Minor league baseball stadiums are not good for economic development

Camden, New Jersey just decided to tear down a baseball stadium that is less than twenty years old. The stadium did not lead to economic development and no team has played there for several years:

Taxpayers spent more than $18 million to build the stadium that would eventually be named Campbell’s Field, as part of a minor league ballpark-building frenzy across New Jersey that saw similar stadiums erected in Newark, Atlantic City, and Somerset—all part of redevelopment schemes that attracted independent minor league teams (that is, minor league teams not affiliated with the Major League Baseball farm system)…

The sad saga of the Camden Riversharks—the Atlantic League team for whom the stadium was built prior to the 2001 season—will come to an official end more than three years after the team picked up and moved to New Britain, Connecticut, leaving Campbell’s Field vacant. The city tried to attract a new team, but after those efforts failed, the Camden County Improvement Authority signed off on a plan to demolish the stadium, according to NJ.com. The Riversharks and Campbell’s Field were supposed to revitalize the impoverished city by being the centerpiece of an economic development plan along the edge of the Delaware River. Now, the demolition of the stadium is the first step in a new $15 million economic development scheme that will turn the site into a complex of athletic fields for Rutgers University’s Camden campus, NJ.com reports…

In the team’s final two seasons, the Riversharks averaged about 3,000 fans per game—which is actually not bad by the standards of independent minor league baseball—but the team never turned a profit and abruptly skipped town in 2015 when negotiations on a new lease stalled.

By then, the ballpark was so deep in debt that it faced foreclosure because the team had missed several lease payments. To bail it out, Camden paid off $3.5 million in outstanding debt and purchased the property. The city planned to impose a new ticket surcharge to cover those costs, but the city only received one payment from the team before it moved away, NJ.com reported last year.

This is a consistent story with sports stadiums: they primarily benefit the teams and their owners, not communities. Local officials and politicians want to be the ones who can say they helped keep a sports team in town or they attracted a new franchise but using public dollars for this effort is not a good investment in the long run.

While the story is not quite the same with tax breaks for corporations, there are some parallels. Communities often want to jumpstart economic development. New businesses, particularly headquarters or large office buildings, as well as stadiums can appear to be good ways to do this. They bring jobs, something every local leader supports. They bring increased status for a community, a less quantifiable feature but still important as communities jockey to attract additional firms and residents. Thus, communities are willing to offer tax breaks in a variety of ways – sometimes to help construct infrastructure, sometimes provided per job created, sometimes to construct the stadium – to beat out other communities. The question of whether the community benefits in tangible ways in the years to come is not often raised.

A related earlier post: championships won by sports teams do not necessarily lead to better outcomes in cities.

No, the Milwaukee Bucks’ new arena will not solve residential segregation in Milwaukee

The CEO of the Milwaukee Bucks says their new arena may or may not help the city:

Perhaps no NBA city is in greater need of a melting-pot meeting point than Milwaukee…

Feigin told the Wisconsin State Journal in 2016 that Milwaukee was “the most segregated, racist place I’ve ever experienced.” While he didn’t want to revisit those comments this week, Feigin said the new arena could help transform the city’s downtown.

“I don’t think this (arena) is a solution for racial harmony,” he said. “But Milwaukee doesn’t have a centralized meeting place. There are no parks in the middle of the city. By building this plaza, you’ve kind of orchestrated a meeting place.

“There are certainly obstacles and certainly a long way to go, but our message is this is a wonderful city. We are an organization that will speak out about injustice, and we are also an organization that is focused on how we can solve problems.”

It sounds like the Bucks CEO hopes the stadium becomes a cosmopolitan canopy site where people of different backgrounds can gather together and find common ground around the city’s basketball team. I am generally skeptical of claims that sports teams can help revive cities or heal cities. See this earlier post about whether the Cleveland Cavaliers winning an NBA championship would revive the fortunes of Cleveland. For an arena, will a few hours of watching basketball help fans truly cross race and class boundaries? A general civic pride might develop but I would guess many sports fans can compartmentalize their love for a winning team and their relationships, abstract or otherwise, with the other.

Las Vegas willing to pay record public subsidy to have NFL

How much power does the NFL have? Enough to have major cities commit incredible sums of public monies:

Las Vegas appears poised to claim the mantle of World’s Most Expensive Stadium from East Rutherford, New Jersey, where the Jets and Giants play in the $1.6 billion MetLife Stadium. (Los Angeles Stadium, Stan Kroenke’s project that will host the Rams and Chargers, is estimated at $2.6 billion—but that cost includes parts of the surrounding entertainment district.*)

Clark County taxpayers will contribute $750 million to the new arena, a record for a sports facility—about $354 per resident, taken from an increased tax on hotel rooms. That tax currently pays for schools and transportation, in addition to tourism-related expenditures.

