Sports teams can’t save a city, but if you squint hard enough you can pretend they can

You probably didn’t even know that Gary, Indiana spent $50 million in 2002 to build a sports stadium for an independent-league baseball team, theGary South Shore RailCats— I didn’t know, so I’d be stunned if you did. But now that you do, I bet you’re wondering, “Wait, are people really flocking to downtown Gary, Indiana just because there’s a minor-league baseball team in town?

Fortunately for you, the Times of Northwest Indiana has the answer, and it’s no, not so much:

Walking down Fifth Avenue, where the U.S. Steel Yard is located, it’s not hard to see how much remains to be done. The Steel City Buffet owned by the Gary Empowerment Zone across from the stadium is again in search of an operator. The barbecue joint in the same building is empty. A Bennigan’s restaurant was kicked out of the Steel Yard itself after shootings outside, rowdy nights inside and failure to pay rent…

And it’s hard not to notice the largest projects counted by the mayor as successes have all been heavily, and in some cases completely, subsidized by government. Stand-alone private investment is almost nil.

And:

“There is a lot of traffic out there,” said Christopher Maxfield, 42, owner of a small building with apartments and shop space just across from the stadium. “I just wish it would slow down a little and that some of them would stop here.”…

“The impact the stadium has had for me?” Key muses as business winds down for the day at Fresh Coast Coffee Co. “I’d say it’s more a psychological benefit.”

“It serves to mitigate a lot of the negative publicity the city of Gary has received,” Key goes on to say. “Now thousands of people have come into Gary on a summer evening and had good family fun.”

That’s all pretty typical of what one tends to hear from businesses around sports facilities — it’s nice to give people something to say about your downtown other than that it doesn’t have any doctors or dentists or Walgreens-style general stores, as is the case in Gary, but it’s really hard to catch the firehose of people swarming into games and back out three hours later to build, say, a restaurant clientele. But it’s nice to see a local newspaper interviewing actual business owners to see the impact or lack thereof of a sports facility, unlike … oh, say, Indianapolis Star columnist David Masciotra, who chimed in today with this Atlantic Cities piece about how stadium subsidies are working out at the other end of the state, in Indianapolis:

In the 1960s, visitors and all but the most loyal residents gave it the nickname “Nap Town.” The joke being that the only thing to do in Indianapolis is take a nap… Now, Indianapolis is still the host of the Indy 500, but it is also home to an NBA team, an NFL franchise, a minor baseball team, 200 restaurants, 300 retail shops, 28 museums and galleries, and 12 performing arts theaters. All of these entertainment venues and service businesses attract a growing market of Indiana visitors and out-of-state tourists…

The New York Times praised Indianapolis’ “thriving culture scene,” while the Los Angeles Times called the success of its revitalization project, “breathtaking.”

The unemployment rates in Indiana and Indianapolis are lower than the national average, and both the state and city have sizable budget surpluses.

The essay, which features zero quotes from anyone actually in Indianapolis, is already getting shredded by Atlantic Cities commenters, who have noted errors both small — the Colts moved to Indianapolis in 1984, not “the 1970s,” and the city hosted the Super Bowl in 2012, not 2006 — and large — that “sizable” city budget surplus is actually a $55 million deficit, and comes on the heels of years of painful budget cuts to close past budget gaps. Which weren’t entirely created by the hundreds of millions of dollars spent on new buildings for the Colts and Pacers, or by the tens of millions more that the city gave to the Pacers to keep playing in their brand-new arena, but it sure didn’t help.

To be fair, by the end of the article Masciotra does credit Indianapolis’s alleged renaissance — which, as one flabbergasted Indiana correspondent wrote to me, is sourced partly to an L.A. Times article from “19-friggen-86″ — to not putting all its eggs in the basket of sports, but rather to “cross-sector partnership” that helped spur new shops and “the second largest collection of urban monuments in the country.” (And also to lowering property and business taxes and privatizing services, which also haven’t actually worked out all that swimmingly.) But that just raises the question: If you still have to build public fountains and give tax breaks to downtown businesses in order to create development, can you really claim that it was sports that provided your magic beans?

