case of Le Mans. This
arrangement acts as a crucial safety net for the club but is a huge risk for the city if the club
never returns to the top division.
It might have been wondered whether this question would be addressed in the context
of the Bordeaux project. To secure long-term payment by the Bordeaux Girondins, provided
for in the stadium occupation agreement, a letter of intent constituting a personal guarantee
as understood by the French Civil Code was signed by the resident club’s shareholder. In
this letter sent to the city dated 30 April 2015, the shareholder (chair of the French media
holding company Groupe M6) stated that he “will not disregard the financial situation and
fate of its subsidiary FCGB and will ensure that the latter, in the application of article 20.1
ii of the agreement, fulfills its commitments to you in respect of (i) the annual rental fee,
(ii) the contribution to the annual costs of maintaining the field of the new stadium; and,
where applicable, (iii) the profit-sharing on the turnover achieved by FCGB.” Since the
signing of this letter of intent, the club has been sold to two successive owners and we do
not know whether the commitment expressed in the letter remained binding for the new
owners. However, since the relegation of FCGB in July 2022, and the fact that the city of
Bordeaux paid for the entire rent of the stadium, it seems that the initial commitment made
Sustainability 2023,15, 135 13 of 19
in 2015 by the owner of the club through the letter of intent is no longer relevant for the
new owners.
4.2.4. Soft Credit Conditions
Soft credit conditions refer to the liberality of banks when granting a loan when they
know that rich benefactors behind the club can reimburse the debt.
Example 1: Role of financial guarantor played by the city to close the financing of the
stadium—ex ante aid (OL)
Faced with difficulties in the financing of Lyon’s stadium, in October 2013 the De-
partment of Rhône guaranteed
€
40 million in bonds in subscription to the construction
group, and the public financial institution Caisse des Dépôts et Consignations subscribed
to a bond issue for the club for
€
32 million. Involvement by public players secured a total
of 20% of the financing plan for the private stadium. This aid raises various questions.
Public loan guarantees for professional sports clubs were prohibited because some had
been granted indiscriminately for the “day-to-day operations” of these clubs. Accord-
ing to Article 19-2, inserted by Act No. 92-652 of 13 July 1992 into Act No. 84-610 of
16 July 1984, on the organization and promotion of physical and sporting activities, the
granting of loan guarantees or backing by local authorities or their groupings to associa-
tions or limited liability sports companies. Mr. Jean-Marie Girault reminded the Minister
of the Interior that it was in reaction to several financial scandals involving professional
football clubs that Parliament intended, through this measure, to avoid the repetition of
practices that were dangerous for local finances.
However, the minister in charge of sports declared the Lyon stadium and its related
facilities to be of general interest in the context of hosting the UEFA Euro 2016 tournament,
by order published on 31 May 2011. After having initially been blocked by several refusals,
the stakeholders of Lyon were finally able to put in place their financial support after this
declaration. The stadium’s “public interest” status has enabled the club to receive non-legal
aid in other circumstances. Stadiums built in France after 2016, on the other hand, have
not had the possibility to receive similar public loan guarantees, even though this has been
sought by some stakeholders [
5
]. This example shows us how laws can be adapted ex ante
and used on occasion to bypass certain barriers, and in this case to help arrange public aid
for a private club to facilitate the granting of credit for the construction of its stadium.
4.2.5. Soft Investment
Soft investment refers to the cases when, for example, the government or other spon-
sors pay for part or even all of the costs when a new stadium is built.
Example 1: The city finances the stadium-access infrastructure—ex ante aid (OM, PSG,
ASSE, OGCN, LOSC, FCGB, HAC, OL).
In France, all access infrastructure is financed by cities and the state, even in the case of
private projects. For example, the city of Lyon financed all the infrastructure enabling access
to the OL stadium, particularly public transportation, for a total cost of
€
220 million. This
kind of aid, occurring before stadium construction, is the only type that was in common in
all our cases.
Example 2: The city finances the construction or renovation of the stadium—ex ante
aid (OM, ASSE, OGCN, LOSC, FCGB, HAC).
