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Public funding for stadiums?


Phils Phan

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The Yankees paid for their new ballpark, although the city/state funded some infrastructure around it. As was the case, I believe, in San Francisco. FWIW, the Cubs tried to ask for public financing to renovate Wrigley Field but were turned down.

No stadium by itself provides a positive financial return on the investment. That's not what they're for. They are used to lure and retain sports teams, which are not only used to build community but also to create the sense of a "major league city"/high-quality-of-life place that can lure and retain other businesses. I've seen it happen, or at least I've seen cities try it.

For example, Detroit's sports teams have often provided positive national stories at a time when the national narrative of the city is far less pleasant. That's not nothing.

So no, don't let anybody tell you that stadiums are cash cows for cities. They aren't. But that doesn't necessarily mean they aren't "good investments".

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Unfortunately privately funded stadiums are in the minority in this country. Their might be a few you didn't metion but it's almost certainly in single digits at the pro level.

As far as whether or not they're a good investment; if your an owner, a player, a huge fan of the team, a construction worker, or a bar/restaurant owner by the new stadium/arena I would say yes. But if your anyone else, I don't see much if any upside. Your simply paying more for the same product.

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Unfortunately privately funded stadiums are in the minority in this country. Their might be a few you didn't metion but it's almost certainly in single digits at the pro level.

As far as whether or not they're a good investment; if your an owner, a player, a huge fan of the team, a construction worker, or a bar/restaurant owner by the new stadium/arena I would say yes. But if your anyone else, I don't see much if any upside. Your simply paying more for the same product.

It all depends. The definition of "public value" is fungible for a variety of reasons, and Gothamite touched on several of the benefits a publicly funded stadium can have.

In Seattle, the neighborhood that abuts CenturyLink and Safeco (Pioneer Square) is undergoing a bit of a renaissance lately, with fancy new restaurants, some new housing, and a general uptick in services. The other side is that lots of new businesses have moved into the area, including several tech firms. Are they there because it's easy to head to a game after work? Do they like the frequency of people on the streets before/after games? Is it a combination of a variety of factors? Probably.

I do think that general in-city investment is a good thing, especially if new stadia are around other entertainment options. If you put your stadium in a strip mall or somewhere far away from any kind of density, you're losing in the long run. In 2014, people are returning to cities. Building a stadium in, say, Cobb County, seems incredibly short-sighted right now.

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Unfortunately privately funded stadiums are in the minority in this country. Their might be a few you didn't metion but it's almost certainly in single digits at the pro level.

As far as whether or not they're a good investment; if your an owner, a player, a huge fan of the team, a construction worker, or a bar/restaurant owner by the new stadium/arena I would say yes. But if your anyone else, I don't see much if any upside. Your simply paying more for the same product.

It all depends. The definition of "public value" is fungible for a variety of reasons, and Gothamite touched on several of the benefits a publicly funded stadium can have.

In Seattle, the neighborhood that abuts CenturyLink and Safeco (Pioneer Square) is undergoing a bit of a renaissance lately, with fancy new restaurants, some new housing, and a general uptick in services. The other side is that lots of new businesses have moved into the area, including several tech firms. Are they there because it's easy to head to a game after work? Do they like the frequency of people on the streets before/after games? Is it a combination of a variety of factors? Probably.

I do think that general in-city investment is a good thing, especially if new stadia are around other entertainment options. If you put your stadium in a strip mall or somewhere far away from any kind of density, you're losing in the long run. In 2014, people are returning to cities. Building a stadium in, say, Cobb County, seems incredibly short-sighted right now.

Your essentially arguing that publically funded stadiums are good because they bring in some type of value that no other business can to an area.

But you also admitted, on its own a sports stadium/arena has little if any value. Like you said, you can't just build a stadium anywhere and expect it to turn revenue for the city/state. That would seem to condradict that argument of a stadium adding value, because on how can it add value when it had none on its own?

It's assuming that giving money to a sports stadium is going to bring in more city revenue then if they had done nothing. You bring up Seattle, which is interesting because both the Seahawks and Mariners only moved a few hundred feet away from the Kingdome. The only way it would have been beneficial for Seattle to give money to both the Seahawks and Mariners is if people who wouldn't normally go to the Kingdome would be more apt to go to either Safeco or CenturyLink Fields and therefore more likely to being business to the surrounding area.

