Are sports facilities more like cars or houses?

This isn’t the first time I’ve discussed the useful life of sports facilities, but three recent articles have caused me to turn my attention in that direction once again. There has been wide ranging speculation about what the new owners of the Los Angeles Dodgers will do to recoup their $2+ billion investment. Some have raised the possibility that naming rights might be sold or that an NFL stadium could be built on the site. The most likely prospect is that the parking lots will be redeveloped for a large scale mixed use project like Mission Rock which was recently announced for a site next to AT&T Park in San Francisco. However, no one has suggested that it is time to replace the 50-year old stadium. In fact, until Frank McCourt’s disastrous reign it was widely considered one of the best stadiums from a fan’s standpoint.

Dodger Stadium

Conversely owners of facilities in Milwaukee and Atlanta that are less than half that age have recently raised the alarm that their buildings are obsolete and must be replaced (the Bradley Center is 24 years old and the Georgia Dome is 20 years old).

This raise the question of whether we ought to be treating our sports facilities like cars to be used up and traded regularly for a new model that has the latest bells and whistles or like a house to be maintained regularly and updated periodically so that it can be enjoyed by generations of owners. Clearly it is possible to do the latter successfully and the cost of doing so is far, far less than the “use up, throw away” philosophy.

We’ve made it easier for teams to get public funding for a new facility than to include funds in their own operating and capital budgets to put off the need for a new facility as long as possible. When teams and municipalities negotiate over the terms of funding a new facility and the use agreement, they rarely spend much time discussing maintenance and capital improvements. Rather than face this issue and the significant cost of it head on, they conspire to ignore it.

I have a simple suggestion that could go a long ways to reversing the trend of shorter and shorter lives for sports facilities. The public sector should insist that the initial funding plan and lease agreement with the primary tenant include a detailed plan for insuring that the facility have a useful life of at least fifty years. While it may appear to add to the cost of the project at the outset, over time it will save the taxpayers of the community many millions of dollars. It would seem that if the host city is willing to “give” a team 50-90% of the cost of a new building, the least the team can do is agree to be responsible for the lion’s share of the cost of treating the building like a house and not a car.

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When the ball game isn’t enough

Over the past several weeks, two sports teams have announced their intention to develop large scale mixed use projects adjacent to their stadium or arena. The San Francisco Giants are teaming up with The Cordish Companies to undertake a $1.6 billion, 3.5 million square foot project that will be known as Mission Rock. It will occupy 27 acres adjacent to AT&T Park and the San Francisco waterfront.

Site of proposed Mission Rock project

The Chicago Bulls are planning to move forward with a 260,000 square foot, $80+ million retail/entertainment project on land currently used for surface parking at the United Center. The area surrounding the arena is largely devoid of pre and post-game attractions for the 1.5 million people who attend games and events at the facility.

Proposed retail and entertainment complex at The United Center

It’s worth noting that it has been 18 years since The United Center opened and 12 years since AT&T Park was completed. So while it appears that both projects may finally be realizing their potential as catalysts for neighborhood rejuvenation, it also suggests that sports facilities may not provide the kind of instantaneous boost to redevelopment efforts often touted by their proponents.

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Sports entertainment districts

Two recent articles present two very different takes on glitzy sports entertainment districts – Kansas City’s Power & Light District and San Francisco’s Mission Rock project. The former is completed; the latter has just been announced. What do they have in common? Both are anchored by a sports facility; the Baltimore-based Cordish Companies acted as the developer; and each includes the usual mix of chain retail, bars and restaurants.

Power & Light District, Kansas City

The Wall Street Journal has labeled the Power & Light District a dismal failure and significant drain on the city’s budget. The San Francisco Chronicle touts the all but assured success of Mission Rock. While I know San Francisco is not Kansas City, the Power & Light District is a cautionary tale for cities betting their future and investing their dollars in one of these districts.

Kansas City finds itself using general funds for more than 2/3 of the debt service on the $295 million in bonds it issued for the project because projected sales and property taxes generated by the project have lagged. In addition, the city funded more of the $276 million cost of a new arena that has been waiting for its first sports tenant since its 2007 opening. As a result, the city has been forced to cut back on basic services.

The story is much the same in Glendale, Arizona, where the city provided hundreds of millions in funding for a hockey arena and spring training complex only to see the hockey team and adjacent mixed-use development, Westgate, go into bankruptcy. For each of the past two years, the city has covered $25 million to the NHL which now owns the hockey team to cover operating losses. Now the city is facing a $35 million budget deficit and the possibility it will still lose the hockey team to another city.

San Francisco’s plans are even more grandiose – $1.6 billion cost for a park, 1,000 rental units, 1.7 million square feet of office and retail, and parking garages. The Giants and Cordish plan to ground lease 27 acres comprised of existing surface parking lots and Pier 48 and begin construction in 2015. I suspect San Francisco’s efforts to use a sports facility as an anchor and catalyst for a major redevelopment project will be more successful than either Kansas City or Glendale. The worrisome thing is that there are numerous second and third tier cities currently looking at smaller scale, sports entertainment districts (e.g., Allentown, PA) as an avenue to urban regeneration. One hopes that they will not only look at the promise of projects like Mission Rock but also the reality of projects like Power & Light and Westgate.

