Sports stadium economics

The Oakland Tribune has an interesting article, "Sports economics hinder Oakland."  It's about the relative competitiveness of the Oakland Coliseum area as a place to redevelop and attract sports teams--the Golden State Warriors basketball team recently announced they are moving to the San Francisco waterfront.  It's found wanting because it's not located downtown, but in an area convenient to freeways.

According to the article:

In moving to San Francisco, the Warriors are following in the footsteps of nearly the entire NBA. Of the 22 NBA arenas built since 1992, 20 are in downtown areas, about half of which replaced arenas that were outside city centers.

Baseball has followed a similar trajectory, even though its stadiums require more seats and parking spaces. Since Baltimore's Camden Yards ushered in the retro ballpark era in 1992, most of the 21 new baseball stadiums have been built in and around city centers.

The exception is football, whose relatively few home games and utilitarian revenue sharing policies make it less important for stadiums to be in top markets.

Several factors account for the downtown sports building boom. As governments poured money into reviving downtown areas during the last two decades, they included funds for stadiums and arenas in hopes that they could spur additional development.

Downtown facilities placed teams in much closer proximity to businesses that could pay for new luxury suites and club seating, which now account for about 10 percent of teams' revenue.

"When you had suburbanization, the idea was that rich people were leaving the city center," Zimbalist said. "Now the idea is to be close to the business community to get the corporate dollar, sell more corporate sponsorships and charge higher prices."

In terms of the ongoing efforts by some DC politicians to "bring the Washington Redskins back to DC"--the team has been located in suburban Prince George's County for more than 10 years--the article is instructive in terms of the point it makes about football having less positive economic impact on the local community.

Prince George's County nets about $10 million per year in additional revenue from the presence of the Washington Redskins football team.  But 80% of that comes from a local tax on ticket sales.  Without that tax, the return would be minimal (Md. Weighs Stadium for D.C. United: Study Will Gauge Pr. George's Benefits," a 2008 article from the Post).  More than $300 million was spent on public infrastructure improvements associated with the stadium.

As I wrote in a 2008 blog entry:

Too often government programs and actions are (rash) responses to actions or proposals rather than a proactive decision made in terms of overarching priorities and commitments.

To spend all that public money on a stadium for so little economic return is crazy.