Do Stadium/Ballparks Save Cities?
Source: The American Conservative
Baseball stadiums are expensive to build and property prices have always been high, especially considering the amount of parking needed to accommodate 15-20,000 people.
As a result, teams want public financing, tax abatements, and all the other ills that crony capitalism promotes.
Paid for with higher taxes, increased public indebtedness, and highway improvements, the stadiums/ballparks were sold to city, county, and state governments as a form of economic development and urban regeneration.
None of that has happened most of the time - here in Mesa it's questionable with another pitch for another stadium using the same playbook to hoodwink taxpayers to finance the games of millionaire sports team franchise owners or to finance some dodgy real estate development schemes of one kind or another
According to Bloomberg in 2013, sports stadiums don’t fulfill development goals because they’re empty much of the time, the jobs they create are low-wage, and they divert spending on food and beverages from other businesses... retail sales-and-use taxes do get a boost if it's only for the one month of spring training.
Stadium deals are no better than ordinary economic development funds.
Back in December of 2012, the New York Times found that states and cities spend up to $80 billion a year on economic development incentives with nothing much to show for it in the way of stronger economies or more and better paying jobs...
as long as team owners use threats to move a beloved team as emotional blackmail against an entire city—and public officials think can win votes on bad deals—sports franchises will continue to feast on public funds like a slugger on hanging sliders.
Matthew M. Robare is a freelance journalist based in Boston who writes about urbanism and history. This article was supported by a grant from the Richard H. Driehaus Foundation.
Cubs mean big business, and big debt, for spring training home Mesa
By Robert ChannickContact Reporter Chicago Tribune
Cubs spring training is a tradition and a major tourist attraction in Mesa, Arizona, which built the team a $100 million stadium to keep them from leaving for Florida
When the Chicago Cubs opened spring training play last month in Mesa, nearly 15,000 far-flung fans packed the city's 3-year-old stadium, celebrating the defending world champions after more than a century of shared futility.
For Mesa, a city of 475,000 which bankrolled the $100 million ballpark to keep the Cubs from bolting to Florida, ownership in the team's success is a source of civic pride, an economic opportunity and a major league debt.
For Mesa, a city of 475,000 which bankrolled the $100 million ballpark to keep the Cubs from bolting to Florida, ownership in the team's success is a source of civic pride, an economic opportunity and a major league debt.
Much larger cities than Mesa have balked in recent years at funding sports stadiums and indeed, in Chicago, the Cubs are privately funding the $800 million renovation of their team-owned mothership, Wrigley Field, and part of the surrounding neighborhood.
But beyond a new upscale hotel, adjacent development has come slower than some had hoped, and while the stadium's tax burden falls on Mesa, the economic benefit flows across the border to neighboring Scottsdale, Tempe and other Phoenix-area towns.
Whether the one-month exhibition season provides enough of a boost to justify building the stadium remains the $100 million question.
Faced with potentially losing its most prominent tourist attraction to Florida and unable to secure state funding, Mesa stepped up to the plate, backing the deal through a municipal bond sale. The Cubs got a state-of-the-art spring training facility and increased stadium revenue, juiced by higher ticket prices. The city got the bill.
"The Cubs were in position to negotiate a very lucrative deal, and we're not begrudging that at all," said Mesa Mayor John Giles. "There still is a significant amount of economic activity that occurs outside of the ballpark, in the restaurants and hotels and everything. It's very significant for us."
HOW SIGNIFICANT?
Some history
In 2009, the Ricketts family bought the Cubs and Wrigley Field from Tribune Co. (now Tribune Media) in an $845 million deal, launching a long-term plan to renovate the club and the century-old ballpark.
In Mesa, the Cubs threatened to exercise a 15-year lease option and move spring training to Florida after the 2012 season. Two Naples businessmen proposed building a 15,000-seat stadium, expansive training facilities and an adjacent Wrigley Village commercial district, with beach access nearby.
"It was a very attractive deal," said Crane Kenney, president of business operations for the Cubs. "We were flattered to be that attractive to Naples."
While Mesa could not match the beach access, the Cubs agreed to stay if they could get the rest, including a new stadium, adjacent training facilities and a "Wrigleyville" commercial complex.
