Been to Largo lately? Sports teams often aren't very good partners...
... the area around the FedEx Stadium in Prince George's County isn't particularly nice. The Boulevard at Cap Centre shopping center, built on the grounds of the old US Air sports arena is a disaster. But to be fair, because football stadiums are used so infrequently, most areas around football stadiums aren't particularly lively. WRT to PG County, they only make some money off the events, and that comes because of an entertainment tax on the tickets.
In public private partnerships, local governments tend to be the junior partner. One thing that bothers me about relationships between public and private entities, usually called "public-private partnerships," is that if partnerships are defined as relationships between equals, they are not.
In most cases, what is called a partnership is really contractual, not capable of flexible modification as circumstances warrant, and most importantly, tends to be quite one-sided in favor of the for profit business.
This is the case with contracts between public entities and sports teams. There are few examples of such relationships being somewhat equal, where the local government as major funder of stadiums and other stuff (training facilities, etc.) get a decent economic return. Mostly they lose out.
Sports infrastructure is costly no matter who pays for it. And NotionsCapital points us to this Governing Magazine article, "Even When Teams Pay, Stadiums Still Aren't Free for Cities," which discusses machinations by the Columbus soccer team which aims to move to Austin. From the article:
While many cities are no longer willing to foot the bill for sports stadiums, they are still facing other costs or lost revenue when teams come to town.The article goes on to discuss the proposed deal in Austin, Texas and points out that while the team would pay for the stadium, it would come at great cost to the city:
These can take several forms: forgone property tax revenue if cities offer an exemption, missed ticket and parking tax revenue if teams are allowed to keep it for themselves, or passed on stadium maintenance and improvement costs.
Who's responsible for maintenance and improvements can be a particular flashpoint as crumbling stadiums are often used as a reason by teams to relocate. That's what happened when Stan Kroenke moved the NFL's St. Louis Rams to Los Angeles in 2016 and what precipitated the sale of the NBA's Seattle SuperSonics and eventual move to Oklahoma City in 2008.
While the city's mayor touts the move as having no cost to taxpayers, that's a superficial way of looking at it, says Nathan Jensen, a professor at the University of Texas at Austin who has been critical of the deal. The city isn't paying upfront money, but Jensen notes that it's giving up substantial tax revenue. First, the team is gifting the stadium to the city, which makes the whole site exempt from property taxes. Second, the team gets to keep any revenue related to the stadium, such as ticket and parking taxes, naming rights and sponsorship deals.Teams play jurisdictions off each other to get the best deal. Although the team owners often continue to play jurisdictions against each other, even threaten to leave for another community, in planning to maximize the incentives received for the replacement of the current facility, figuring it will age out soon enough.
That lost revenue adds up. According to research by University of Michigan professor Judith Grant Long, lost property tax revenue on a $350 million stadium can total $67 million over 30 years. The average city's share of revenue from ticket surcharges, concessions and parking surcharges (often split with a team) can add to at least another $53 million in lost money over 30 years. Naming rights and advertising revenue are also lucrative revenue streams -- although most cities, even when they own the stadium, don't see this money.
Choose your partners carefully. Also, I have been thinking about this in terms of the longevity of the contracts. These are agreements that last decades. When you're giving a stadium or arena to a firm, shouldn't you want that firm to be somewhat open and flexible and reasonable and a good manager and operator of the team?
Why should you give land and lots of money to a team where the owner is a jerk and runs the franchise very poorly? ("Advocacy group creates 'The Danifesto' to protect Redskins fans from Dan Snyder," Washington Post).
Or turns around and says they shouldn't have to pay the equivalent of taxes on the free land they got ("Carolina Panthers, Charlotte Knights could get big tax breaks on land around stadiums," Charlotte Observer).
Why "choose" as your "partner" someone bad? (Note I also made this point wrt the GSA and the Old Post Office Building, where they picked the Trump Organization to operate it. Besides immediately asking for tax breaks when the RFP said such wouldn't be provided, they are a firm known for challenging tax assessments, not paying bills, etc.)