We have shown there was significant public investment (78%) in the financing of
the eight stadiums covered by the study. Only PSG and OL fully financed the reno-
vation or construction of their stadiums. For the other six clubs, the cities usually fi-
nanced the entire construction or renovation costs of the stadium. The realization of such
projects is dependent on this kind of financial participation, which is a typical example of
soft investment.
Having reviewed the public aid for these eight different projects, we provide a sum-
mary of the results in the next subsection.
Sustainability 2023,15, 135 14 of 19
4.2.6. Public Financing of Stadiums Has Characteristics of the Five Forms of SBC,
According to Two Time Frames
Across the eight case studies, 32 forms of public aid were found, making an average
of four SBC-type instruments per project. Public support is thus significant, with several
million euros sometimes being granted in a single case, either ex post or ex ante [
22
]. The
unique context of French stadium financing allowed us to identify five of the six types of
softness described by [15]. Table 7summarizes the major contributions of our research.
Table 7. Overview of instruments leading to SBCs in the financing of French football stadiums.
Public Aid Type of Softness ASSE OGCN LOSC FCGB OM HAC PSG OL
Preliminary SBC: Before construction
Local government’s role as public guarantor
of borrowing Soft credit condition (S4) 0 0 0 0 0 0 0 1
Sale of land at devalued price Soft pricing (S1) 0 0 0 0 0 0 0 1
Local government finances construction or
renovation of new stadium Soft investments (S5) 1 1 1 1 1 1 0 0
Local government finances stadium
access infrastructure Soft investments (S5) 1 1 1 1 1 1 1 1
Total ex ante aid 16 2 2 2 2 2 2 1 3
Incremental SBC: After construction
Tax relief for stadium builder Soft taxation (S2) 0 1 0 1 0 0 0 0
Stadium rental fees undervalued in relation
to actual price Soft pricing (S1) 1 1 1 1 1 1 1 0
Cancellation of rental fee owed by club to
local government Soft subsidies (S3) 0 0 0 1 0 1 0 0
Local government covers risk of team
relegation and remains “payer of last resort”
if resident club goes bankrupt Soft subsidies (S3) 1 1 1 1 1 1 1 0
Total ex post aid 16 2 3 2 4 2 3 2 0
Total identified ex ante and ex post aid 32 4 5 4 6 4 5 3 3
Source: Own creation.
We also noted that, within the framework of a private stadium (OL), the SBC instru-
ments were essentially preliminary and there was local government support to launch
and consolidate the realization of the project, but no ex post contribution was identified.
The club remained the sole actor and decision-maker of its project. Conversely, in cases
where the stadium is owned by the cities, examples of ex ante and ex post aid were found
in similar proportions (four each). This recurrent public presence throughout the projects
could have repercussions on the quality of the projects and the responses to initial objectives.
Ref. [
19
] suggested that ex ante support is more relevant for providing effective support
for clubs. For them, “ex-post funding can be argued to be counter-productive to financial
viability (e.g., cloaking inadequate finances, providing incentives for overspending, and
rewarding clubs that overspend), ex-ante funding is more in line with sound financial
management (e.g., funds that are contingent upon a history of sound finances, incorporated
in budgets).”
Considering the eight instruments identified in this research, Nice and Le Havre
appeared to benefit the most from public aid through SBCs, along with Bordeaux. Before
2022, only four instruments were observed in the case of Bordeaux: (i) Local government
finances the construction or renovation of the new stadium; (ii) local government finances
the stadium’s access infrastructure; (iii) tax relief for the stadium constructor; (iv) stadium
rental fees undervalued in relation to actual price. After relegation of the club, we can
observe two new instruments, i.e., cancellation of the rental fee owed by the club to the
local government, and the local government covering the risk of the team’s relegation and
remaining “payer of last resort” if the resident club goes bankrupt.
Sustainability 2023,15, 135 15 of 19
For the clubs of Saint-Étienne, Marseille, and Lille, the same two preliminary and incre-
mental aids were observed. The four most common SBC instruments in French professional
football are the financial support provided by the local government for construction of the
stadium, support for access infrastructure, as well as a reduced rental fee and coverage of
the team’s relegation (and thus economic) risk.
