No, Nationals Park is not an exception to the rule that stadiums don’t do squat for local economies

On Wednesday afternoon, WNYC-FM’s Leonard Lopate Show tackled the topic of “Why Cities Fund Professional Sports Stadiums,” a subject of more than passing interest around here. Guests were investigative tax reporter (and my editor on the inequality anthology Divided, still available from finer internet trading conglomerates near you) David Cay Johnston and Grantland staff editor Andrew Sharp, who wrote a long article last month calling on Congress to address stadium subsidies because local officials afraid of losing their teams sure won’t. (Or mostly won’t, anyway.)

Now, one of the problems of talk radio (okay, talk anything) is that hosts feel obligated to pit guests against each other, so here Sharp ended up cast as the pro-stadium side, or at least Mr. Glass Half Full. After Johnston led off by outlining the billions of dollars in public cash that goes to stadiums as “just a drop in a very large bucket” of ways that the public end up subsidizing billionaires, Lopate turned to Sharp for any silver lining, and got this response:

“One of the reasons that cities sell themselves on these investments is that every now and then, particularly when you invest in a stadium in an urban area, it can help stimulate growth around that area, and it can turn into a win-win situation where the owners obviously get their subsidies, but then also the surrounding businesses around those stadiums can prove pretty beneficial to the city at large.”

As an example of one of these wins, Sharp cited the new Washington Nationals stadium, which he said “helped revitalize the whole waterfront area” — though he immediately added that there are far more examples of failures than successes.

I got dragged into this last night when someone asked about it on Twitter, which led to me questioning why anyone would consider the Nats stadium an economic success, and eventually to one of those Twitter conversations where nobody is quite arguing about the same thing and everyone just feels icky and misunderstood. So let me try presenting my side here, in a bit more detail.

First off, as Johnston immediately noted on the air, sports venues are “human surge tanks” — crowds sweep in and sweep out on game days, but most of the year the place is dark, which isn’t a great anchor for neighborhood development. Sharp countered that there are now more bars and restaurants around the stadium, and “you can’t deny that now and then these things work.”

There are a few problems here. First off, you can absolutely deny that now and then these things work, especially given that economic study after study has found no measurable economic benefit for cities that build new stadium, or get new teams, or get teams back in action after strikes and lockouts. If there really are outliers that are win-wins, they’re awfully well-hidden in the data.

Secondly, have you been to D.C. lately? You can’t go anywhere without seeing construction cranes — it’s one of the hottest real estate markets in the U.S., and that’s true of virtually every neighborhood, with or without a stadium in it. It’s impossible to say what would have happened to the Navy Yard area if the Nats were still playing at RFK Stadium (or in Montreal, for that matter) — and even if that area wouldn’t have been developed to the same degree, might developers and residents and restaurateurs have gone elsewhere in the city instead? It’s a huge “but-for” problem, albeit one that stadium boosters love to overlook, especially when they just built a stadium in a neighborhood that was already starting to take off.

But fine: Let’s grant that the arrival of Nats Park at least prompted a handful of sports bars and the like to locate in the immediate neighborhood. (I wouldn’t dispute that.) The question here is whether the stadium project is “beneficial to the city at large,” and you can’t determine that without taking into account the price tag. As I’ve noted many times before, there’s a price point where subsidizing stadiums makes sense: In most cases I’d be fine with spending $1 in public money towards a new sports venue, and even the $20 million or so that San Francisco put up for the Giants‘ stadium is arguably reasonable, even if the SoMa neighborhood was already going gangbusters before Pac Bell Park was built.

Nationals Park, though, cost D.C. taxpayers something on the order of $600 million. That’s a crazy-high figure to justify with a few sports bars, but on Twitter at least, Sharp said that the cost isn’t the point:

I think I get Sharp’s point: We shouldn’t criticize spending $600 million on a stadium just because there are even better investments a city could be making with the money. But that’s not what I was saying at all — rather, the point is that since doing just about anything with $600 million, including sitting on it or throwing it from a helicopter, would be better for the local economy, handing it over to the owners of the Nationals for a new stadium is a massive waste of taxpayer funds.

Let’s start with the simplest example: What if D.C. simply hadn’t collected the money in the first place? About two-thirds of the money came from a tax on large D.C. businesses, and while I’m not about to start defending them as efficient economic engines, they would have done something else with that cash, whether it was hiring more entry-level staff, giving more perks to corporate bigwigs, or (hahaha) cutting prices for local consumers. Sure, probably only a small share of it would have been spent in D.C. — but it’s still a non-zero cost to the local economy. And if that cost is more than the benefit of those handful of sports bars, suddenly the Nats stadium is a net loss for D.C.

