Build, Renovate, Destroy

[Originally published by the American Spectator]


There have long been two absolutes about sports stadiums, at least when built in America’s big cities. The first is the willingness of public officials to subsidize them, using hundreds of millions in taxpayer money to build monoliths that will supposedly spur jobs and redevelopment. The other is the substantial economic literature claiming that such benefits never materialize enough to justify the handout. In the last dozen years these notions have collided, as cities like Cincinnati, Detroit, and Miami have continued with the status quo, and funded new stadiums, while others, rather than bowing to billionaire owners, have watched their sports teams flee. The way Atlanta addressed its own stadium issues this year strengthened the dichotomy.

In November the city decided not to fund renovations for Turner Field, home of the Atlanta Braves. The stadium was donated to the city in 1996 after hosting the Olympics, and converted thereafter into a 50,000-seat baseball venue. Although just a mile from downtown, it soon became a relic when compared to the more compact, urban-style parks arising in other cities. It was surrounded by a sea of parking lots, ill-served by transit, and smack in the middle of a dangerous, underdeveloped neighborhood. But when Braves ownership asked recently for $150-250 million for renovations to the ball park, the city refused, impelling the team to relocate to suburban Cobb County. There a new $672 million stadium will go alongside a major mixed-use development, while “The Ted” will be demolished in 2017 after just two decades of use.

The reason against funding the renovation, said Mayor Kasim Reed, was that selling bonds for it would generate more city debt, taking from the nearly $1 billion needed to repair Atlanta’s infrastructure. Reed also didn’t feel that having the Braves move 12 miles away was horrific enough to justify the massive expenditure.

“I’m not going to play this Atlanta versus Cobb game,” he explained. “I believe in the region.”

Unfortunately, Reed didn’t apply such logic eight months earlier to another stadium project. In March Atlanta’s city council, with the mayor’s urging, approved the construction of a new $1.2 billion, retractable-roof football stadium for the Falcons. Tapping into a 7% hotel tax, the city will pay $200 million of this, and likely hundreds of millions more in interest, while holding the team to a 30-year lease. The stadium will go just south of the Georgia Dome, where the Falcons now play, and will be run by the Georgia World Congress Center Authority, the same state bureaucracy now managing the dome. Meanwhile “The Dome,” like Turner Field, will be demolished.

If it’s senseless for Atlanta to renovate a baseball stadium rather than its infrastructure, as Reed recognized, it is even more so to replace the Georgia Dome. Currently it seats 70,000, is structurally sound, and is a stone’s throw from downtown, a light rail station, an NBA arena, and CNN’s headquarters. Completed in 1992, it is only six years removed from its own $300 million renovation. Officials estimate another few hundred million is needed, and that the city might as well just build a new venue to help keep the Falcons, and further attract national events.

But the Georgia Dome already does all this, regularly selling out for professional and college football games, and hosting several Final Fours and a Super Bowl. And the idea that without a new stadium the Falcons will leave Atlanta — presumably for Los Angeles — is unlikely given that a half-dozen other NFL teams are considering such a move, most without the Falcon’s rabid fan base.

The distinction Reed made between the two projects was that while the baseball stadium had no dedicated revenue stream, and would just pillage the general fund, the football stadium will be funded by a hotel tax. Thus, he explained, it will be paid for by visitors rather than residents. But this just shows that the Democratic mayor must believe taxes are harmless so long as they target not you or me, but the man behind the tree. He apparently hasn’t considered that without this new stadium, the tax could be reduced or even repealed — thus boosting tourism — or that its revenue could be shifted towards essential services.

That said, it is encouraging that Atlanta refused to fund at least one stadium, enjoining it to a growing list of like-minded cities. In 2008 Seattle lost its NBA team because local and state leaders would not pay $500 million for a new arena. Also during that decade the New York City area, still paying debts for now-demolished stadiums, passed on subsidizing new ones for the Giants, Jets, and Mets. San Francisco required full private funding for both its waterfront baseball park and future basketball arena, and lost the 49ers to Santa Clara only after refusing to make the same giveaways that other cities provide for their football teams.

This unwillingness by cities to subsidize stadiums, while still rare, is due to increased publicity about their dubious benefits. According to the Journal of Economic Perspectives, widespread research “has uniformly found that there is no statistically significant positive correlation between sports facility construction and economic development.” Another study by Colgate University found this correlation in “only 8 of 55 stadiums that are currently in-use and were constructed with at least 25% public funding.” Rather, money that would be spent on other entertainment gets sucked up by these stadiums, and thus redirected from local businesses to rich owners and players, who generally locate in the suburbs.

Stadiums are also consistent money-losers in themselves, requiring yearly subsidization for operating costs and bond payments. This is not only because of their under-use — some host only 10 games a year — but the fact that they’re often run by unaccountable public authorities. For example the one operating the Georgia Dome is also responsible for the surrounding entertainment complex, which consumes much of downtown Atlanta, but still manages to lose millions annually. Harvard planning professor Judith Grant Long determined that the total costs to taxpayers of the 121 sports facilities in the U.S. average $259 million.

Of course, none of this evidence has reversed the folk wisdom that having governments fund stadiums — or arenas, entertainment districts, and convention centers — will spur growth (even the Braves’ move was fueled by conservative Cobb County’s decision to pay $300 million for the new park). But nowadays every new private stadium, or opposition to funding a public one, is a small sign that cities are coming closer to fiscal sanity on the issue.