D.C. United stadium’s public cost would be double the MLS average

More from D.C. Fiscal Policy Institute on the D.C. United soccer stadium plan: This week’s topic is Why would Washington be paying so much more toward a stadium than other cities have?

The public subsidies for 12 soccer stadiums across the nation have varied dramatically — from as little as $7 million in Kansas City to $247 million in Newark, NJ.  But in most cases the public financing has fallen well below what the District offered earlier this summer.

Four of the stadiums received under $50 million in public funds.

The typical subsidy among the 12 cities is $77 million — or just half of what Mayor Gray proposes.

The numbers are all from Judith Grant Long’s data, and checking my copy of her book, I see that they’re adjusted for hidden lease subsidies — meaning that the D.C. deal will look even worse if the District has to kick in more for that profit guarantee.

The proposed D.C. stadium is also way more expensive than most other MLS facilities — in fact, at $290 million, it would be the most expensive soccer-only stadium in U.S. history. But unless building pricier digs somehow increases the spending power of D.C. United’s fans, DCFPI is right in noting, “There is little explanation as to why the District would offer so much.” Mayor Gray, your answer as to why the city should put up all this money for a stadium instead of housing or schools?

“Let me make one thing clear… this is not to the exclusion of those investments.”

Got that? According to its mayor, the District of Columbia doesn’t need any more money for housing or schools. Or maybe D.C. has figured out a way to spend the same money twice, without, you know, getting arrested? Either way, everybody please form an orderly line for your share.


16 comments on “D.C. United stadium’s public cost would be double the MLS average

  1. “There is little explanation as to why the District would offer so much.”

    From what the Mayor leaked at a speech at a local SE brewery a week ago, apparently the United threatened to move to Baltimore or other cities on several occasions unless the DC gave them reasons not to. So, the mayor made it sound like he’s giving them whatever they want just so they won’t leave the district.

  2. I don’t think it’s any secret that United was threatening to move – it’s what team owners do, after all. Their stadium talks with Baltimore had gone pretty much nowhere over the last four years, though, so for Gray to bid $150 million plus profit guarantees is a pretty crazy high counteroffer.

  3. I understand that this blog is rooted in the idea that there should never be public funding of any sort for stadiums, but it would be nice if you would at least try to appear even-handed when presenting your “facts,” and we could do without the snarky tone, too (“everybody please form an orderly line for your share”).

    (1) The biggest reason, by far, for the high cost of the stadium for DC United is the VERY high cost of real estate in DC. There is no comparison between DC and Salt Lake City, Kansas City, Montreal, or Houston. Portland already had a location with the minor league baseball stadium.

    (2) While the city’s contribution toward the stadium may be valued at up to $150 million, the amount coming from the treasury will be NOWHERE NEAR THAT…and you know it (or you should, if you read the details of the land swap proposal). Unlike the Nationals stadium there will be no new taxes or a bond issued.

    (3) The city had a $140 million surplus in 2012. If schools or housing assistance is underfunded now or will be in the future it will certainly not be because of the city providing some support to keep DC United in the District.

    I am a longtime resident/homeowner/taxpayer in DC. I care about our schools and city services. I have lived for 15 years in the neighborhood where the Reeves Center is (the building and land that would be swapped for part of the stadium location). This could be a very good thing for our neighborhood, and it won’t happen (at least any time soon) without this deal.

    An independent valuation will be made of both properties will be made and the developer who owns the biggest parcel of land where the stadium will go will have to make up the difference in cash or other property to the city (the Reeves Center is a big parcel in a part of the city where the real estate market is on fire). The city could actually add money to the treasury with this — at least before they build the new Reeves Center in Southeast (but that will bring jobs and huge economic benefits to that part of the city).

    Your presentation of the situation is totally and predictably one-sided.

  4. 1) Sure, but that doesn’t make a stadium more valuable to D.C. than it does to Portland.

    2) Not from the treasury, no, but selling land and giving the proceeds to United is still a gift. And an opportunity cost – as DCFPI has noted previously, there’s nothing stopping D.C. from selling the Reeves Center and then using the money for something else.

    3) Budget surpluses != fully funded programs. I mean, they do sometimes, but it’s a bit like assuming that because your bank balance is going up, you’re eating healthy.

    The Buzzard Point site doesn’t seem like a bad one for a soccer stadium (at least aside from the question of how people are going to get there), and swapping land around isn’t a bad idea in a vacuum. But the deal would work just as well with, say, D.C. United putting in half the cost of buying the land, or dispensing with the bizarro profit guarantee, either of which would get the District’s cost down closer to that of a more typical MLS stadium. (Not that all those have worked out that well for cities, either…) That Gray hasn’t asked them to do that indicates to me that he’s bidding against himself, which is never a good position to be in.