The other third (roughly) of the public cost, meanwhile, came from kicking back sales taxes on money spent at the ballpark — not a sales-tax surcharge, mind you, but refunding to the Nats sales taxes that otherwise would have gone to the district. So if the Nats had been playing at RFK, this would have been money that would have gone into the public treasury — and if the Nats had never come to town, at least some of those sales taxes would have been collected when locals spent at other entertainment options in D.C. Again, it’s not 100% — but you can make an excellent case that even doing nothing would have been more economically beneficial to the D.C. economy than building a baseball stadium.

What we’re left with as a pro-Nationals Park argument, then, is that if a city is going to blow a few hundred million dollars on something, at least putting it in a promising neighborhood downtown might shift a little bit of development to that locale. That’s certainly true — Tim Chapin at Florida State has done some good work in this area — but using it as an argument that some stadiums are good public investments is like saying, “Sure, the Pentagon budget may be bloated beyond belief, but aren’t these some cool hammers?”

I don’t want to get on Sharp’s case too much — he was asked to present a counterexample of a stadium deal that’s worked out better, and he threw out one that seems to have been a relative success, at least on a “look around and see if the surrounding streets are blowing with tumbleweeds” basis. But that’s the problem: Just looking at what is there misses what would have been there — and elsewhere in the city — if the project hadn’t been done. Pointing to a full sports bar is easy; pointing to the bar across town that closed, or was never built, because public or consumer spending was diverted away from there is hard without a time machine. And stay away from those things, man, they’re dangerous.

Palm Beach County gives Astros, Nats $135m for spring-training complex, says now go find a place to build it

The city of West Palm Beach may have voted to take the land that the Houston Astros and Washington Nationals wanted for a spring-training site and hand it over to developers who are actually willing to pay for it, but that’s not stopping the Palm Beach County Commission, which voted yesterday to give the two teams $135 million in hotel tax money to build a new stadium complex … somewhere.

The new $135 million proposal to build another stadium calls for the county to pay for about half of the costs, with the Astros, Nationals and the state paying for the rest.

The latest version of the deal trims $5 million from construction costs in a prior proposal. But the deal would also leave the county responsible for about $17 million more in public money than once envisioned.

The hotel tax is already being used to pay off the county convention center, support local arts programs, and other ways of promoting tourism, but hey, maybe hotel tax receipts will rise by $135 million if these stadiums are built, right? And if not, they can always raise the hotel tax. Because surely that won’t do anything to cause tourists to choose to stay in a different county.

In any event, the Astros and Nationals owners now just have to drive around Florida looking for a place to spend their $135 million, which they’re promising to do within the next couple of weeks. It’s a tough life, running a pro sports franchise.

West Palm votes to pursue alternate plan for Astros, Nats spring site, and what’s up with that graphic?

The West Palm Beach city commission voted Tuesday to pursue the other offer for land that the Houston Astros and Washington Nationals want for a spring training site, since that proposal wouldn’t require piles of public subsidies, and … you know what, while this is all very interesting, I’m more concerned with what’s going on with the image illustrating the South Florida Sun-Sentinel article on this:

Seriously, what exactly happened here? Did graphics staffer Cindy Jones-Hulfachor supply two alternate images, one with a bluish stadium site and the other in straight greyscale, and then the web production staff mistakenly used both? If so, why are both images cut off at the outside edges? It’s been a day and a half since this went up — isn’t anyone paying attention at the Sun-Sentinel to what’s actually on their site?

Anyway, Nats and Astros still want stadium subsidies, West Palm Beach is still saying no, blah blah blah. That graphic sure is strange, though.

Palm Beach gets better offer for stadium site, newspaper makes sad face

One of the complaints that I and other subsidy critics like to levy at stadium plans is that localities seldom examine the but-for: What else could be done with the land, money, and political time and energy that might be more productive than a sports facility? Fortunately for Palm Beach County, Florida, a developer has just done this for its plan to build new spring training facilities for the Washington Nationals and Houston Astros, offering to pay the city of West Palm Beach $14 million for its land and not demand tens of millions of dollars in subsidies like the stadium project would.

This, according to the South Florida Sun-Sentinel, is a terrible roadblock:

New obstacles surface for county baseball stadium proposal

(Okay, the Sun-Sentinel is also reporting on county officials raising concerns about the cost of the spring training plan, which could reasonably be seen as an obstacle. Still, it’s a bit odd that the headline writer didn’t go with something a bit less “Oh, noes!” in the headline, like, say, “County officials wonder if there might be a better deal than baseball.”)

