(Post Super Bowl) Towards a framework for maximizing community return on investment from professional sports venues
The basis of this list was first developed in this 2014 entry, "An arena subsidy project I'd probably favor: Sacramento," and was expanded but not recompiled last year, in "More sports: sports-anchored entertainment districts and LA Live."
Other entries that complement this listing include "Stadiums and economic effects," "Sports stadiums (and arenas) and local economic development and a DC soccer stadium," and "Stadiums and arenas as the enabling infrastructure for "money-making" platforms ."
The idea behind it is the fact that despite most advocates calling for no public funding of stadiums and arenas, most places still do it. So, holding our noses, what kind of approach should stakeholders take in ensuring the best possible project, with "best" defined as the least amount of outlay and the greatest amount of benefits and economic and social return.
Such a process should start with a framework for thinking about the venues, where they are located, how they are operated, etc.
Now I would call it an example of what I am calling Transformational Projects Action Planning ("Minneapolis Super Bowl: Urban Revitalization and Transformational Projects Action Planning").
Characteristics that support successful ancillary development associated with professional sports facilities:
- isolation or connection: how well is the facility integrated into the urban fabric beyond the stadium site and does it leverage, build upon, and extend the location and the community around it;
- size of the facility (baseball, football, basketball, hockey, soccer), bigger stadiums--football stadiums specifically--are harder to integrate in the urban fabric;
- frequency of events held by the primary tenant--baseball has 82 home games/year, football about 10 including pre-season, basketball and hockey have 41, soccer about 17--so football stadiums are very rarely used (according to the Chicago Sun-Times article "Emanuel mulling 5,000-seat expansion to Soldier Field," the facility holds about 22 events including annually, 12 non-football events);
- how many teams use the facility, maximizing use and utility of the building--for example, Verizon Center in DC is used by professional men's and women's basketball, hockey, and one college basketball team for more than 100 sports events each year;
- are events scheduled in a manner that facilitates attendee patronage of off-site businesses--a business isn't an anchor if it aims to not share its customers; the earlier events are scheduled, the harder it is to patronize retailers and restaurants located off-site, at night during the week, there is limited post-game spending as well, on the weekends it's a different story with more opportunity to patronize off-site establishments--teams manipulate scheduling to reduce spending outside of their on-site and 100% controlled facilities;
- use of the facility for non-game events drawing additional patrons--such as concerts and other types of programming; and
- how people travel to events: automobiles vs. transit--if automobiles are the primary way people get to events, then large amounts of parking usually in surface lots needs to be provided, making it difficult to foster ancillary development because of lack of land and poor quality of the visual environment, whereas if transit is the primary mode, then more land around a facility can be developed in ways that leverage the proximity of the arena.
- ownership split concerning ancillary development: is it all controlled by the team?
- fair lease terms rather than agreements where the team pays little or no rent
- profit percentage paid to the local/state governments upon the sale of the team, in recognition of the importance of government funding for the facility and/or support infrastructure (like what was intended for the Miami Marlins stadium) as well as the reality that the facility is the platform for the success of the entire enterprise
- public facilities access and use program, such as how the basketball arena in Bilbao includes a recreation center open to the public, including access to the main court when not in use; while not on-site, the Redskins football team did pay towards a community and recreation center in the area of the stadium
- admissions taxes: Prince George's County would make almost zero off the Washington Redskins if it weren't for an admissions tax on each ticket; but many teams argue against imposing such taxes or that they should be the beneficiaries, e.g., the Washington Wizards used admissions tax receipts to pay for interior improvements, "Verizon Center Ticket Tax to Rise to 10%," Washington Post, 2007.
- property tax payments: a lot of times, the facilities are exempt from local property taxes.
- transportation demand management requirements: some teams have TDM plan requirements, in particular the Chicago Cubs, most don't. Some teams provide a great deal of information or support for sustainable mobility, most don't. Some teams pay for transit services (Pittsburgh Steelers and Pittsburgh Pirates pay part of the cost of free transit to the light rail stations serving their facilities, called the North Shore Connector), at least some of the time (the Washington Wizards and Washington Capitals), most don't (Washington Nationals).
