Is there a real public fight brewing over Alexandria’s plans for a $2 billion Washington Capitals and Wizards arena project that would include more than $1 billion in public subsidies? You could read Friday’s Washingtonian article headlined “Is a Real Fight Brewing Over the New Alexandria Arena Proposal?” (in a rare exception to Betteridge’s Law, and maybe not even effective clickbait SEO practice anymore), or you could just read about Saturday, when the city held a town hall on the arena plan and opponents protested outside:
Wearing caps and t-shirts that read “Stop the Move” and sending a bus around an Alexandria town hall with the same message, those against the proposed new home for the Capitals and Wizards made their position clear.
“There is absolutely no reason our taxpayer money should be going to build this stadium,” said Brian Hess, with Sports Fans Coalition. “The quality of life is going to be miserable for us here.”…
“You see the stadium. You see the bright lights. You see the flashy games what you don’t see is the new high school that doesn’t get built,” Patrick Hedger, with Taxpayers Protection Alliance, said.
(It’s arena not a stadium, you won’t be able to see the bright lights because they’ll be indoors, and there’s punctuation missing from WJLA’s transcription of Hedger’s last sentence. But point taken.)
While the protesters cited a long list of concerns about the arena project — “transportation, environment issues, housing affordability, public finance,” checked off John Breyault of the National Consumers League — a major argument is coming down to whether the project will really generate enough new tax revenue to pay for itself, or if it will just cannibalize money that the public would receive anyway, either at the project site or elsewhere in the city or state. University of Colorado economist Geoffrey Propheter already questioned last week whether this should really count as new money, and this weekend he shared some more substantial calculations:
If VA required all Monumental staff/players to FT live in VA, and assuming none already do, the PIT rev could wipe out the hole. But you'd still only gain net about $6m more per year at best (at current salaries). A residency requirement seems sensible.
— Geoffrey Propheter (@gfpropheter) January 27, 2024
In an email exchange, Propheter clarified that the $20 million a year is how much tax revenue (in income taxes, business taxes, sales taxes, etc.) is currently generated at the Potomac Yards site, which would be immediately removed from the state and city general funds and redirected toward paying off bonds for the arena project. So “the first $20m [per year] made by any post-TIF development, then, is just backfill, not net new revenue.”
As for how much money Virginia could get from Capitals and Wizards employees (including players) relocating to Virginia, that obviously depends on how many are already living there. One Twitter commenter reported team owner Ted Leonsis as saying that 30-40% of team employees currently live in Virginia, but not which employees, and it makes a big difference whether we’re talking about hot dog vendors or Jordan Poole. Leonsis himself lives in a mansion in Maryland, so maybe one demand by the state could be getting the boss to agree to relocate himself to Virginia and pay taxes there?
In any event, that $20 million a year hole is only part of the public cost of this project: There’s also $150-200 million in state transportation spending, plus around $380 million in property tax breaks and the other forgone future sales, income, etc., taxes that would get poured into the TIF to pay off Leonsis’s construction costs. That latter revenue isn’t money that’s collected now, of course, but it could end up getting cannibalized from taxes on spending that as a result of the arena project soaking up economic activity wouldn’t take place elsewhere in the state — or even from spending that would otherwise have taken place at whatever development would happen on the arena site without the arena. All you people who periodically ask me exactly how much sports venues cost the public: This is why there’s no one simple answer! And also why real fiscal projections are needed before anyone should be voting on sports subsidy deals, sure would be nice if the Virginia legislature would commission one and actually show it to the public, still waiting on that.
I said it once and I’ll say it again: Who cares if a project in my city supposedly takes away tax dollars from another city, some other place in the state! It’s called competition Neil and that’s the American way!
If you pay taxes in the state, you should care whether one city’s project is taking tax money from another part of the state and then calling it “paying for itself.”
It’s now the end of January, over halfway through the hockey season and a year since Tempe told the Coyotes forget it and 2 years since Glenale slammed the arena door in howlers face. Where is the great new proposal for a billion dollar arena? At the bottom of a gravel pit getting run over by cement trucks?
It’s coming! Neither Bettman, nor Xavier G., nor Craig Morgan, nor anyone else knows when, where, how much it’ll cost, but it’s coming!
Neil, what are the largest metropolitan areas in the country without a major sports team? And, how do their economic metrics compare to the ones with major sports teams? Just curious if a comparison supports any argument that larger metro areas benefit from subsidizing major sports teams.
Hartford, followed by Austin. Not sure what you’re asking about economic metrics?
Despite the general dismissiveness on this blog regarding soccer and Major League Soccer, Austin does have a major sports team. The MLS team Austin FC.
I actually meant to include MLS, just forgot about Austin FC. (Because of my general reluctance to pay attention to MLS, though, yes.) That would make it Hartford followed by Greenville, South Carolina, then — unless the WNBA’s Connecticut Sun are close enough to Hartford-New Haven to count there.
What about Louisville?
In terms of Nielsen market size, Louisville is smaller than Hartford, Greenville, West Palm Beach, Grand Rapids-Kalamazoo, Harrisburg, Norfolk, Birmingham, and (wait for it) Greensboro.
The major team owners and their political allies claim the tax breaks and subsidies pay for themselves and bring benefits to the community. You and others argue convincingly that they do not pay for themselves. I don’t know if these are you words, but it sounds like welfare for the wealthy.
If Hartford or Austin are compared with the smallest major sports team markets how do they fare? Is there a difference in funding for schools, police, fire, etc.? Are tax rates different? Is quality life different? In short, would Hartford or Austin be better, worse or the same if they subsidized major sports teams with hundreds of millions of dollars?
Part of the grift is the FOMO/canard foisted on the public that they can’t possibly be “a major league city” without having one or more sports teams. As if the metro areas without one are somehow wastelands, and the ones with them are Nirvana.
As I often point out, Portland notably turned down a chance to get the NFL in the 1970s, and ended up being the place everyone started moving to around the turn of the century because it was so “livable.”
Austin has UT which is basically major league sports and San Antonio an hour away.
Hmmm.
With all this buzz about Hartford, it makes me think it’s time the city got busy building a new NHL ready arena for a replacement Whalers team… before Greensboro beats them to it.
As someone once said, “If you ain’t first, yer last”.
What’ll determine the fate of this new vaporware arena is public sentiment beyond NoVa. Go anywhere south of Prince William County or west of Loudoun County. The Old Dominion is more MAGA than people think, especially in cities such as Virginia Beach and Bristol.