Astros, Nats: We’ll pay rent on Palm Beach spring training site if we get it right back in hotel tax kickbacks

Palm Beach County is still trying to build a new $140 million spring-training complex to lure the Houston Astros and Washington Nationals, with the slight holdup that the county doesn’t actually have $140 million. So the teams have proposed a solution: They’ll pay $2.1 million a year rent (combined), if the county agrees to give them $3 million a year in hotel taxes, rising by 3.5% a year for 30 years wait what? How does that help?

The Palm Beach Post, which apparently first reported this, is behind a paywall, and the subsequent reports in the Houston Chronicle and Washington Post aren’t helping much. (The Chronicle says that $2.1 million a year would pay off $56 million in bonds, which it wouldn’t, and the Post links to a month-old Palm Beach Post article about something else, which is also behind the paywall anyway.) The two teams are making a formal presentation to the Palm Beach County Tourist Development Council on Thursday; hopefully we’ll get some actual information then.


Palm Beach County trying to get all the spring training teams

Looks like the Washington Nationals finally found someone interested in throwing money at them for a new spring-training stadium, even if it’s only theoretical money at this point:

Palm Beach County is willing to play ball with two Major League Baseball teams trying to get a new spring training stadium, but public cost and tax hurdles could get in the way.

The County Commission Tuesday gave its endorsement to trying to craft a deal with the Houston Astros and Washington Nationals that could include building a $100 million stadium and training facility that would host both teams for spring training.

Palm Beach County already has a spring training stadium — Roger Dean Stadium in Jupiter, which tragically does not look like this — which is home to the Miami Marlins and St. Louis Cardinals, but county officials are hoping that adding a second stadium and two more teams will “keep baseball spring training here in Florida,” according to County Mayor Priscilla Taylor. Because, I guess, they’re trying to build a critical mass of teams so that they don’t all move to Arizona, is the theory?

Anyway, the county commission doesn’t know where a stadium would go (there are reportedly ten sites under consideration) or how that $100 million would be paid for (the state has offered $50 million in funding over 37 years, which would only pay for a small sliver of the cost). The county could kick in some hotel tax money, and … yeah, that’s about as far as they’ve got. “There are still a lot of unknowns,” county commissioner Paulette Burdick told the South Florida Sun-Sentinel. Tell me about it.

Nats’ spring training plans hit “roadblocks,” aka “nobody will open their damn wallets”

There’s a long post on today’s Washington Post site about the poor Washington Nationals, whose plans for having Osceola County spend $98 million on building them a new spring-training facility in Kissimmee fell apart last summer over Osceola County not wanting to give them $98 million, and who ever since have been striking out at finding someone else to throw money at them:

Deals for a more ideal location, empty City of Palms Park in Fort Myers, have now fallen apart twice, including a recent proposal that involved a private developer who county officials thought would help make the project possible…

The Fort Myers site re-emerged as an option in August when a private development company, Rockford Construction, joined talks at officials’ requests. County officials hoped that a public-private partnership as part of a mixed-use project that featured the stadium as a centerpiece could be the solution to their financial concerns. But the project hit a major snag last week when officials told Rockford that they didn’t find the developer’s funding proposal feasible.

According to a Jan. 29 letter from Fort Myers City Manager William Mitchell to Paul Roberts, a principal at Rockford, the developer proposed that the city essentially finance the entire cost of the $45 million in refurbishments. By adding that to the existing debt, the city’s total debt on the project would be between $53 million and $56 million, according to the letter.

Now, writes the Post, the Nationals have “few known options.” Aside from, hmm, let’s see, staying at their existing spring training site that’s only 21 years old, or, if being a long bus ride from other teams’ facilities is such a huge deal-breaker, maybe building a new spring training site with some of their own money. But those aren’t “solutions” in the mind of team execs, so far be it from the Post to mention them, either.

Nats owner asked D.C. to add $300m roof to 5-year-old stadium STOP LAUGHING WHY ARE YOU LAUGHING?

Washington, D.C. Mayor Vincent Gray revealed yesterday that — excuse me, what?

Mayor Vincent C. Gray said Tuesday that Washington Nationals owner Theodore N. Lerner pitched him earlier this year on a pricey plan to have the city build a retractable roof over Nationals Park — a proposal, Gray said, that he swiftly but politely rejected.

(Hang on, I’m going to need a minute here.)

Okay, so: This news first broke when WNEW-FM (hey, that used to be our station ID!), which learned from multiple sources that “team executives have approached several District officials, including some inside mayor Vincent Gray’s office,” to propose a $300 million roof atop the five-year-old stadium, which cost $667 million to build, almost all of it from city tax money. Gray later confirmed the report, saying he had a 15-minute meeting with the Nats owner in July at which “what Lerner wanted to talk about was the possibility of a roof on Nationals Park. That was it. There was no discussion about how much it was going to cost and no further details. I’ve had no further discussions.” Another city official, this one unnamed, told the Washington Post: “The mayor was polite but unequivocal. We are not going to spend taxpayer money to put a roof on the stadium, regardless of the cost.”