Indianapolis tops off $715m Colts stadium subsidy by building new suites for 5-year-old stadium

What do you get for a team owner for whom you’ve already gotten everything? If it’s Indianapolis and Colts owner Jim Irsay, apparently the answer is $2 million worth of new luxury suites:

For leaders of the Capital Improvement Board, which runs the city’s sports venues and convention center, the city’s $2 million investment is worthwhile because it keeps the $720 million stadium, which opened in 2008, at a “top-notch level.”

Which is totally to the benefit of the city and not just the Colts, because, um. But the Colts are paying $700,000 for some new ad boards for themselves at the same time, so it’s a public-private partnership, right?

In the grand scheme of things, $2 million on top of the $715 million that the CIB already spent to build Lucas Oil Stadium isn’t really all that much. Still, coming on top of the $33 million in operating subsidies the CIB threw at the Pacers three years ago, Indianapolis just solidified its lead as national champion at throwing good sports dollars after bad.

Your morning great big ball of stadium stupid

I’ve never actually heard of Pacific Standard magazine — apparently until recently it was called Miller-McCune, which I’ve also never heard of — but if this infographic is what it has to offer, then I hope I never heard of it again. Ostensibly an explanation of how to “help a Los Angeles [NFL] stadium buck the trend” of stadium projects, you know, sucking for the cities that build them, it ends up combining the interactivity of a bad Flash game with the informativeness of a USA Today charticle. Among the things readers will learn from PS:

  • On the “best to worst subsidies” graph (most of which consists of a graphic that looks to have been lifted from one of these), it says that “Public financing accounted for 50 percent of the new Lucas Oil Stadium [in Indianapolis], offset by taxes on hotels, rental cars, restaurants, and sales of Colts license plates.” Um, no.
  • The “Making It Work” chart, once you’ve scrolled over little gratuitous circles to see what the chart actually says, suggests “folding in concessions and entertainment” uses for a sports facility, pointing to the “apartments and office space” of Brooklyn’s Barclays Center as an example. Exempt that none of the apartments have broken ground yet, and the office tower was scrapped four years ago.
  • There’s a map of the U.S. with little colored markers indicating how much public funding various stadiums have received, which would be cute, except that tons of buildings are left out (where’s the Seattle Seahawks‘ stadium, for one?) and that the figures are drawn from some wildly inaccurate source (Citi Field, for example, is listed as 19% publicly funded, which really, not.)

On the marginally less stupid front, meanwhile, let’s turn to Bill Parker of DRays Bay, who has penned an essay about the Tampa Bay Rays‘ stadium campaign that, like Pacific Standard’s infographic, starts by acknowledging that stadium deals are almost always terrible for the public before asking, gee, can we get one of them here?

I think that on some level, by now, virtually every governor, city council and county board of commissioners recognizes that it’s a bad deal. Yet, they continue to happen because there’s the fear that the team will bolt to another location, and no politician wants to be the one who was stuck in office when the team left town (which is a bad thing for real-world reasons, too; the teams do provide jobs, even if it’s a low number for their revenue brackets, and tend to have pretty active local charity arms). It’s in everyone’s collective interest to simply agree to stop doing these deals, but individual actors (cities, in this case) often have their own reasons to ignore the common good and do it anyway.

And so this keeps happening. But can it happen in Tampa or St. Pete?

Parker actually kind of punts on whether he’s rooting for it to happen there (he says as a Minnesotan, he loves the Twins’ new ballpark, but hates its public subsidies), but the upshot of the article remains the same: Stadium deals are almost always ripoffs, but never mind that, what are the odds of this one going through? Which neatly achieves the goal of stadium seekers: shift the terms of the debate from “Should we build a stadium?” to “How should we build a stadium?” Because everyone agrees that whatever it costs, the Rays totally neeeeeeeeeeeed a new stadium. (Quiet, you.)