Finally, Paris and Lyon were the two clubs that received the least aid. Accord-
ing to [
6
], they are also the two clubs that have invested the most in projects in terms
of being prime mover, project governance (owners/operators), skills (with more than
100 targeted recruitments for operation of the new stadium, compared with a maximum of
five recruitments for other clubs), and in terms of structural investment (
€
430 million in
investment for OL and
€
75 million for PSG). They are also the two clubs that have come
closest to achieving their goals of economic diversification through the stadium. Looking
at these two cases, it seems there may be a link between the levels of human and financial
investment by a club into a stadium project, the level of ex ante or ex post public aid, and
the performance of the project. To illustrate this idea partly, we can see that costs have been
better managed in the Paris and Lyon projects than in those managed and financed mainly
by the cities, where the costs of construction increased by 25% to 68% compared with the
initial price. Further research on this issue is required.
5. Conclusions and Discussion
The objective of this paper was to examine the relationship between public funding
of stadiums and soft budget constraints (SBCs) of professional clubs. Specifically, we
aimed to answer the question of whether financial support by local governments for
stadium renovation or construction qualifies as an SBC. Using data on eight new stadiums
for hosting the UEFA Euro 2016 tournament in France, we have confirmed that public
funding of stadiums meets the definitional elements of an SBC. Specifically, we found that
78% of stadium financing was public and that local authorities provided an average of
€
6.45 million per year in stadium fees, representing 60% of the annual operation costs of
the stadiums.
In addition, we identified different forms of public aid that fit within the categories of
“softness” proposed by [
15
] and that appeared according to different ex-ante and ex-post
time frames [
22
]. Identifying the temporality of public aid is essential for measuring the
effectiveness of sports policies put in place. In this respect, we agree with the conclusions
of [
19
] for whom “it is useful to distinguish clearly between ex-ante and ex-post funding.”
For them, ex ante aid seems to be more effective in supporting and helping clubs to
develop. In the context of stadiums, the Lyon model could confirm their claim: ex ante
aid accompanied the realization of the club’s stadium project, and the absence of ex post
support obliged the club to invest in and commit to the project, as there was no public
safety net in case of failure. In the context of the findings by [
15
], we were not able to
illustrate the “soft accounting” category for an SBC in our case studies, but we were able to
confirm the relevance of the other five softness categories. It is rare to be able to identify so
many softness categories in a single-use case (public funding of new stadiums).
In some cases, the public funding of stadiums exceeded the
€
2.3 million limits defined
in Article R. 113-1 of the French Sports Code as the maximum amount of government
subsidy a professional club is permitted to receive. If public aid in the context of the
construction and renovation of French football stadiums was considered a government
subsidy, the European Commission could then, for example, require clubs to reimburse
difference between the amount paid and the "fair level" of the rental fee (as defined by its
2013 decision).
We believe that territorial specificities can increase the number of SBCs in certain
regions. Thus, each SBC can have a different rationality which can be often explained
via political ambitions, vis-à-vis the stadiums as well as the clubs, because support for
professional football often constitutes an investment with high returns for local elected
officials [
42
]. In the case of OL, the support of the local government can be explained by
Sustainability 2023,15, 135 16 of 19
the innovative nature of the stadium project and its potential positive image effects on local
politics. The former mayor of Lyon—Gérard Collomb—was clearly in favor of this project.
However, as the Lyon club did not have sufficient financial resources to raise the funds
necessary to finance the stadium, the city found solutions through indirect financial aid
granted to the club via the sale of the land at devalued prices and the city’s own role as a
financial guarantor.