So we’ve established that whatever else you want to say about Mayor Gray’s sports stadium dreams — not only is he proposing one of the largest soccer-stadium subsidies ever for D.C. United, but he recently approved $50 million in tax-increment financing funds for the Wizards‘ Verizon Center to buy a new scoreboard and other goodies — he’s not totally crazy. Which raises the other obvious question: Is Lerner?

It’s not totally unheard of to add a roof (retractable, presumably, since for $300 million you damn well better get a roof that moves) to a stadium that wasn’t designed for one in the first place: There’s the U.S. Open tennis center’s planned roof, and the one at Wimbledon, and … okay, there’s not a lot else, and certainly no examples from baseball. Roofs, especially retractable ones, require a ton of support structure, which means giant pylons around the stadium, and Nationals Park doesn’t exactly have a lot of free space around it. Supposedly Lerner went as far as having renderings drawn up, which he showed to Gray, but which haven’t publicly surfaced yet.

And then there’s the bigger question: Why the hell do the Nationals need a roof, anyway? Washington isn’t especially rainy as cities go, and though the Nats have shown a strange obsession with not wanting to have to give rain checks for games lost to weather, the amount of revenue at stake has to be piddling. So why spend $300 million to solve a problem that really isn’t?

The answer, I suppose, could be that Lerner wasn’t looking to spend his money. Why he thought Gray would go for building a roof with city money is anyone’s guess, though. Maybe this was just an opening gambit so that later when he says, “Okay, we’ll just take one of those $50 million scoreboard plans like you gave the Wizards,” he’ll sound more reasonable by comparison? Given that right now Jeffrey Loria sounds more reasonable than Lerner, that might be the best bet — call it baseball’s madman theory.

Area Americans disagree on what sports facilities do for (or to) cities that build them

Moyers and Company has a bunch of stadium-related stuff up on its website, including a repost of its 2008 segment on the funding of the New York Yankees‘ new stadium, plus a collection of essays by local community activists and stadium experts on what new sports facilities have done for their cities. (Disclosure: I helped suggest a couple of the essayists.) Among the highlights:

“I invite you to take a walk around the neighborhood and see for yourself if that has happened. Businesses have closed and the remaining ones are hurting as the Yankee organization has moved many of the services inside the stadium.” —Joyce Hogi, Bronx community activist

“Forbes Magazine consistently lists Stockton as the most miserable city in the nation. For those who love Stockton, the arena is a great addition to the city; ‘I never thought Stockton could have something this nice,’ is a common refrain.” —Lori Gilbert, Stockton Record features writer

“When someone sits down with a beer and hot dog, virtually everything they see is owned by the District of Columbia. Yet all of the money earned from the stadium — tickets, concessions, advertising — goes to the team owner, Ted Lerner.” —Ed Lazere, D.C. Fiscal Policy Institute

“The stadium’s opening has been one of the greatest economic drivers for our city, providing thousands of jobs and an expanding sales tax revenue. If you combine this new revenue stream with the $500,000 expected annually from the Cowboys’ new naming rights deal with AT&T then Arlington is on pace to pay off the stadium ten years earlier than anticipated.” —Arlington Mayor Robert Cluck

Add it all up and, well, I’m not sure there’s any consensus, other than that stadiums are expensive, and that people like sports. But it does do a decent job of describing the elephant.

County rejects Nats spring stadium plan for Kissimmee

The Osceola County Commission voted last night on spending $98 million and providing free county land for a new spring training home in Kissimmee for the Washington Nationals — whose old home in Viera is, omigod, almost 20 years old, and can’t be replaced who struck out on getting a new one in Fort Myers because Lee County already owes $234 million for all the other spring-training stadiums it’s been building — and lo and behold, they voted it down, 4-1. Who in the state has the pull to outrank spring-training baseball, self-proclaimed savior of Florida tourism?

Leaders in Osceola’s tourism industry expressed concern that the deal would commit too much of the county’s tourist-tax money to allow adequate funding of Experience Kissimmee, the area’s convention and visitors bureau, and would preclude the county from pursuing any other tourist development projects.

Well, that’s interesting. So apparently local business leaders can recognize opportunity cost — the lost possibilities of doing something else with a sum of money — when the opportunity being cost is something they’re interested in. Or maybe after years of having to watch the Houston Astros play spring games in Kissimmee, local restaurateurs are tired of throwing money at an attraction that just makes people lose their appetite.