Mission Rock site plan

 

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Stadium blowback – at last?

Updated: April 24, 2012

Updated to reflect bill being sent to floor of house for vot.

Updated: April 21, 2012

Updated to reflect action by senate committee.

Earlier this week the House Government Operations Committee in Minnesota voted against the proposed funding measure for a new $975 million Vikings stadium. After years of wrangling it had appeared that the measure, which is strongly backed by Governor Mark Dayton, was poised for passage. It would have provided $398 million in state funding raised from charitable electronic gaming alongside $427 million from the team and NFL (relatively generous compared to many recent stadium deals) and $150 million from the city of Minneapolis.

Proposed Vikings stadium

Like many states, Minnesota has been wrestling for the past several years with extraordinary budget challenges and this measure had difficulty garnering any support from members of the governor’s DFL party or even those from the host city on the committee. Having already funded a baseball stadium, a university football stadium (Query: Why couldn’t the Vikings have shared that stadium with the Gophers as the Steelers do with Pitt?) and a hockey/basketball arena, this was apparently the straw that broke the camel’s back.

The NFL is left with few options other than to raise the specter of relocation (LA anyone?) and trot out Commissioner Roger Goodell to issue dire warnings about whether the market is adequately supporting the Vikings. One wonders why 15 years of sell-outs is not considered sufficient “support” by the league.

One local observer has suggested this vote may signal the end of the era of publicly funded sports facilities. Given the track record of each of the four major sports in garnering billions of dollars of public funds for these sports palaces, I am not so sanguine about his prediction. Dave DeLand does offer some compelling statistics. According to him, the inflation adjusted cost of the current 1982 stadium was $161 million; the projected cost for the proposed stadium is over $1 billion. I think it is fair to ask whether NFL owners would have engaged in a stadium “arms race” over the past two decades (perhaps best epitomized by Jerry World in Dallas) if public dollars had not been so readily available. Would we be so much worse off as a nation if we were still watching games in stadiums and arenas with 1960s era comfort levels?

DeLand points out that in 1991 the NFL’s Fan Cost Index (i.e., the cost of a family of four attending a game) was $151.55. After two decades of public funded stadiums, the Index has skyrocketed to $427.21. So taxpayers have paid for the privilege of paying even more to see their favorite teams play.

One could argue that sports facilities are an addiction that U.S. cities cannot afford but which they cannot resist. The real action today isn’t in major league cities, but in second and third tier cities which are trying to emulate their big brothers in a kind of perverse trickle down fashion. For example, El Paso (!) elected officials are considering a ballot measure that would provide $150 million for an arena, $45 million for a minor league baseball stadium, $50 million for upgrades to the Sun Bowl, and perhaps another $100 million for a soccer stadium.

I suspect that Minnesota will find a way to pass this measure to avoid losing its beloved Vikings. In fact, days after the house committee rejection, a senate committee voted to approve a similar funding measure giving the project renewed life. Subsequently the bill was also revised in the house with an unrecorded positive voice vote in a different committee paving the way for a floor vote.

No single city is likely to be able to stem the tide of public financing for sports facilities. Doing so would take unprecedented concerted action by a group of several dozen cities or legislative action at the federal level. Neither seems likely. A broad-based, multi-jurisdictional taxpayer revolt may be the only way to force a reexamination of how sports facilities are funded in this country.

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Will Lincoln be disappointed in 20 years?

There was a fascinating article yesterday in the Baltimore Sun by Louis Miserendino marking the 20th anniversary of the opening of Camden Yards (we attempted to see a game during that inaugural year but didn’t make it past the National Anthem as one of our kids got sick in the stands). Mr. Miserendino compares the economic development track records for Boston and Baltimore over past half century. I was surprised to see that before 1980 Boston was in worse shape than Baltimore having lost more manufacturing jobs and population had a lower median income and a higher crime rate. But in the ensuing period, Boston’s income levels have soared while Baltimore’s have stagnated.

Camden Yards, Baltimore, Maryland

He notes that Boston has not built a new baseball or football stadium during that period (though he does not mention that the Boston Garden was replaced) while Baltimore made an enormous public investment in both baseball and football stadiums downtown. He questions whether that strategy has paid off for the city as a whole. Camden Yards, of course, is the stadium that triggered an onslaught of downtown, retro baseball stadiums (e.g., Pittsburgh, Cincinnati, Detroit, Denver, San Francisco). It is often held up as the poster child for how sports facilities can be used as catalyst for a downtown renaissance. The question Mr. Miserendino asks is “at what cost to the economic development prospects for the remainder of a city.