Stanford economist Roger Noll said it was the “worst deal for a city” he had ever seen…

The state’s figures to justify that new tax are… ambitious. Its forecasts suggest 450,000 new visitors every year drawn by the 65,000-seat stadium, spending an average of 3.2 nights per visit. About a third of tickets are supposed to be purchased by tourists, although no other city manages 10 percent. Why half a million people would fly across the country to watch a team that no one wants to pay $20 to see in Oakland is not clear.

Even with the studies that show stadiums don’t contribute anything to cities, it seems that someone is always willing to pay. In this case, it wasn’t just Las Vegas: Oakland tried to put together a last-minute deal that they claimed would require even less of the team:

Schaaf told ESPN Friday she believes Oakland’s new stadium plan is viable.

“At the end of the day, this is the decision of the Raiders and the NFL,” Schaaf said. “What I am confident about is, if the Raiders want to stay in Oakland, we have a viable plan to build them a stadium with no upfront money from them, in financial terms that I believe are more favorable to them than the terms in Las Vegas — what we know of them.”

I’m still waiting for a city mayor or other big-name official to publicly bid a major sports franchise good riddance when they ask for a lot of local money. Perhaps that would be bad form – local officials are usually in the business of trying to attract everyone they can – but it could also send a strong signal about how private interests cannot overrule the long-term public interest.

A new MLS team will “lift a community and drive a civic renaissance”?

I’m a little skeptical of the claim that adding a Major League Soccer team will have a tremendous impact on a city:

Here’s what Detroit Pistons owner Tom Gores and Cleveland Cavaliers owner Dan Gilbert said in their joint announcement that they had partnered up to bring an MLS franchise to Detroit:

“Detroit is rising and we know firsthand the power of sports to lift a community and drive a civic renaissance. We are very excited about the prospect of bringing Major League Soccer to Detroit and building an ownership group that represents a cross-section of investors.”

You could swap out “Detroit” in that paragraph for any number of cities and it wouldn’t seem out of place. Sacramento, St. Louis, and the other cities vying to get in on the next wave of MLS expansion have all used the language of revival and civic pride when announcing their MLS intentions. This tracks with MLS’ twin desires to get teams and downtown stadiums into midtier cities throughout the nation and attract a younger, hipper crowd to full those seats.

The article is more interested in whether having so many teams is good for MLS but I would want evidence for the other part of the claim: how do we know that sports “lift a community and drive a civic renaissance”? Do cities without major sports franchises have less civic pride because of it or miss out because have this kind of economic engine?

Remember: academics have consistently found that it is sports team owners who benefit the most from stadium deals as residents will spend their entertainment dollars elsewhere if there are not sports teams to support. Additionally, bigger thriving cities tend to lead to sports teams, not the other way around. Yet, this sort of language is common among sports owners as they try to demonstrate a broader value beyond entertainment. And recent plans for new stadiums – such as the proposed NFL stadium in Los Angeles – are partly about the sports venue and also about a package of commercial and residential space that will in use throughout the year.

Finally, if a soccer team is considered the means by which to turnaround Detroit, it is likely going to take a lot more than that…

Santa Clara: from small city to Super Bowl host

How did Santa Clara come to be the home to Super Bowl 50? It involved particular decisions made from the 1970s on by local leaders about zoning and land use:

Newly elected mayor Gary Gillmor and city manager Don Von Raesfeld were determined to keep Santa Clara comprised of specific sections — with residential property assigned a large but non-elastic section.

This meant buying undeveloped land in the north and east parts of the city for business and industrial purposes and building a robust tax base. McClain doesn’t recall much about the vacant land other than a dairy where families bought their milk if it wasn’t delivered.

The city already had three major highways and expressways that funneled into the undeveloped area, where high-tech companies such as Intel, Applied Materials, McAfee and National Semiconductor gradually started and became a large part of what is now Silicon Valley.

Gillmor, 79, cited three factors that helped Santa Clara maintain its preferred blueprint: a strong middle class, a huge industrial base for tax purposes and its own municipal power plant that reduces residents’ electric bills to about half of what is charged in neighboring cities…

A convention center and another large chain hotel were built in 1986, but the city’s fondness for the 49ers surfaced during the height of the team’s dominance.