  5. Kevin: You’re going after Neil for one-sidedness, but you’re in favor of this deal because subsidizing a sports team with public dollars will improve your neighborhood? That doesn’t sound very objective either.

  6. Neil wrote:
    “I don’t think it’s any secret that United was threatening to move – it’s what team owners do, after all. Their stadium talks with Baltimore had gone pretty much nowhere over the last four years, though, so for Gray to bid $150 million plus profit guarantees is a pretty crazy high counteroffer.”

    Actually quite the opposite. The state of Maryland paid for a study for DC united in getting them a stadium at Westport in Baltimore. They even went as far as coming up with the actual stadium plans so the state could see if that will work in the footprint there. As part of that deal, DC United agreed to pay back the money for the study if they choose not to go that route. The state would of owned the stadium like the M&T Bank Stadium and Camden Yards in Baltimore. In the end, DC United decided not to relocated as talks started to heat up with the District.

  7. One of the buildings involved in the land swap is the Henry J. Daly Building which is in bad shape and in such disrepair, that it would require every office to move out to renovate it and fix it up. http://www.washingtoncitypaper.com/blogs/housingcomplex/2013/08/07/swap-and-go/ is the source where I got that info from and is a pretty fair article on the land swap.

    Also, could you provide me sources for how you got the numbers for “public subsidies” for other cities that built soccer stadiums. I did some quick research on Kansas City and that number appears to be way off. I’m actually seeing 147M for Kansas City but don’t have time to fully check the sources out on the internet for this. You should have already checked this info though before writing about this so it shouldn’t be a problem providing the sources.

  8. As the original item says, “The numbers are all from Judith Grant Long’s data.” If you like I can ask her permission to scan the relevant page in her book, but it’s mostly going to look like what DCFPI posted. The numbers are higher because she includes things like land costs and property tax breaks that many newspaper reports don’t. (Her chart has a column for straight capital expenses, too, though.)

  9. Sorry, missed the link above that you provided. The one article I saw on Kansas City is they used bonds to help pay for it but it sounded complicated like all things are. I’ll take a look at the site you provided.

  10. To Neil’s last comment… if you have any interest in stadium subsidies beyond what you might get off this blog (or you want numbers like those in question here all in one place for every sport, city and stadium), that Judith Grant Long book is fantastic. Well, it’s actually a painfully dry read. But the data is great. Yes, it is priced north of $100. No, I don’t fault anyone for balking at that.

  11. Judith has promised that her next book is going to be way, way more readable. But as reference material, yeah, The One With The Really Long Name is invaluable.

  12. Kevin,

    I don’t think this blog is against “any” public stadium subsidy. However, many people who follow this issue would be happy just to see honest reporting of costs and benefits on this issue, which certainly does not happen in the Washington Post.

    I find it interesting that, according to published reporting, the development generation capacity of the baseball stadium is so weak that it doesn’t even reach a mile from the ballpark. Most ‘reporting’ of this issue states how this ballpark has been a “catalyst” of development in the hottest real estate market in America, yet within view of the stadium the effects are dismal. How is a stadium used–lets be generous–50 times a year going to change that, particularly without a Metro station. People don’t even like walking to FedEx the same distance.

    Based on my own personal family experience with DC schools, there’s enough deferred maintenance in those buildings to take up a couple soccer stadiums.

    Exactly what evidence do you have that a soccer stadium “helps” neighborhoods? KC? Chester? Foxborough? Harrison, NJ? Chicago? Seems like the public policy thinking on this issue drifts towards the wishful because of the emotion of sports. Maybe our city’s financial status (long term) would be better with a focus on business activities that take place every day, and not just once every other week in the summer.

  13. I guess all those poor blacks who have jobs at the Nationals stadium are illusory gains, right? This article blows. Move aside while the big boys get the ball rolling.

    • It looks like according to the Nationals’ own figures, the stadium “created” 360 full-time equivalent jobs. (“Created” in scare quotes because I’m not clear on whether this was a net gain, or total FTE jobs including those shifted over from RFK.) With D.C. spending $585 million on the stadium, that’s $1.6 million in public cost for each job created — one of the worst ratios in economic development history.

      In short, it would have been damn hard to spend $585 million on *anything* in D.C. without creating well over 360 full-time equivalent jobs, but Nationals Park managed to pull it off. Damn fine work, big boys!

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