New book by Harvard prof details $10b in hidden stadium and arena subsidies

Hallelujah! After years of waiting, Harvard stadium researcher Judith Grant Long’s book is finally out, and while I haven’t seen a copy yet, Bloomberg News has and provides some highlights of her findings:

  • The 121 sports facilities in use during 2010 cost taxpayers about $10 billion more than is commonly reported, thanks to hidden subsidies for things like land, infrastructure, operations, and lost property taxes.
  • Once hidden costs are taken into account, the average sports facility split is 78% public, 22% private.
  • The worst deals for the public include stadiums for the Indianapolis Colts, Cincinnati Bengals, and Milwaukee Brewers, each of which managed to rack up more in subsidies than the stadiums themselves cost to build. Best deals include venues for the Columbus Crew, Toronto Maple Leafs, and Ottawa Senators.
  • Arenas are generally better deals than stadiums, because they cost less to build. And  small cities tend to get get worse deals than larger ones, since they have less leverage to keep a team in town without large payoffs.

If you’re not familiar with Long, she’s been a favorite reference of FoS ever since she first started publishing her “Full Count” data on the true costs of sports facilities close to a decade ago. (At one point her book was also going to be called “Full Count,” I believe, but it ended up with the slightly less pithy title “Public/Private Partnerships for Major League Sports Facilities.”) Until Long came along, for example, it wasn’t clear that the Minneapolis Metrodome was actually one of the best deals for the public, thanks to a lease that forced the teams to actually share revenues; you can read more about her work in a profile I wrote of her for Baseball Prospectus back in 2005.

Needless to say, I’ll have much more to say about this once I’ve actually gotten my hands on a copy. (Which will have to wait until Routledge starts sending out either review copies or e-books, because $125 isn’t in my research budget.) But suffice to say that this is big, big news, and will be a huge boon to anyone trying to suss out the true public costs of stadium and arena deals after all the parts have stopped moving.

Indianapolis to lose money on Super Bowl

Every so often, I get a call from a journalist asking what I think the economic benefits are to a city of hosting a Super Bowl. To which I can now answer with a link to this Indianapolis Business Journal story:

Scores of businesses in and around Indianapolis are licking their chops in hopes of scoring a windfall from the city’s hosting of the Super Bowl on Feb. 5.

But the city entity that manages Lucas Oil Stadium, where the game will be played, expects to lose money.

The Capital Improvement Board of Marion County is budgeting for total Super Bowl expenses of $8 million and revenue of nearly $7.2 million, leaving a loss of $810,000.

The main added costs are for extra police time and hiring of additional temporary workers. That’s partly made up for new tax revenues from the estimated $200 million in spending that will go on in the city during Super Bowl week,

But that tax money is limited, in part because, notes the IBJ:

  • The NFL is using its tax-exempt status (yes, the NFL is tax-exempt, and yes, lots of other people also think this is ridiculous) to get its wmployees out of paying hotel and restaurant taxes.
  • Food and beverage taxes collected inside Lucas Oil Stadium also won’t be going to the CIB, but will be diverted to the NFL.

However, Indianapolitans will at least get the thrill of watching the Super Bowl on TV and knowing that they could be there, if only they had tickets. Plus the free publicity that comes from the world learning what it’s like in Indianapolis in January. With benefits like these, who needs tax revenues?

Rusty pipes need replacing at three-year-old Colts stadium

In sports-page lingo, every old stadium is “crumbling” and every new one is “sparkling,” so it’s always amusing when the new buildings immediately break:

Lucas Oil Stadium will partially close to events for four months to replace rusted and corroded steel piping in the 3-year-old structure….

John Klipsch, the authority’s executive director, said the cause of the rust and corrosion on galvanized steel pipes hasn’t been determined.

Now, the total cost of the repair is expected to cost less than $2 million, and Indianapolis officials insist that it won’t cost taxpayers anything. (Though they say it will instead be covered by “bonding, warranties and insurance,” which is slightly worrisome unless they mean bonds that have already been sold and aren’t being used for anything else. [UPDATE: One reader suggests that the reference is to this kind of bonding, not this kind; if so, that’s less worrisome.]) Still, you know that if this sort of thing had happened at the Hoosier Dome, the Colts would have been screaming that this showed it was time for a new stadium.

Indy Biz Journal: NFL playoff games rule!

It’s playoff season, which means it must be time for another article touting the economic benefits of your team making the playoffs. Today’s entry comes courtesy of the Indianapolis Business Journal, which, typical of these articles, doesn’t actually attempt to quantify the impact of the Colts’ Super Bowl run, but throws out lots of anecdotal evidence like “Sales [of Colts caps and shirts] were so strong, the stadium shop stayed open until 11 p.m., about five hours after the game ended”!