The 49ers were given a sweetheart deal to move their training facility from Redwood City — 18 miles north of Santa Clara. Then-mayor Eddie Souza enticed then-49ers owner Eddie DeBartolo Jr. with a deal that gave the team 12 acres at $1,000 an acre with a 4 percent annual increase for 55 years, according to the San Francisco Chronicle.

Today, Santa Clara is a wealthy place as a city with over 122,000 residents: the median household income is $93,840, 53.9% of adults over 25 years old have a bachelor’s degree or more education, and Intel, Texas Instruments, and other semiconductor firms have thousands of jobs in the city. But, this sort of growth doesn’t just happen. Decisions made by civic and business leaders – operating as a growth machine trying to boost profits – often help execute a particular vision of growth. As suggested above, it sounds like land in the city was intentionally set aside for business use and the city was able to attract a number of companies. Not everything can be controlled by civic leaders but they can set themselves up to take advantage of particular opportunities.

On the other hand, having a football stadium is not necessarily a win for a city. This is particularly the case if local tax dollars are used for the stadium. The stadium might be a status symbol – note that the San Francisco 49ers now do not play close to San Francisco – but they often bring other issues.

Soldier Field, home to religious events, Chicago Fire remembrances, and first cell phone call

Soldier Field has a long history beyond hosting the Chicago Bears:

The first football game hosted in the stadium was, indeed, a football game. Notre Dame faced off against Northwestern in November of 1924 (ND won 12 to 6) but before that, on October 9, a “Chicago Day” event was held to mark the anniversary of the Great Chicago Fire of 1871.

The event featured a formal dedication and official opening with a mock battle, a horse-riding exhibition from the U.S. 14th Cavalry, and a re-enactment of the fire complete with a cow kicking over Mrs. O’Leary’s lantern. Ten firemen who had actually fought the great fire used the city’s first pump engine against the mock blaze in which a replica O’Leary barn was burned down. Some variation of this event was held there until 1970…

But perhaps the largest event ever held at the field was the Marian Year tribute of the Roman Catholic Archdiocese of Chicago. It’s estimated that 180,000 attendees were inside the stadium itself while another 80,000 listened outside on loudspeakers…

In another landmark moment for Chicago synergy, on October 13, 1983, David D. Meilahn made the first-ever commercial cell phone call from the field on a Motorola DynaTAC, a major turning point in communications history. The Chicago-based handset and radio equipment manufacturer was proud to show off its new technology on home turf.

While this has clearly been a sports stadium for nearly a century, it is interesting to note the wide-ranging events that have been held on site. In many ways, this has operated as a public space where the city could come together to celebrate its past, ethnic and religious groups could hold ceremonies, and new sights could be seen. Do we have such spaces today? Most stadiums are tools of corporate power where team owners, often benefiting from public funds in the construction of the stadium, make money. Perhaps it could be argued that they serve the community in that sports can often be a large part of local culture. Yet, it is hard to imagine having large-scale stadiums today that host a wide variety of events and that tens of thousands of local residents would regularly show up to see what was happening.

Asking $9.8 million for one small home near Wrigley Field

The property near Wrigley Field is getting quite valuable – at least according to the asking price:

In the world of real estate, location means everything. But does a property around the corner from Wrigley Field command $9.8 million? The sellers of 3710 N Kenmore Ave. realize that there is much more to the property than the two-story frame house that sits on it. The property has some potential to earn a few bucks and the listing agent is suggesting that investors consider erecting rooftop advertising (specifically a digital billboard) on the site. The Ricketts family have famously scooped up several of the surrounding rooftop properties, but this property is billing itself as one of the few that is not under the control of the Cubs organization. Broker Amy Duong of Jameson Sotheby’s Intl Realty tells us that the seller has been paying attention to sales in the neighborhood, notably the McDonald’s parking lot that the Ricketts family paid $20 million for. Duong also tells us that there’s no mistake in the price in the listing and the seller is fine with sitting on the house until a reasonable offer comes forth.

Perhaps the asking price was influenced by the success of the team this past season. More wins and young talent mean that property values may go up even more. In contrast, look at the land near U.S. Cellular Field on Chicago’s South Side. While that land is not easily converted to party/retail/restaurant space like the properties near Wrigley, imagine if the team was good for a number of years. Wouldn’t businesses and residents want to be part of the scene?

I’m guessing the property won’t sell soon for anywhere near this initial price but why not ask for the moon while the team is winning and the owners are spending money on property and renovations?