That's a very hard claim to make.

Your essentially arguing that publically funded stadiums are good because they bring in some type of value that no other business can to an area.

But you also admitted, on its own a sports stadium/arena has little if any value. Like you said, you can't just build a stadium anywhere and expect it to turn revenue for the city/state. That would seem to condradict that argument of a stadium adding value, because on how can it add value when it had none on its own?

It's assuming that giving money to a sports stadium is going to bring in more city revenue then if they had done nothing. You bring up Seattle, which is interesting because both the Seahawks and Mariners only moved a few hundred feet away from the Kingdome. The only way it would have been beneficial for Seattle to give money to both th Seahawks and Mariners is if people who wouldn't normally go to the Kingdome would be more apt to go to either Safeco or CenturyLink Fields and therefore more likely to being business to the surrounding area.

That's a very hard claim to prove and one that couldn't be done in a couple of posts on message board if in fact true.

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True, although the Red Bulls are currently embroiled in a dispute over taxes they claim they don't have to pay.

http://newyork.cbslocal.com/2014/05/12/court-red-bulls-must-pay-2-8m-in-property-taxes/

And the proposed private investment in the area around the stadium has not materialized. Take heed, Cobb County. You can't just plop a stadium down in the middle of nowhere and expect real neighborhoods to suddenly take root around it.

My basic argument is in-city investment is good.Sometimes stadium investment is good, but who knows?

That's partially what I mean about luring other businesses. You can use a stadium as an anchor to an entertainment or business district, or to draw investment to a district in need of gentrification. That wouldn't be reflected in the stadium's own ledger.

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The building of Coors Field (and the attraction of new business that followed) completely changed downtown Denver. That was a pretty good public investment, and I believe all ballpark debt was paid off in nine years, 11 years ahead of schedule.

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Unfortunately privately funded stadiums are in the minority in this country. Their might be a few you didn't metion but it's almost certainly in single digits at the pro level.

As far as whether or not they're a good investment; if your an owner, a player, a huge fan of the team, a construction worker, or a bar/restaurant owner by the new stadium/arena I would say yes. But if your anyone else, I don't see much if any upside. Your simply paying more for the same product.

It all depends. The definition of "public value" is fungible for a variety of reasons, and Gothamite touched on several of the benefits a publicly funded stadium can have.

In Seattle, the neighborhood that abuts CenturyLink and Safeco (Pioneer Square) is undergoing a bit of a renaissance lately, with fancy new restaurants, some new housing, and a general uptick in services. The other side is that lots of new businesses have moved into the area, including several tech firms. Are they there because it's easy to head to a game after work? Do they like the frequency of people on the streets before/after games? Is it a combination of a variety of factors? Probably.

I do think that general in-city investment is a good thing, especially if new stadia are around other entertainment options. If you put your stadium in a strip mall or somewhere far away from any kind of density, you're losing in the long run. In 2014, people are returning to cities. Building a stadium in, say, Cobb County, seems incredibly short-sighted right now.

Your essentially arguing that publically funded stadiums are good because they bring in some type of value that no other business can to an area.

But you also admitted, on its own a sports stadium/arena has little if any value. Like you said, you can't just build a stadium anywhere and expect it to turn revenue for the city/state. That would seem to condradict that argument of a stadium adding value, because on how can it add value when it had none on its own?

It's assuming that giving money to a sports stadium is going to bring in more city revenue then if they had done nothing. You bring up Seattle, which is interesting because both the Seahawks and Mariners only moved a few hundred feet away from the Kingdome. The only way it would have been beneficial for Seattle to give money to both th Seahawks and Mariners is if people who wouldn't normally go to the Kingdome would be more apt to go to either Safeco or CenturyLink Fields and therefore more likely to being business to the surrounding area.

That's a very hard claim to prove and one that couldn't be done in a couple of posts on message board if in fact true.

I'm not sure it is that hard to prove that people would rather go and spend money at Safeco or CenturyLink rather than the Kingdome.