Mesa first looked to fund the project through state legislation that called for a surcharge on Cactus League tickets. The so-called Cubs tax met with opposition from other club owners — notably White Sox Chairman Jerry Reinsdorf — and died on the vine.
Under the gun, Mesa agreed to finance the $84 million stadium and $15 million in infrastructure improvements itself, a plan approved by voters in November 2010.
"The political appetite outside of Mesa for stepping up to build the stadium was not there," said Giles, a lawyer and former city councilman who was elected mayor in August 2014. "So the city of Mesa just took the whole thing on its shoulders."
ADD on the back of taxpayers
In 2013, Mesa sold $94 million in excise tax bonds to cover the cost of the Cubs stadium and an $18 million renovation of Hohokam for its new tenants, the Oakland Athletics.
The bonds mature in 2027 and 2032, but the city can pay off the bonds earlier, in 2017 and 2022.
How is Mesa planning to pay off the debt?
Back in 2010 Mesa was talking about using a combination of existing funds, selling off city-owned land, and an increase in the hotel tax to raise $99 million in construction costs.
Mesa is planning to pay off the debtholders by selling nearly 11,400 acres of distant Pinal County farmland it acquired during the 1980s for water rights it no longer needs.
In December 2013, Pinal Land Holdings, a Scottsdale-based developer, agreed to buy the entire property for about $135 million, closing on 1,613 acres for $24 million.
The deal included an annual option fee of about $4.9 million to buy the balance of the land in two phases — by June 30, 2017, and June 30, 2019 — with the remaining 9,734 acres priced at $89 million.
The city expects the stadium bonds to be paid in full by 2022, according to Michael Kennington, Mesa's chief financial officer.
Mesa's commitment to carry the full debt for Sloan Park comes at a time when some cities are turning away from publicly financed pro sports facilities.
Most recently, San Diego voters in November rejected a referendum to allocate hundreds of millions in tax dollars toward a new stadium for the Chargers, prompting the football team to move to Los Angeles.
In Chicago, the Ricketts family is spending $800 million of its own money for the ongoing renovation of 103-year-old Wrigley Field and the surrounding neighborhood.
Bob Leib, a Wisconsin-based financial consultant to professional sports teams and owners, said taxpayer fatigue and shifting economic priorities have made publicly funded stadiums a harder sell.
"A politician doesn't want to be known as the guy who put into place a funding mechanism that funneled public dollars to billionaire owners," Leib said.
Bob Kammrath of the Mesa Taxpayer's Alliance, a now-defunct grass-roots group that led the failed opposition to the stadium funding referendum in 2010, still believes Mesa made a mistake by financing Sloan Park.
NEW POLITICAL TRICK in Arizona State House
The bill would allow creation of “community engagement” districts of up to 30 acres. Within them, up to half of the state’s share of sales taxes generated from retail sales and hotel stays would be dedicated to paying the bond debt for new sports or entertainment facilities. It also would allow an additional 2 percent district sales tax to be applied to all purchases within the district, with those revenues also dedicated to defraying the cost of facility construction.
This is a bit of a hybrid bill, combining super-TIFs (where half of existing sales and hotel taxes would be kicked back to pay teams’ construction costs) with a new sales tax surcharge in the area around the new sports venue. The math on how much of a subsidy this amounts to gets dicey — virtually all of a TIF would be cannibalized from sales and hotel tax receipts elsewhere in the state, but a slice of a sales tax surcharge could come out of a team owner’s pockets, depending on how big the surcharge area is ...the new super-TIF districts could be applied to help build any new sports and entertainment facilities. The only limit is that state money would only be allowed to pay for half of construction costs up to $750 million ...
Faced with potentially losing its most prominent tourist attraction to Florida and unable to secure state funding, Mesa stepped up to the plate, backing the deal through a municipal bond sale. The Cubs got a state-of-the-art spring training facility and increased stadium revenue, juiced by higher ticket prices. The city got the bill.
"The Cubs were in position to negotiate a very lucrative deal, and we're not begrudging that at all," said Mesa Mayor John Giles. "There still is a significant amount of economic activity that occurs outside of the ballpark, in the restaurants and hotels and everything. It's very significant for us."
HOW SIGNIFICANT?
