In the required reading for this module, the article “If You Build It, They Will Relocate: Public Private Partnerships in Sport Stadium Financing (Links to an external site.)” describes the unique relationship formed between a jurisdiction and a sports franchise that is potentially “on the move” with the common goal of attracting/retaining lucrative revenue streams for the related public and private sector businesses.
Public private partnerships are one recommended mechanism for brokering the financial side of the transaction where public funding and private funding combine to sponsor the construction/rehabilitation efforts of a sporting facility. Using taxpayer dollars for such projects can often be a tenuous proposition, so as accountants, we need to make sure this project’s accounting will withstand potentially intense scrutiny.
Please respond in MS Word to the following questions related to this scenario:
- In your own words, summarize the “If You Build It…” article in two to three paragraphs, specifically evaluating the financing vehicle of the public private partnership.
- Based on the article content, how would you set up the public private partnership financing arrangement on the books of the jurisdiction using fund accounting? What items should you consider in your decision?
- Assume instead that the sports franchise and private donors will sponsor the entire cost of the project on a reimbursement basis, but the local government will handle the management of the project, including handling the bookkeeping and paying the bills. What factors would you need to know to properly account for the transaction? For each possible type of fund, identify the factors that determine the classification of the project into a particular fund.
- The construction of major facilities like a sports stadium often encounter challenges during the construction process that create budget overruns. When additional public funds will be needed to cover some or all of these overruns, what are the jurisdiction’s options for obtaining additional funds to finance large projects were discussed in the textbook Chapter 5? How would those options be accounted for on the jurisdiction’s books?
- What is your opinion on whether taxpayer funds should be utilized for building sports arenas that benefit a for-profit business for a limited period before the facility starts to become undesirable and obsolete? (There is no right or wrong answer here, but make sure your side is well supported.) If there were any other opinions, thoughts, commentary from the authors that you agreed or disagreed with, feel free include them in this section!
Submit your responses to the questions in a 3-4-page document in MS Word as indicated. Label each question clearly. For computations, please include them in a table.
For written answers, please make sure your responses are well written.
The assignment should follow APA guidelines (Links to an external site.) for the use of subheadings, 1” margins, and double-spaced.
The required number of pages for the assignment does not include the title page and references page.
References include your textbook plus two additional credible academic references. All sources used, including your textbook, must be referenced; paraphrased and quoted material must have accompanying citations and cited per APA guidelines.