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And the proposed private investment in the area around the stadium has not materialized. Take heed, Cobb County. You can't just plop a stadium down in the middle of nowhere and expect real neighborhoods to suddenly take root around it.

My basic argument is in-city investment is good.Sometimes stadium investment is good, but who knows?

That's partially what I mean about luring other businesses. You can use a stadium as an anchor to an entertainment or business district, or to draw investment to a district in need of gentrification. That wouldn't be reflected in the stadium's own ledger.

Again though, I think those two statements contradict its other.

It has no value on its own, but it can also add value. It can add to the value of an infrastructure, but it needs an already existing infrastructure or planned infrastructure to add this value.

At the very least it says the stadium/arena is way more dependent on the existence of surrounding businesses then businesses are on the stadium/arena. So from the team's perspective, it makes total sense to want to be in these vibrant downtown areas.

I'm not so sure it makes sense for a city/state to pay teams to go there though. If they need to be there so badly to succeed as a business, then why don't they just go there on their own dollar?

Also if them moving there actually does provide a public good or benefit that wouldn't otherwise be available, then is there anything that would as well, such as a museum, a park, or a public theater? And if so, then why not just use the land for that instead?

I know the city of Anaheim who is in the negotiations with the Angels recently asked that same question, and the Angels went nuts.

The argument for publically financed stadiums has been based almost entirely on correlation. Downtown Denver was doing nothing until Coors Field came in and look at how much better its gotten. And that's true. But downtown Denver wasn't doing until Mary moved in after graduating college in '95 and then the area just exploded. Neither sentence proves anything. You have to show causation as well and that's where the argument starts breaking down.

You can't show that a stadium/arena by its own produces a large amount of revenue, nor can you separate the stadium/arena from other positive factors in city development such as lower crime rates and other urban development projects which were happening at the exact same time. There's only one industry you can consistently point to as showing a huge increase in business where the stadium is and that's bars and restaurants. But even with that, if let's say $30 million in extra revenue came into an bars and restaurants into an area where a new stadium/arena just went up, you would expect to see that same $30 million increase on city wide report. But the money almost always gets lost. Its just seems like money is getting moved from one area of the city to another, but not necessarily generating any new revenue on its own.

What all that tells me is the benefit is at best marginal and worth looking into other public investment options, and at worst non-existent.

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The building of Coors Field (and the attraction of new business that followed) completely changed downtown Denver. That was a pretty good public investment, and I believe all ballpark debt was paid off in nine years, 11 years ahead of schedule.

Similar situation in San Diego with the 70% public funded Petco Park. Petco Park helped further along the redevelopment of the formerly seedy Gaslamp District and the East Village (the latter still continuing today). Great public investment that, and it would have been even better if not for obstructionist "tax" people who blocked it for two years mid-construction driving up the price and delaying it two years ultimately for no good reason. Same can be said for the 100% public funded San Jose Arena (now SAP Center) up in San Jose and its assistance in helping revitalize downtown San Jose.

Not saying all public stadiums or arenas are beneficial to their cities. Coors, SAP Center and Petco Park do tend to be the exception not the rule. Particularly when you're talking about baseball stadiums placed far from any other development (like Turner Field) or football stadiums in general due to their sparse use by the team and community.

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My only experience with Red Bull Arena is passing it by while riding NJ Transit from Penn Station to MetLife. It's a beautiful stadium, but it's basically in the middle of a swamp. They really blew it.

Location wise they really did. Which may be why Red Bull is rumored to be pulling out of the league. They got suckered into building a private stadium in a less than ideal location in Jersey only to have a second MLS team be granted in NYC proper who are going to undermine their position in the market. Particularly considering they have a better brand (lets face it, Red Bull NY isn't exactly the team kids grow up dreaming to root for unless they've got a thing for Taurine) and now they're being severely undermined on location.

Strangely MLS appears poised to repeat the mistake in LA with the new 2017 LA2 franchise being put in downtown while the Galaxy are stuck out in Carson.

