Stadium, Schmadium

Year after year, city boosters tell us building new stadiums at a cost of hundreds of millions or even a billion dollars will create jobs, bring back neighborhoods, spur development, build national buzz and image, and stimulate local economies. The evidence show this is mostly hooey. Writing in the Wall Street Journal, Mark Yost sheds light on one of the great public policy travesties of our time:

Yes, stadiums do create high-paying construction jobs for a year or two. But the vast majority of long-term employment is low-wage concession jobs. A Congressional Research Service study of the Baltimore Ravens stadium found that each job created cost the state $127,000. By comparison, Maryland's Sunny Day Fund created jobs for about $6,000 each ... A 1998 report by the New York City Independent Budget Office found no "economic rationale for assuming that building any new stadium would itself spur construction of office towers and hotels. Total output resulting from the presence of the teams in the city amounts to less than one tenth of one percent of the economic activity in New York City." ...

But perhaps the best argument against publicly financed stadiums is straight out of Econ 101: Opportunity cost. "What else could the city have invested its money in and what kind of a return would it have produced?" said King Banaian, chairman of the St. Cloud State (Minn.) Economics Dept.

While using public money to subsidize stadiums and sports is economics and bad economic development is most ever city, wealthy cities like NYC, DC, LA or Boston can to some degree afford such extravagances. The real tragedies are in smaller, older, stagnating rustbelt cities - like Pittsburgh, Cleveland, Detroit, Buffalo, St. Louis and others, where city revenues are terribly strapped and stadium funding takes away from pressing local needs from police and fire to schools and parks.  I am amazed and outraged that such blatant abuse of the public purse is allowed to go on.

Comments

[stuart mease]

taxpayer funds yes, but through private funds it would seem it makes a difference - look at Durham, NC and how development has been created around the stadium...also, on college campuses like a Virginia Tech and the boost it has made, of course winning helps too!!!

[Wendy]

Personally, on the one hand I'm very skeptical of using public funds to subsidize millionaire athletes and team owners.

On the other hand, professional sports teams can be good for city citizens' morale. It gives people from all socio-economic backgrounds something in common to talk about. In Vancouver, everyone has an opinion about the Canucks, for example -- even recent immigrants from all of the world seem to get into whatever *the* local sports team is. Losing a team because of a lack of stadium would be devastating to urban popular culture.

I'm reminded of an international development story from an undergrad history course. When an international aid worker came to an impoverished village (in India I think it was) with money to help, the non-religious aid workers were thinking "build a well for clean water," improve drainage and roads, buy school supplies, etc.

The villagers insisted that their biggest priority was to repair and restore the church/temple (I don't remember their religion). Having a run down place of worship was a source of shame. They felt they were letting a deity down, ancestors down, etc.

They couldn't feel good enough about themselves to take advantage of everything else the aid workers were offering without a nice community and communal place of worship.

I think sports teams and stadiums in North American cities -- for better or worse -- often function somewhat like that temple. (I just greatly prefer it if the private sector would build them.)

[Michael Wells]

This from the next post "Last week hundreds of young people queued overnight to watch Andrew Murray play a game of tennis. Tickets were reportedly changing hands for £2,000. Yet the game could be watched on any television or computer screen, in the comfort of home, pub or work-place."

It's important to differentiate the sports from the stadium. As Wendy says, the home team is a source of local pride, and people will flock to watch them. And as the above quote says, people want to see them live. This doesn't of course mean that the local government should waste money, and land, on new stadiums. But since sports have become big business, the owners seem to be able to play cities against each other for larger and fancier coliseums.

[The Gull]

Here's the thing. What would Buffalo be without The Bills, or the Sabres? Not much, in my opinion.

There is a city that is so tied into its sports identity - especially because of its economic woes - that imagining a sports-less Queen City is unfathomable.

So many Tier-2 and Tier-3 American cities (Buffalo, Kansas City, St. Louis, Indianapolis, Memphis) rely on professional sports as defacto marketing tools. If not for being a hockey fan, would I have ever cared about the existence of Columbus, Ohio?