Some history
In 2009, the Ricketts family bought the Cubs and Wrigley Field from Tribune Co. (now Tribune Media) in an $845 million deal, launching a long-term plan to renovate the club and the century-old ballpark.
In Mesa, the Cubs threatened to exercise a 15-year lease option and move spring training to Florida after the 2012 season. Two Naples businessmen proposed building a 15,000-seat stadium, expansive training facilities and an adjacent Wrigley Village commercial district, with beach access nearby.
"It was a very attractive deal," said Crane Kenney, president of business operations for the Cubs. "We were flattered to be that attractive to Naples."
While Mesa could not match the beach access, the Cubs agreed to stay if they could get the rest, including a new stadium, adjacent training facilities and a "Wrigleyville" commercial complex.
Mesa first looked to fund the project through state legislation that called for a surcharge on Cactus League tickets. The so-called Cubs tax met with opposition from other club owners — notably White Sox Chairman Jerry Reinsdorf — and died on the vine.
Under the gun, Mesa agreed to finance the $84 million stadium and $15 million in infrastructure improvements itself, a plan approved by voters in November 2010.
"The political appetite outside of Mesa for stepping up to build the stadium was not there," said Giles, a lawyer and former city councilman who was elected mayor in August 2014. "So the city of Mesa just took the whole thing on its shoulders."
ADD on the back of taxpayers
In 2013, Mesa sold $94 million in excise tax bonds to cover the cost of the Cubs stadium and an $18 million renovation of Hohokam for its new tenants, the Oakland Athletics.
The bonds mature in 2027 and 2032, but the city can pay off the bonds earlier, in 2017 and 2022.
How is Mesa planning to pay off the debt?
Back in 2010 Mesa was talking about using a combination of existing funds, selling off city-owned land, and an increase in the hotel tax to raise $99 million in construction costs.
Mesa is planning to pay off the debtholders by selling nearly 11,400 acres of distant Pinal County farmland it acquired during the 1980s for water rights it no longer needs.
In December 2013, Pinal Land Holdings, a Scottsdale-based developer, agreed to buy the entire property for about $135 million, closing on 1,613 acres for $24 million.
The deal included an annual option fee of about $4.9 million to buy the balance of the land in two phases — by June 30, 2017, and June 30, 2019 — with the remaining 9,734 acres priced at $89 million.
The city expects the stadium bonds to be paid in full by 2022, according to Michael Kennington, Mesa's chief financial officer.
Mesa's commitment to carry the full debt for Sloan Park comes at a time when some cities are turning away from publicly financed pro sports facilities.
Most recently, San Diego voters in November rejected a referendum to allocate hundreds of millions in tax dollars toward a new stadium for the Chargers, prompting the football team to move to Los Angeles.
In Chicago, the Ricketts family is spending $800 million of its own money for the ongoing renovation of 103-year-old Wrigley Field and the surrounding neighborhood.
Bob Leib, a Wisconsin-based financial consultant to professional sports teams and owners, said taxpayer fatigue and shifting economic priorities have made publicly funded stadiums a harder sell.
Bob Kammrath of the Mesa Taxpayer's Alliance, a now-defunct grass-roots group that led the failed opposition to the stadium funding referendum in 2010, still believes Mesa made a mistake by financing Sloan Park.
NEW POLITICAL TRICK in Arizona State House
The bill would allow creation of “community engagement” districts of up to 30 acres. Within them, up to half of the state’s share of sales taxes generated from retail sales and hotel stays would be dedicated to paying the bond debt for new sports or entertainment facilities. It also would allow an additional 2 percent district sales tax to be applied to all purchases within the district, with those revenues also dedicated to defraying the cost of facility construction.
This is a bit of a hybrid bill, combining super-TIFs (where half of existing sales and hotel taxes would be kicked back to pay teams’ construction costs) with a new sales tax surcharge in the area around the new sports venue. The math on how much of a subsidy this amounts to gets dicey — virtually all of a TIF would be cannibalized from sales and hotel tax receipts elsewhere in the state, but a slice of a sales tax surcharge could come out of a team owner’s pockets, depending on how big the surcharge area is ...the new super-TIF districts could be applied to help build any new sports and entertainment facilities. The only limit is that state money would only be allowed to pay for half of construction costs up to $750 million ...
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