Sports Law Blog
All things legal relating
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Friday, March 28, 2008
Ballpark construction, public culture, and public resources







Here in Central Arkansas we built a nice arena several years ago in North Little Rock while across the river we used the same tax expand the convention center and renovate some older buildings into what is called the "River Market". The Little Rock investment paid off well. A nice new entertainment district, new condos, all that jazz and was helped along later with a presidential library at the end of the street. The short-term sales tax was a success for Little Rock not so much for North Little Rock.

Back across the river in North Little Rock, there was mild improvement around the arena but nothing striking. Then the city opted for another tax recently to build a new minor league ballpark to replace the aging relic in Little Rock that had the area's Double A franchise on a death watch due to inability to meet minor league park standards.

New park gets built just down the street from the arena and the area has really taken off. Old homes are being renovated, older empty commercial property is being redeveloped. The area has taken off and now my wife wants to move into that neighborhood. A couple years ago I didn't like driving there much less the idea of living there.

All of this without major tenants.

Ballparks aren't going to save a community but it can be the fuel to redevelop blighted areas. When schools depend heavily on property taxes, rising values can bring as much or more into the schools as handing over the lump sum needed to build a park.

The truth we don't care to discuss though is that the voters will usually approve a one to five year tax for ballparks but won't approve a much smaller permanent tax for schools.

Blogger Mark -- 3/28/2008 5:33 PM  

In a state (California) where taxes are as inequitable as any in the nation (Prop 13) no viable argument can be made for public funding of ballparks. The entire burden falls on a segment of the population (those who have purchased property in the last 20 years) busy trying to save for the day when Social Security becomes means tested. Ironically, those of us in Alameda County are nevertheless paying the City of Oakland to indemnify the Oakland Raiders for its abysmal ticket sales. Now that's salt in the wound.

Anonymous Anonymous -- 3/28/2008 6:39 PM  

I didn't realize there was anyone who supported gifting private sports teams with the public's tax money who wasn't a politician on the take. If the team wants me to invest in their operations that's fine -- but I want a clear schedule of repayment, and a competitive interest rate.

Anonymous L -- 3/28/2008 6:56 PM  

Great post.

Another issue regarding public stadium funding is whether or not events should be restricted to broadcast television. For taxpayer-funded stadiums and arenas, I personally think they should.

In a March 5th House Energy and Commerce Committee hearing, Rep. John Dingell said:

"Taxpayers have a vested interest in this question. Taxpayers finance public universities and approve public financing for professional sport venues. Cities, counties, and States have provided support in other ways, including financial incentives and the use of public resources. It is therefore logical and fair that taxpayers should be able to enjoy the fruits of their investments and continue to see local teams in free, over-the-air broadcasts."

An author who's addressed this issue well is Dr. Andrew Zimbalist, the economics professor at Smith who used to consult for the MLBPA. I just finished his 1992 book Baseball and Billions, which offers a good assessment of the issue before direct broadcast satellite and fiber-to-the-home became viable competitors to cable. I don't know if he discusses it again in his two subsequent books, May the Best Team Win, and In the Best Interests of Baseball, but I hope that he does, because I plan to read those as well.

I'd like to see this issue get more traction before Congress. It was great to see Sens. Kerry, Leahy, and Specter get the NFL to broadcast the Giants vs. Patriots game instead of restricting it to the NFL Network. But more needs to be done. I guess we'll just have to wait and see.

Anonymous northernsoulfan -- 3/29/2008 3:08 PM  

Good article, I'm glad someone finally spoke up. I'm a DC native so I can give you a little more incite on this deal:

1. DC was almost forced by MLB to provide a stadium that was almost completely publically funded, OR ELSE the Nats would move to another city or near by area such as Virginia. The original cost of the stadium was supposed to be 400 mil, but it just kept on increasing.

2. The current DC mayor was not the mayor who signed off on this deal. It was former mayor Anthony Williams who basically wanted to be known as the mayor who bought baseball to DC.

3. Many people in the city and I believe also the city council was pretty angry that city politics cost this a new Redskins stadium which was pushed out to a Maryland county, and now instead of the revenue going to DC, it went to MD. Also although its on the metro, the MD stadium is an inconvenience for people traveling from VA to watch the skins.

4.650 million doesn't even explain how much more money it cost. The metro station closest to the stadium is getting a complete make over.