The other seven stadiums in our study are public, like 90% of major French sports
facilities [
3
]. Thus, we found that the majority of the SBCs were linked to “soft investments”
in stadiums and road infrastructures. In addition to the fact that clubs may be unwilling
or unable to finance a stadium, a significant number of elected officials consider stadium
projects highly strategic in terms of municipal policy. Indeed, in some communities, the
stadium functions as an element of local identity, a social and electoral sounding board, a
creator of employment and dynamization of the local fabric, and it can be dangerous to
lose control of it. This realization has allowed the massive involvement of public finance in
these projects. Ref. [
43
] even speaks of the "politicization of stadiums". However, numerous
analyses have been tempering the supposed positive impact of a new sports facility on a
community for over 20 years [
44
–
47
]. Ref. [
48
] explain “It is inevitable that ex ante economic
impact studies of proposed facilities executed under contract for sports teams, leagues, or
special event organizing committees will lead the local community to expect unrealistic
economic development benefits. However, economic theory and empirical tests of such
possible benefits unambiguously show that sports facilities cannot be expected to stimulate
local economies. The lesson is clear: before agreeing to subsidize a sports facility with
public funds, residents should ask themselves what they expect to receive in return, and
realistically it cannot be a more vibrant local economy”. This observation made more than
15 years ago is still valid in view of the results obtained in France.
Politically, besides the visibility offered by a new stadium, it is also important to be
able to support and promote the local soccer club. Given that direct subsidy of professional
teams is limited to
€
2.3 million per year, indirect subsidy via the provision of a stadium
with moderate rent is extremely common, as shown by our results on soft pricing. This
desire to support the local club also explains the generous "soft subsidies" granted to the
clubs of Le Havre and Bordeaux, where the full costs of stadium rent are covered by the
local governments.
Finally, our hypothesis concerning "soft taxation" is more specific. It can be explained
by the choice of stadium construction model, which in two cases were PPP agreements
signed by the elected officials of Nice and Bordeaux. The lack of liquidity of the local
authorities to fully finance the infrastructure necessary to host the UEFA Euro 2016 tourna-
ment and support the development of their clubs encouraged the mayors of the two cities,
Mr. Estrosi and Mr. Juppé, to conclude PPPs with construction companies that financed,
built, and operated the facilities. This type of model is extremely costly for public finances
in the medium and long term. Thus, if construction costs are more expensive, the stadium
rent will also be more expensive for the club and community. However, communities
find ways to reduce the final bills. For example, the removal or reduction of taxes for
the builder is an indirect way to lower the fee that the club and community must pay for
construction [49].
Ref. [
50
] claim that the forms of public aid identified in the French context are not
unique and can be observed in other European countries such as in Eastern Europe where
"public stadiums are made available to football clubs by local government at below market
fees.” In addition, they show how “clubs of some countries like Hungary cannot operate
effectively thanks to excessive state subsidies and SBC.” In the same vein, a promising
avenue of future research involves further examination of the harmful effects that SBC can
have on club management. For example, it seems that the low stadium-operating results
observed in France are indeed the product of an inefficient renovation and construction
policy associated with significant structural and organizational limitations [
6
]. These
limitations could be explained by the poor involvement of club executives in determining
Sustainability 2023,15, 135 17 of 19
their stadium projects and then financing and operating those stadiums. In these specific
cases, recurrent use of SBC instruments seems to be a cause of reduction in managerial
efficiency [51].
In conclusion, we encourage further research to examine the correlation between the
amount of public aid received by a new stadium project and its economic performance.
If a negative correlation exists, it could on the one hand explain the failure of French
efforts towards stadium modernization, and on the other the economic success of the
stadium renovation program in Germany, where 61% of the financing came from the
private sector [2].
Author Contributions:
Conceptualization, J.M. and N.D.-R.; methodology, J.M, M.L. and N.D.-R.;
formal analysis, J.M.; data curation, J.M.; writing—original draft preparation, J.M., M.L. and N.D.-R.;
writing—review and editing, J.M. and M.L. All authors have read and agreed to the published version
of the manuscript.
Funding: This research received no external funding.
Institutional Review Board Statement: Not applicable.
Informed Consent Statement: Not applicable.
Data Availability Statement:
Data are not publicly available, though the data may be made available
on request from the corresponding author.
Conflicts of Interest: The authors declare no conflict of interest.
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