Public funding for new football stadia: overinvestment and underutilisation in Hungarian football

Research question: We investigate whether the state-funded construction and renovation of football stadia results in sustained attendance growth, addressing a significant gap in European sport management literature, particularly regarding Central-Eastern Europe. Hungary presents a unique research context due to its extensive government-funded stadium redevelopment program. Research methods: Utilising match-level attendance and stadium capacity data from Hungary’s top two football divisions (NB I and NB II) covering the 2005/06–2023/24 seasons, we apply a difference-in-differences (DID) methodology. Clubs that received new stadia (treatment group) are compared against clubs without stadium renovations (control group), employing two-way fixed effects and advanced DID-imputation techniques to robustly isolate causal impacts on attendance and stadium utilisation rates. Results and Findings: The findings reveal a significant “honeymoon” increase in attendance immediately following the opening of new stadia, lasting approximately five seasons. However, stadium utilisation rates show no lasting improvement beyond the initial season. Results demonstrate considerable variation across clubs. Unlike some Western European contexts, the novelty effect observed in Hungary closely resembles that found in North American leagues, reflecting the limited commercial incentives for clubs in fully statefunded projects. Implications: This research provides crucial insights into the implications of public stadium funding models, suggesting that fully taxpayer-financed projects may lead to suboptimal longterm outcomes, characterised by temporary attendance boosts and persistent underutilisation. The findings underscore the necessity of complementary fan engagement strategies and incentive-aligned financing structures to ensure sustainable attendance growth and effective use of public resources in sports infrastructure projects.