On the same day, the City Council in Lincoln, Nebraska, approved a $57 million mixed-use project that is to be built adjacent to the Pinnacle Bank Arena currently under construction.   The link between the two projects was acknowledged by Councilman Carl Eskridge who said: “Part of the reason for building the arena is to have lots of things around it, places for people to live and play.” The Arena will be part of a sports-entertainment district that includes Memorial Stadium and Haymarket Park. These three facilities are the home for the Husker basketball, football and baseball teams respectively. The Haymarket itself is a successful conversion of an old warehouse district into restaurants and shops.

Haymarket project, Lincoln, Nebraska

So while this project has a lot going for it in terms of ties to the University of Nebraska and an already thriving mixed-use district that it hopes to become an integral part of, one wonders what public investments in other parts of Lincoln could not be made in order to create this mecca for sports fans.

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Stadiums as historic landmarks

I happened across an article today about the City of San Antonio moving towards designating Alamo Stadium as a city historic landmark. With my curiosity piqued, I soon learned that this stadium was built as a WPA project during the Depression and with a seating capacity of 23,000 is the largest high school football stadium in Texas.

This got me wondering about how many stadiums (and arenas) have been designated as historic landmarks by city, state or federal governments. It doesn’t appear that there is a master list of such designations (or at least I have not come across one). But I did learn that Harvard Stadium, the Yale Bowl, the Rose Bowl and the Los Angeles Memorial Coliseum all have received the most prestigious such designation as National Historic Landmarks. I find it a bit ironic that two Ivy League facilities and two from Los Angeles make up this quartet. Conversely, Soldier Field lost its National Historic Landmark status as a result of the massive renovation completed in 2003.

Before you ask, yes, Fenway Park is a National Historic Landmark; but you may be surprised to learn that designation was made only this month! Another iconic baseball stadium, Wrigley Field, was deemed eligible for designation back in 1987 but has not requested it be formalized in the ensuing quarter century.

One wonders which, if any, of the current generation of sports facilities will be around long enough to be considered as candidates for historic preservation.

 

 

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Mixed-use development and Lincoln’s new arena

The City of Lincoln is poised to approve a redevelopment agreement next week that will provide $7.4 million in tax increment financing (TIF) to the $57 million project. The project will consist of 92,500 square feet of residential space, 15,000 square feet of office space, 49,500 square feet of retail space and a 110-room hotel. The TIF money will be used for various public components of the project. The most interesting of these will include a public gathering place, a large outdoor screen for entertainment purposes, and a year round public market.

The proposed project is located immediately to the west of Lincoln’s Haymarket district.

You can access a complete copy of the proposed redevelopment agreement at the Lincoln City Council’s website.

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What should the useful life of a sports facility be?

Residents of Orlando will be able to watch the implosion of the Amway Arena on March 25. Completed in 1989 at a cost of $110 million and paid for entirely with public funds, the arena was the home to the NBA Orlando Magic for 21 years before moving to the $500 million Amway Center.

Original Amway Arena

Should cities expect to have to replace their sports facilities every 20 years; and, if so, how should this be taken into account when they make the initial decision to build a sports facility? Other pieces of civic infrastructure (e.g., courts, libraries, museums, hospitals) are not regularly torn down after 20 years. Furthermore some of our most treasured sports venues – Fenway Park, Wrigley Field, Dodger Stadium, Madison Square Garden – have remained viable for decades longer than that.

Perhaps municipalities need to pay more attention to the lifecycle of their sports facilities when the negotiate financing and use agreements at the outset to insure that they are properly maintained and keep up to date. In the long run, such an approach is likely to save taxpayers a great deal of money.

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Sports facilities as infrastructure

Should sports facilities be thought of as pieces of a metropolitan area’s infrastructure rather than as another building type like shopping centers or multi-family housing? Doing so might enable city officials and taxpayers to take a more honest and realistic approach to analyzing the value of a proposed sports facility project.

In Waco, Texas, Baylor is planning to construct a new $250 million football stadium on a site along the banks of the Brazos River. Proponents of the project hope that it will jump start development of a long delayed effort by Waco to create their own version of San Antonio’s famed River Walk. 

Putting aside for the moment whether institutions of higher learning have lost there way in the swamp of college athletics, it seems to me that whenever the public sector makes an investment of the size required for any sports facility it ought to be accomplishing multiple public policy objectives. One such objective is advancing a city’s capital improvements program for infrastructure. Perhaps the best examples of the connection between sports facilities and urban infrastructure are the way in which various Olympic host cities have used the games as a catalyst for spurring completion of transit, highway, park, and other infrastructure projects.

 

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Do stadiums spur new development?

Stadium advocates would answer that question with a resounding “YES!”, but the actual picture is more murky as blogger Nathaniel Hood suggests in a recent post. He supports his skepticism about this claim with a series of aerial photos of stadiums and their surroundings over a 15-20 year period. In city after city (e.g., Minneapolis, Indianapolis, Phoenix, and Philadelphia). The real culprit appears to be the amount of land devoted to surface parking lots and the considerable cost involved in building parking garages to free up land for redevelopment.

Does this suggest cities interested in using sports facilities as a catalyst for redevelopment would be better advised to focus on arenas or smaller stadiums housing soccer or minor league baseball?

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