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