5.The new Nats stadium is located in SOUTHEAST DC, which is the Camden NJ of DC. Its literally the projects. And just like the rest of DC its being "revived" (regentrified). And the new Nats stadium is drastically increasing property taxes that is booting out many local businesses, as well as people from their homes. I wouldn't be surprised if even public housing was torn down to create room for the new stadiums. Yes there are new jobs, buildings, hotels, and the like, but still a lot of people had to move.


Blogger 5PercentBodyFat -- 3/30/2008 1:49 AM  

If stadiums of themselves were profitable, private business would be building them and screaming bloody murder any time a city/county/state went into competition against them. There would be two or three in the DC area competing for the Nats business.

Stadiums and to a lesser degree arenas are public infrastructure. They tend to be no profitable than youth ball fields, bicycle trails, schools, libraries, sidewalks, or streets.

The highway system subsidizes the trucking industry. Their cost of use does not remotely come close to covering the cost of construction and upkeep.

Most national parks have programs where private enterprise taps into the resources (vending contracts, guide programs, logging) at rates that still leave the private enterprise making a profit, yet leave the parks a money loser.

Usage fees for libraries don't come close to the cost of building, stocking the shelves and staffing them.

Spending tax dollars to benefit private business or limited groups of individuals is a constant. It is a reason government exists. As troubled as the national levee program may be the old system where the rich landowner across the river from you built a bigger levee so your side would flood and not his was even worse.

The only problem I have with government ballpark construction is what it says about us as people that we value that and cannot muster similar support for schools, better mass transit, etc.

Blogger Mark -- 3/30/2008 9:56 AM  

Maybe its time to start asking these LEAGUES why do they need to have such expensive stadia to play in and why do they need "state of the art" stadiums with all the bells and whistles. (Heck, remember when people objected to the Superdome at $150 million in 1975 dollars?)

Meanwhile, how about a list of stadiums at or under 30 years old, now closed, gone, or underused? Kingdome, Three Rivers, Fulton County, Riverfront, Silverdome, the Vet, RCA/Hoosier Dome, Key Arena (Seattle, renovated less than 13 years ago), McNichols Arena, Reliant Astrodome (still up, but underused), the Summit (now a church in Houston), Reunion Arena (underused), the Spectrum (underused), Richfield Coliseum, Capital Centre (Washington/Landover, MD), ARCO Arena I (Sacramento), Olympic Stadium (Montreal), Texas Stadium [in about 2-3 years], Miami Arena, Kemper Arena . . . all opened since 1970 in most cases. How soon will the leagues and teams be back demanding more new stadiums--15, 20 years? And at what much higher cost?

Yes, I do see a need in many cases for new arenas as well (Denver Mile High, Cleveland, Boston [Garden and Schafer Stadium], Shea Stadium, Madison Square Garden--eventually--and Yankee Stadium, Candlestick Park, the Cotton Bowl, Soldier Field [renovation], and many more.

Time to go back to one stadium, two sports again (i.e. Three Rivers, Riverfront, Busch stadium II, Qualcomm/San Diego, old Mile High in Denver, etc.). If it is going to cost HUGE bucks, methinks that these sports leagues need to be given a lesson in economics--that is, why should it cost $700million to $1Billion+ each for a team to play only 10 games (NFL) or 82 (MLB) in it when I can save money by building ONE for BOTH??

And, while they're at it . . . make sure that the deal pays back the public entity(ies) funding it in full with any interest included. That means no giving the store away--we, the taxpayers paying for these buildings, sould get at least, say, 20-25% of all revenue, which would go toward paying off the cost first.

Anonymous Anonymous -- 3/31/2008 11:50 PM  

Another on the list of closed venues.

The Pyramid in Memphis opened in 1991 to be the new home of Memphis State (yeah I know University of Memphis) and to try to lure an NBA team.

They got the NBA team and..... the teams moved to FedEx Forum in 2004.

Blogger Mark -- 4/01/2008 10:01 AM  

The situation in DC is not so dissimiliar from other cities where the public was bamboozled into funding (and then maintaining) sports arenas/stadiums. What I fail to understand is this: if the public is being asked to underwrite these expenses, how is it that the tennants assume all the rights of ownership? Here in Seattle, local government allows the Mariners to keep virtually all revenue until they recoup their losses from the mid '90's. And after that, the public will still only see a small percentage.

If professional sports teams want the public to underwrite their places of business, the only fair thing is for these expenses to be treated as loans or the cities/states should be awarded an appropriate share of ownership.

Yeah, I know, maybe on Bizarro Planet.

Anonymous Anonymous -- 4/01/2008 7:17 PM  

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