In short, it's because without subsidies, TNSE wouldn't be profitable (or at least not as profitable)
If they aren't profitable, they'd leave
If they leave, they take all the tax revenue they generate with them
It's an example of the government spending money to make money
Whatever subsidies the govt gives TNSE will be less than the tax revenue that is generated so the govt still comes out ahead
What I don't understand is that a lot of these franchises worth hundreds of millions of dollars AREN'T profitable. So where's the value coming from ?
There's basically 2 types of value in an investment. One being "cash flow" - can it pay it's bills in a fiscal year, and also make profit. The other is "long term asset appreciation".
I really don't think owners buy initially to make money by way of cash flow, as the cost to get in , is just too high. If they can that's great, and some older more established clubs do.
The money is made "long term " like a real estate investment. Example Chipman buys the Jets for $ 160 million, and could likely sell the Jets for at least $ 2 billion. I think Seattle paid close to $ 3 billion, but it may have been $ 2 bil.
So say Chipman sold the Jets for $ 2 billion, less his cost of 160 mill, then his profit would be ( $ 2 bil - $ 160 mil ) =
$ 1.84 billion dollars,
less some bad years on the operating side. Now you see where the money is made = "long term." and it's very big money $$$
The Key is you have to have the pockets to carry the team thru bad operating years, where you lost money on the operating side. A good example would be Zeto, owner of the Florida Panthers. He has very very deep pockets, and can play with 1/2 empty arenas, ( and did) whereas a guy like Chipman, cannot afford that.
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