Football stadiums have limited economic return for the local community. Besides the fact that football stadiums don't appear to offer much in the way of economic benefit, unlike baseball stadiums or basketball/hockey arenas which have many more events ("An arena subsidy project I'd probably favor: Sacramento," 2014), why choose to "partner up" with someone bad?
That to me is the crux of the issue with the Washington Redskins football team or with any team owned by Jeffrey Loria ("Protecting local government interests: Jurisdictions at risk from slimy sports teams owners and the Miami Marlins as an example").
Just Go Away/Let it Go. DC should be happy to let the Redskins move from Maryland to Virginia ("McAuliffe: Virginia in 'very serious negotiations' with Redskins for new stadium," Richmond Times-Dispatch
Although the Redskins seem to want to be in the city ("The Redskins reportedly ‘want a downtown experience’ surrounding their new stadium," Washington Post). But that could be the team trying to play DC off Virginia for a better deal.
A downtown experience 12 times/year isn't much return for the city. Especially when football is still dominated by tailgate culture, which requires parking lots.
Although in Los Angeles, partly because of lack of parking space, a goodly number of people have traveled to Rams games via transit. according to the San Gabriel Valley Tribune ("Why weekend ridership is up on Gold, Expo line trains"), 25% or more trips to Rams football games are on transit. They say it's because of the high cost of parking. From the article:
Why do these lines show bigger increases on weekends than weekdays? Riders tell Metro they like saving money on parking.We'd save a lot of money and get to use whatever land would be used for the stadium for other, more profitable purposes.
Parking at the Sept. 18 Los Angeles Rams game at the Los Angeles Coliseum was as high as $200, according to some bloggers and fans. The Expo Line — with stops at USC and Exposition Park — carried 21,000 of the 80,000 who jammed the Coliseum for the Ram’s first win, Metro reported.
“I know some friends from West Los Angeles who are music aficionados and go to the Music Center downtown but hate to pay $35 to park your car,” said Bart Reed, executive director of The Transit Coalition, a nonprofit, pro-mass transit group based in the San Fernando Valley.
While exiting the symphony for the nearest train station may be a breeze, hopping an Expo train with 20,000 riders exiting the Coliseum meant long lines and required plenty of patience. It took about 90 minutes to clear the last passenger, and that was with three-car trains every six minutes, Hillmer said.
Football practice facilities seem to be a losing proposition. Back when Councilman Jack Evans and others wanted to land the Redskins practice facility I was not in favor ("Unstrategy for economic development in DC," 2011).
It hasn't worked out for Richmond ("Impact of Redskins camp surpasses city’s estimates," Richmond Times-Dispatch). While the economic study touted by the city claims an economic impact for the region, not just the city, of over $10 million, after deducting tax revenues earned from the annual payment the city makes to the Redskins, they lose money.
We dodged that bullet.
DC's Mayor wants the Redskins to return to DC. Despite Mayor Bowser's clamoring for DC to be picked ("Mayor Muriel Bowser Wants NFL Team Back in D.C.," Washington City Paper), hopefully DC will dodge the bullet of a new stadium for the Washington Redskins.
Irrespective of the name ("Roger Goodell doesn't see Redskins name change," NFL), recently the Redskins have realized that their reputation on the business side required a reboot, especially as attendance has dropped precipitously ("The Sad History Of The Skins' Bogus Season Ticket Waiting List," Deadspin; "They've had Redskins tickets for more than 50 years. They've finally had enough," Post), so they hired a new VP of business operations ("Redskins hire Brian Lafemina from NFL to lead business side," Post) with a lot of experience in not being a jerk.
Lately I can't get the song "Just Go Away," by Blondie out of my head, thinking about both Roseanne Barr and Donald Trump. I feel the same about a football stadium in DC. ... and also the "Let it Go" song from the Disney movie "Frozen" although when I "sing it" in my head, I say "... 'et it go" because that's how the then 2-year old next door used to sing it.
P.S. when you do write the contract, don't forget to put in provisions requiring transportation demand management and specific contracts with the local transit agencies for service when games run late. DC failed on that with the Washington Nationals baseball team.
Labels: capital improvements planning, civic assets, public finance and spending, sports and economic development, stadiums/arenas, tax incentives, tax increment financing districts, urban design/placemaking