Some say we should keep sport out of politics. But that seems to be almost impossible in the case of Tasmania.

The announcement that Tasmania will get its own AFL team has become the centrepiece of one of the fiercest political battles the state has seen - and it's about a stadium.

As part of the deal to launch the 19th AFL team, the league required Tasmania to build a fresh stadium, which was agreed to be a new precinct on the Hobart waterfront.

Premier Jeremy Rockliff has pledged $375 million from the state government to build the precinct, about half the $715 million price tag. Prime Minister Anthony Albanese also pledged $240 million from the federal government, plus $65 million for an upgrade to Launceston's York Park. And the AFL has promised $15 million towards the stadium.

But Rockliff has come under fire from all directions for the cost of the new precinct. It has led to him losing his majority in the lower house after two Liberals resigned over the stadium, pushing the nation's only Liberal state government into minority.

Tasmanian Labor has argued the government shouldn't be committing to the stadium amid a cost-of-living crisis, although the party still supports a Tasmanian AFL team.

The Tasmanian Greens also withdrew their support for the team based on the costs of the stadium, while the disaffected Liberals say they want more transparency.

There have also been public protests on the grounds that Tasmania shouldn't be building a new stadium precinct when it has a health and housing crisis, with some people being forced to live in makeshift campsites in Hobart.

While it was hoped that having an AFL team at last would bring Tasmanians together, some believe it has split them politically.

Read more: Devils in the detail: an economist argues the case for a Tasmanian AFL team - and new stadium

Stadium economics

Despite the understandable concerns about health and housing, some misconceptions have formed about the economics of the Tasmanian team.

Tasmanian government research suggests there will be knock-on benefits from the new precinct in terms of extra economic activity, estimated at $2.2 billion over 25 years, including 6,720 new jobs and a potential boost to tourism of around 123,500 international and interstate visitors per year, plus visitors from elsewhere in Tasmania coming to watch the games in Hobart.

Queensland is getting $3.4 billion from the federal government for stadium upgrades for the Gabba and other facilities for the Brisbane Olympics 2032. So the Commonwealth's $240 million for Tasmania is relatively cheap. This is especially the case when you consider this sets up the Tasmanian team for the rest of the century, while the Olympics and Paralympics are held across just four weeks.

What's more, the precinct in Tasmania is cheaper than recent stadiums built in the United States for NFL teams and in Europe for soccer, where price tags routinely top A$1.5 billion and are often partially financed by local and state governments.

In some ways, building a new stadium precinct is like building a new bridge. Because of the huge initial outlay, it can only be done by government, as the returns are public and cannot be totally captured commercially. No private-sector funder could make a return on it, and nor could a sporting organisation. Like the AFL itself, it's a public good.

Having a team in Tasmania is a significant social investment. In assessing the value of the new precinct, we should look at its creative and community potential in addition to the excitement of the Tasmanian team in the AFL.

Yet the political stakes are undeniably high. If the stadium precinct is blocked by the parliament, Tasmania will lose its AFL team - likely forever. And the stadium's opponents, whether it be the Greens, the independents or Tasmanian Labor, will likely get the blame.

The death of the Tasmanian team would then be worn like a crown of thorns for at least a generation or two.

Author: Tim Harcourt - Industry Professor and Chief Economist, University of Technology Sydney