- parking taxes to support community improvements: years ago a neighborhood association in the Hill District of Pittsburgh suggested creating a parking tax that would go towards funding local community projects as a mitigation program ("A dollar a car for the Hill," Hill District Consensus Group). It wasn't done, but it's a great idea.
- locating stadiums and arenas in high-capacity transit locations: e.g., Madison Square Garden, Barclays Center, and Capital One Arena are served by multiple transit lines, whereas most stadiums and arenas are sited in locations that have single line transit service or none.
- specific community benefit investment programs designed to foster economic development and revitalization in the immediate community.
Most of these types of programs tend to be oriented to athletics.
The Washington Nationals baseball team agreed to fund various baseball-related youth programs, which has included an after school academy and some refurbished fields across the city.
The Prince George's Sports and Learning Complex next to FedEx Stadium was built as part of the agreement to fund the stadium ("A Complex Opening," Washington Post). But less than 10% of the cost came from the Redskins football team. From the article:
Built on 80 acres adjoining the stadium, the facility has two swimming pools, a 40,000-square-foot gymnastics center and a 20,000-square-foot fitness center. There's a 75,000-square-foot field house that includes a 200-meter track, volleyball and basketball courts and seating for 3,000 spectators. There's also a Learning Center, for classes in computers, storytelling and designing T-shirts, among others. ...An exception is how the Atlanta Falcons have funded economic and community improvement programs in association with the development of the new Mercedes Benz Stadium ("Building a stadium, Rebuilding a neighborhood," New York Times; "Plan for benefits to Falcons stadium communities moves ahead," Atlanta Journal-Constitution).
Meanwhile, public enthusiasm for the Sportsplex's opening has been tempered somewhat by a fee schedule that some contend is too costly--even with discounts--for many of the area's residents who had thought that access to the facility would be a trade-off for their being forced to live across from FedEx Field.
Mixed use complexes anchored by sports arenas. This is a different category. Definitely sports arenas should be integrated into the urban fabric. As discussed in past entries, this is a lot easier for arenas used by basketball and hockey teams, somewhat easier for baseball teams, and really hard for football teams.
Now teams are much more actively trying to develop multi-faceted entertainment districts around their sites. Recent project include those in Detroit (hockey/basketball), St. Louis (baseball), and Buffalo (hockey), and the LA complex going up for the professional football teams. The Golden State Warriors new complex in San Francisco is justified in part because the additional revenue streams enable the team to spend more money on the sports product.
The issue for me is who owns/controls the development. What's good for the team owner isn't necessarily the best outcome for the community.
But giving more control to the team might be an acceptable tradeoff if it enables construction of a stadium almost completely privately, with the exception of supporting infrastructure, such as in Inglewood with LASED - LA Stadium & Entertainment District at Hollywood Park.
There the stadium will cost as much as $3 billion to build ("Los Angeles Rams stadium costs top $4 billion," LA Business Journal). From the article:
The Kroenkes’ $1.6 billion investment is higher than the final price of the last NFL team to sell, the Buffalo Bills, which were bought by Terry and Kim Pegula for $1.4 billion in 2014. That underscores the allure of the L.A. market as well as the surging price of building the yet-to-be-named stadium.=======
“It is unprecedented,” one banker said of the investment. By comparison, after debt, the top equity infusions into stadiums from NFL team owners, such as the Cowboys’ Jerry Jones and Falcons’ Arthur Blank, have topped out at a few hundred million dollars. Kroenke also has agreed to a completion guarantee, the finance sources said, meaning he covers cost overruns and is responsible for the debt if the project does not open on time.
The $4.25 billion cost for the 298-acre site just four miles from LAX airport more than doubles the most expensive stadium ever built in the U.S., the $1.7 billion spent on MetLife Stadium in New Jersey. The cost also includes the value of a 6,000-seat amphitheater but not the planned retail and commercial development, as well as the building of a new NFL Network home that is expected to drive the total cost of the project close to $5 billion if not more, the finance sources said.
Recommendations for additions to the framework are always appreciated.