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As far as what a sport facility can do to revitalize a "dead" downtown area, Staples Center (mostly privately-financed) certainly did that for Los Angeles. It took a few years after its opening, but the area around Staples/L.A. Convention Center started growing with new shops and restaurants, including the L.A. Live complex across the street. You even have more and more folks (most of them 20 and 30-somethings, with some USC students mixed-in, with just a 5-10 minute train ride from campus) living in and around the South Park neighborhood that occupies Staples/L.A. Live/Convention Center. An added bonus too is the expansion of L.A.'s Metro Rail system, with more people coming in from East and West Los Angeles (plus from the Valley and South Bay) willing to a spend an evening in the area, either going to sporting events, concerts, movies, or just eating out.

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From a pure dollar standpoint, I don't think public stadiums produce much of a return on investment, if any. Regular season events generally result in discretionary income being moved from one location to another, even when sports attendance is up (e.g., a couple chooses to go to a baseball game instead of spending the same amount of money on dinner and a movie on the other side of town). The only plus comes with marquee events that draw out-of-towners, but even the impact of those events is far less than the cost of a stadium.

However, there is a value in publicity and public spirit that cannot be readily quantified. As someone pointed out previously, Detroit gets positive press for its sports teams even at times when the general news coming out of the city is bad. Cities with similar problems don't get the offsetting positive publicity that sports can bring. (NOTE -- Newark was the first example that came to mind, then I remembered that the Devils play there). Those cities also don't get the benefit of beautiful aerial shots and slice-of-life shots after commercials and between innings that most cities would likely pay for to have aired nationally.

Sports also provides a unifying civic force that no other endeavor can provide. Perfect strangers will rally in unison around a team in a pennant race or on a playoff run. Baltimoreans rally around the Ravens and Orioles, not Johns Hopkins Hospital being named No. 1 hospital by USNWR. The same is true of other cities.

Both of the positives I have cited cannot be measured in simple economic terms. It is up to cities and states to determine whether they are willing to pay for those benefits. Unfortunately, since sports teams in the Big Four are a limited, finite good, the result is the blackmail of billionaire team owners playing cities against one another in an effort to further line their pockets.

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LA Live is better than nothing, I guess, but there really is nothing there. There's certainly no reason to go anywhere near it if there's no game, and even after going to a game I've never even thought about hanging around there.

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And the proposed private investment in the area around the stadium has not materialized. Take heed, Cobb County. You can't just plop a stadium down in the middle of nowhere and expect real neighborhoods to suddenly take root around it.

My basic argument is in-city investment is good.Sometimes stadium investment is good, but who knows?

That's partially what I mean about luring other businesses. You can use a stadium as an anchor to an entertainment or business district, or to draw investment to a district in need of gentrification. That wouldn't be reflected in the stadium's own ledger.

Again though, I think those two statements contradict its other.

It has no value on its own, but it can also add value. It can add to the value of an infrastructure, but it needs an already existing infrastructure or planned infrastructure to add this value.

That isn't a contradiction, it's "put the investments in context".

A stadium, when used as an anchor for properly-funded, well-planned development, can help revitalize a neighborhood. If the surrounding development is neither of those, then the stadium alone doesn't do it. It's no magic wand, but it can still be an important tool.

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My only experience with Red Bull Arena is passing it by while riding NJ Transit from Penn Station to MetLife. It's a beautiful stadium, but it's basically in the middle of a swamp. They really blew it.

Location wise they really did. Which may be why Red Bull is rumored to be pulling out of the league. They got suckered into building a private stadium in a less than ideal location in Jersey only to have a second MLS team be granted in NYC proper who are going to undermine their position in the market. Particularly considering they have a better brand (lets face it, Red Bull NY isn't exactly the team kids grow up dreaming to root for unless they've got a thing for Taurine) and now they're being severely undermined on location.

Strangely MLS appears poised to repeat the mistake in LA with the new 2017 LA2 franchise being put in downtown while the Galaxy are stuck out in Carson.

The mistake there is Carson. Throwing the new team in there wouldn't help. Incremental steps; first get LAFC out of there, then wait out the least and get the Galaxy out.

Other than that, there are precious few parallels to be drawn between the Galaxy and Red Bulls.

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