New Arena for Galatasaray and Its Public Benefits

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Football clubs have developed new stadiums over the years to handle the ever increasing numbers and also to maximize on revenue generation. These new stadia have not only benefited the clubs but also the public at large. Galatasary being one of the world soccer clubs craving for growth and development, had a plan to construct a new stadium. Though the initial focus of shifting to a different stadium was to create space for the old one to be refurbished, the club later on settled on construction of a new stadium based on the fact that the old stadium could not handle the ever increasing numbers (Haripriya and Vinish 25).

Over the years, the main reason for development of new stadium was to improve wealth of cities as can be seen in Trabozan city. In this case, development of Avni Aker Stadium motivated fans to bring about significant amount of money to the city which eventually propelled its growth. However, the concerned parties should look in to the cost benefit analysis before embarking on construction of a new stadium. Marginal benefits should always be higher than the marginal costs. Presence of these stadia has proved to be a major boost to the respective regions economic advancement. People living within the surrounding regions got job opportunities thereby improving their living conditions. Construction of Galatasary arena for instance helped in creating direct and indirect jobs such as selling at the restaurants within the stadium. Besides holding soccer games, residents should also be allowed to hold their festivities in these stadiums.

Construction of bigger stadiums has been beneficial to football clubs and also creates employment. In addition, soccer tourism can facilitate economic development. It is also beneficial to the public as well as football teams. The value of stadiums depends upon their location and also how they fit in to the locality growth plan. Stadiums in downtown are highly rated when compared to those in uptown. On the other hand, opponents of stadiums construction are of the opinion that redirection of public resources in to these ventures cripples’ development in other areas of the economy. Stadiums can have negative effects on housing development especially in areas surrounding the stadium. Development of such constructions causes noise pollution, traffic congestion and many more. Developing countries mainly pay attention to the source of income disregarding the negative effects hoping that they will be fixed as the country becomes industrialized. The benefit that may accrue to those who never attend matches is a non excludable benefit which should instead compensate for willingness to pay for local housing. (Haripriya and Vinish 25).

Table-1
Number of seats(y)	Jobs(x1)	Housing values(x2)
5000.00	20.00	5.00
10,000.00	40.00	10.00
15,000.00	60.00	15.00
20,000.00	80.00	20.00
25,000.00	100.00	25.00
30,000.00	120.00	30.00
35,000.00	140.00	35.00
40,000.00	160.00	40.00
45,000.00	180.00	45.00
50,000.00	200.00	50.00
55,000.00	220.00	55.00

Furthermore, the stadiums do not contribute significantly to increased income. The various economic studies carried out shows that public stadiums and soccer clubs fails to measure up in terms of revenue collection. Galatasary being one of the biggest clubs in Europe has its roots in one of the high schools in turkey. Over the years the club has developed into one of the big companies owning schools all over the world. However, education is provided from these schools free of charge whereby by the only sources of income are donations from the alumni and the company benefits. It is therefore apparent that the stadium size will increase the benefits to the students, therefore, it can be concluded that the construction of the new expansive stadium has a positive externality impact on the public as it acts as both public and private good.

*Graph-1: Relationship between number of seats, house values & Jobs*

Regression equation: Y=A+X1 X2

Where: y-Number of seats

X1-housing Values

X2-Job creation

A-Constant

Explanation

Both the independent variables have been found to have a positive relationship with the dependent variable. This shows that increase in sitting capacity will in turn result in hiring of many people to work in the facilities within the stadium. The increased number of fans is also facilitated by the decision to move the stadium from the interior part of the city to the outskirts where people will not experience traffic jams, thereby drawing huge numbers to watch the matches. Also, besides the stadium, there are arenas where concerts and ceremonies can be held. In addition, positive relationship is evident between the number of seats and the housing values. Following an increased numbers of the people who visit the stadium during matches; investors will invest in more houses as their demand will have increased within the stadia vicinity. The increased demand for houses triggers rise in supply and many more houses will be built to cater for the increased numbers (Ridker and John 56).

*Table-2: Marginal Public Benefits & Marginal Public Costs.*

It should be understood that, where positive externalities are evident, products may be under-consumed or may not be adequately provided for since the free market mechanisms may not take into account their effects. This is as a result of the marginal social benefits (MSBs) of consuming the product being greater than private marginal benefits (PMBs). In this graph Galatasary club utilizes the new stadium of which it benefits from but at the same time, the new stadium attracts huge number of fans who contributes to the welfare of the environment within which the stadium is located. The problem of market failure is highly foreseen since the benefit to the public at large in terms of economic prosperity is unpriced by the market. The lack of information makes people be of the opinion that the club will be the sole beneficiary on the construction of the new stadium and arena failing to take in to account the extended effect to the society at large. From the above graph, Galatasary will optimize when private marginal benefit equals private marginal cost as given by QP, distance ab represents the benefits to the public. Optimum public benefit occurs where Marginal public benefit equals public marginal cost qs. On adding up the excess of SMB over PMB between Qs and QP, we arrive at a figure that indicates the deadweight welfare loss to society. This is the triangle ABC. Society as a whole could be made better off by increasing the current level of output from QP to Qs (Ridker and John 56).

References

Ridker, Ronald and John, Henning. The Determinants of Residential Property Values with Special Reference to Air Pollution. London: Longman publishers, 1987.56. Print

Haripriya, Gundimeda and Vinish Kathuria. Can Markets value water scarcity and quality: an analysis using hedonic approach, Project report submitted to the South Asian Network for economic institutions? Melbourne: Australia, 2004.25. Print

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New Arena for Galatasaray and Its Public Benefits

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