Of course, money spent on Peyton Manning shirts is money not spent on something else — unless Colts fans have set aside money in special team merchandise accounts — so a lot of that money is just being redirected from somewhere else in the regional economy. (Hotel spending, which is also up, is a bit more of a legit gain, since typically hotel-room stays in the dead of winter in Indianapolis are pretty minimal.) Indianapolis Convention & Visitors Association CEO Don Welsh exulted to the Business Journal: “You can’t overemphasize how good something like this Colts run is for the city, not only in terms of direct visitor spending but exposure.” Well, sure you can. That’s why we’re supposed to have journalists, to evaluate just how much emphasis is warranted, according to the actual numbers. Remember journalists?

Two economists, no waiting

The San Francisco Chronicle:

While the new [49ers] field [in Santa Clara] promises intangibles such as a national profile and civic pride, observers say it includes hidden costs, lost opportunities and unanswered questions, making it unclear how good a bargain it truly is.

“This is a very low price tag for the city, but it is not a good deal because they are passing up other things they could do there and vastly overplaying the value of non-football events [at the stadium], most of which are highly speculative,” said Roger Noll, a Stanford economist who has conducted exhaustive research on professional sports stadiums.

And from the Indianapolis Star:

“In this economy, to be honest, I think [the Indianapolis Colts‘] Lucas [Oil Stadium] is doing an amazing job,” said the University of Michigan’s Mark Rosentraub, an expert in the economics of sports. He recently wrote a book on how cities have used sports facilities as economic tools. “But that does not mean it’s not going to lose money.”…

Rosentraub said people need to keep in mind the big-picture reason behind the stadium and the deal to keep the Colts in Indianapolis.

“This was an investment in human capital,” he said, “to use the downtown as a linchpin to attract highly skilled workers for Eli Lilly, banks, insurance companies, the kinds of workers we will need in the 21st century.”

Guess which one has worked as a paid consultant to sports leagues, and is touting a new book repenting his stadium critic past?

Indianapolis cuts arts funds to subsidize stadiums

The Indianapolis Capital Improvement Board voted yesterday to start plugging its $47 million a year operating deficit by suspending all grants to arts and tourism groups. The CIB also voted to look at renegotiating its union contracts and selling some of its assets.

The budget gap, you’ll recall, was created in the first place by the city’s sweetheart lease deals for the Colts and Pacers, compounded when the CIB agreed to let the Pacers stop paying $15 million a year in operations costs, either out of the goodness of their hearts or a sudden fear that the team would move to Kansas City otherwise. Next time someone tries to argue that stadium costs don’t cut into the money available for other public spending, remember this moment.

Indiana to stadium board: Drop dead

What if they built a stadium and nobody maintained it? The Indiana general assembly failed to agree on a bailout plan for the Indianapolis Capital Improvement Board yesterday, leaving the board that runs the Colts‘ Lucas Oil Stadium and the Pacers‘ Conseco Fieldhouse with a $47 million a year budget hole and no way to fill it.

The CIB has called an emergency board meeting for tomorrow, at which it will consider … well, no one seems to have much in the way of ideas. Indianapolis Mayor Greg Ballard “said they must do something,” according to WISH-TV, adding that the city could turn the stadium board over to the state, but he doesn’t like that idea; it’s hard to see where the state would like it either, since they already said they don’t want to be stuck with the board’s debts. Then there’s the suggestion, also from Ballard’s office, that Colts owner Jim Irsay might want to make a donation to the arts in lieu of paying rent; three guesses what Irsay’s reaction will be to that one.

The underlying problem remains the teams’ leases, which grant them pretty much all revenues from their buildings and ask them to pay next to nothing in rent ($250,000 a year for the Colts, $1 a year for the Pacers); it’s hard to find money to pay maintenance and operations when you don’t have any income. Nobody really thinks that the CIB will go ahead with its threat to close the buildings if it doesn’t get a cash infusion, it’s hard to imagine what they’ll do to get out of this one.