[Family Fantasy Sports]

I still believe that Abe Pollen's funding of the Verizon Center in Chinatown (DC) led to the rebirth of that neighborhood. He did it for the love of DC and also because he will reap the rewards when he eventually sells the team.

[carl]

I am generally not a fan of public subsidies for profitable (and/or rapidly appreciating) sports franchises.

However, in the studies I've seen that debunk the value of civic investment in stadiums, the two things I haven't seen evaluated are:

1) The reality that from a supply / demand perspective, it always seems to be a sellers market when it comes to sports teams. Generally, there are more cities that want teams than there are franchises available. Thus owners play cities against each other to get their new stadiums and benefits. What mayor or group of public officials wants to stand in front of fans at a press conference and tell them their hardball negotiating saved the city millions but cost loyal team fans their beloved franchise?

2) I've never seen a cost / benefit analysis that acknowledges intangibles like the typical aerial shot of the stadium and cityscape taken from the blimp after a commercial break in an NFL game. Or, the shot of the city skyline that newer baseball stadiums have been built around. What is the marketing value of those images in dollars? How much would it cost to buy those 5-10 second spots in prime time with a national audience. What does it mean to a city's national and international image and identity to have those glamous images shown over and over, year after year?

Public subsidies for stadiums may not hold up to a dollar-for-dollar comparison of other potentially beneficial public investments, but I'd like see an unbiased analysis that factors in the public relations benefits over time. I think its dollar value has never really been thoroughly understood or acknowledged.

[nlamontagne]

it is true that sports teams are a source of civic pride and identity and are hugely popular forms of entertainment. However, that does nothing to justify raiding the public purse to build 'state-of-the-art' revenue generating stadia and arenas. If the team is financially viable and important to a local population, private financing should be equally viable. On the other hand, if it is determined that civic pride justifies massive public investment to keep a local team local, then that team should have substantial public ownership (seems only fair doesn't it? maybe discount tickets for local residents? blocks of tickets provided for free to community groups, public meetings and events at no cost using stadium spaces? revenue-sharing? hey, it was our 'investment' wasn't it?)
The 'spiritual' elements of pro sports blinds us into making poor decisions with our collective resources. We have to break the model of private profit but socialized risk, so we can invest in the kinds of creative infrastructure that Prof. Florida shows us can be so powerful.

[Michael Wells]

What models are there for other ways of doing things?

The Green Bay Packers are somewhat like nlamontagne's community ownership model, but I don't know the details.

In Portland, Paul Allen built the Rose Garden where the Blazers play. He went through a couple of bizarre moves with property ownership, but the fact is the public didn't put up too much money and the team is rebuilding.

On the other hand, The Seattle Sonics are moving to Oklahoma City because the city and state refused to throw a billion at the new owners. Various lawsuits are underway, but the team will probably move.

There's fear here that Allen will move the Blazers to Seattle to replace the Sonics, but he owns the arena here so there's an incentive to sit tight, and he denies any plans to move.

By the way, the areas around the Rose Garden and adjacent Coliseum are a wasteland. Hopes that building the Garden would spur activity and investment fell flat.

[Gary Dare]

Michael, I believe that the Portland Trailblazers cannot be relocated because a personal guarantee on Paul Allen, transferable to subsequent owners, binds the team to Portland, Oregon until 2025. This accord was signed with the City of Portland (I believe early in Vera Katz's administration?) and Multnomah County when the Rose Garden was built. However, I believe that Paul Allen will eventually sell the Blazers and get in on a new team in Seattle, probably if a proposed arena is built in Bellevue, WA (which is wealthy enough to fully fund it, unlike the Renton, WA proposal by Clay Bennett & Co. that was written to fail, demanding 60% public funding plus new roads). My guess is that the Memphis (formerly Vancouver) Grizzlies will become the second Supersonics (the team name and colors were handed to the City of Seattle as part of the settlement), it's a matter of whether current owner Michael Hasley will be at the helm or a post-Blazers Paul Allen.

The Portland Tribune had some good articles in 2004 - 2006 on the Rose Garden and the failed development around it, during the time that Paul Allen lost the arena to creditors.