Do Taxpayer-Funded Arenas Boost Local Economies

[Lord Sun]

Go here to get more info (http://www.heritage.org/press/dailybriefing/policyweblog.cfm?blogid=BDBBA20C-A0C9-D18A-0FBB33D18E3C76C6)

05/25/04 03:56 PM Berry Tramel of the Oklahoman looks at the research and concludes that the case for taxpayer-funding of sports arenas to boost economic growth is weak:

Look down in Dallas. The Cowboys have been in Irving for 33 years, but is the Texas Stadium area a money magnet except on certain autumn Sundays? No. Texas Stadium sits among a freeway convergence that offers only one idea: get the heck away from the traffic mess as quick as possible.

Go downtown to American Airlines Center, which opened in 2001 with the promise of an adjacent commercial district. So far, AAC's neighbors are massive vacant lots.

Ron Utt wrote on this back in 1998, and his conclusion is worth repeating:

[A]dvocates of subsidized sports, convention centers, and other forms of public entertainment should be honest about what is at stake and should not entice the public to believe they are supporting broad-based economic development that will contribute heavily to a city's economy. At the same time, elected officials in declining cities, however desperate they may be for new investment in their communities, must realize that the revitalization boost from such projects is negligible and that community resources and civic energy would be better directed to more productive activities.

As the record from around the country indicates, the economic boost from public investment in entertainment complexes is exceptionally modest at best, and counterproductive at worst. It diverts scarce resources and public attention from the less glamorous activities that make more meaningful contributions to the public's well-being.



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[Kangaroo]

In Houston we are starting to see some results around the new stadiums once the realstate dorks lowered their asking price (which was way over inflated)

Cleveland has also benfited from the stadiums built downtown

So saying it does not help at all depends on the city

The blanket statement that it does not help is just as much a farce as it will

[jay cee]

In Houston we are starting to see some results around the new stadiums once the realstate dorks lowered their asking price (which was way over inflated)

Cleveland has also benfited from the stadiums built downtown

So saying it does not help at all depends on the city

The blanket statement that it does not help is just as much a farce as it will


I don't see all that much here in houston to make up for the hundreds of millions spent on 3 new stadums. I think it is a total rip off by the politicians and team owners.

[Little Jr]

I don't see all that much here in houston to make up for the hundreds of millions spent on 3 new stadums. I think it is a total rip off by the politicians and team owners.


SB, All Star Game, Final Four?

[Doomsday101]

In Houston we are starting to see some results around the new stadiums once the realstate dorks lowered their asking price (which was way over inflated)

Cleveland has also benfited from the stadiums built downtown

So saying it does not help at all depends on the city

The blanket statement that it does not help is just as much a farce as it will

I agree with you. South Main in Houston and the surrounding area of Reliant is much better now than in the past. Downtown Houston has benifeted from Minute Maid park as well as the new Toyota Center

[jay cee]

SB, All Star Game, Final Four?


They were talking about economic benefit. I just don't think the economic benefit is enough to make up for the costs. Especially when they will likely be looking to replace the stadiums in the next 20-30 years.

[Doomsday101]

They were talking about economic benefit. I just don't think the economic benefit is enough to make up for the costs. Especially when they will likely be looking to replace the stadiums in the next 20-30 years.

Not many people were coming Downtown Houston before the baseball stadium was built that has changed and the downtown bussiness owners would tell you the same. Working 1 block from the stadium and working in Downtown Houston for 18 years now I have seen a big differance since the stadium was built. I do understand the other side of wanting the owner to pay for the whole thing but don't kid yourself many benifet from the stadium

[Little Jr]

They were talking about economic benefit. I just don't think the economic benefit is enough to make up for the costs. Especially when they will likely be looking to replace the stadiums in the next 20-30 years.


SB, All Stare Game and Final Four are economic benifits.

[jay cee]

SB, All Stare Game and Final Four are economic benifits.


I see what you guys are saying. I just disagree, the way I see it, the only people who win are the politicians, owners and players. The fans and taxpayers are ripped off.

[DallasInDC]

Working in the public sector and currently pursuing a major league team right now I can say that most research shows that there is minimal economic game generated by the stadium development. However, there is potential as long as it is part of a larger economic development strategy and is not the sole component used to drive economic development. If you introduce the right mix of residential and commercial development along with other arts and cultural venues then you raise the possibility of a stadium project as a positive revenue (or at least a sum zero) initiative. The type of stadium also makes a big difference. NBA/NHL combined stadiums tend to do better than MLB and due to an increase number of games that tend to bring people into the downtown area on a more regular basis. Once you provide for an environment that people can be entertained outside of the stadium events you can conceivably garner enough non-event related traffic to sustain the costs.

Most publicly financed stadiums are financed using some type of tax increment financing pledged against gross receipts taxes of the surrounding business and leverage the incremental city revenues from sales, real property and/or business franchise taxes. Here in DC, the MCI arena has been a benefactor of this type of development. Several years ago downtown DC was desolate ghost town after 6 pm. Now it is thriving with pedestrian traffic.

With respect to the impact on citizens, it depends on what type of taxes are pledged to cover debt service on the bonds whether or not the average citizen is impacted if it is an incremental tax then only the patrons and business in the surrounding area are impacted and it is usually a sales tax, business receipt tax or real property tax which doesn't impact the average citizen. It also does not take away from other services since the revenue is is the result of the additional revenues created from the development. Many of these financing's are based on hospitality related taxes i.e. hotel, restaurant, rental cars. These types of taxes don't generally affect the average citizen. It is when the pledged revenue to support the debt services payments and cities/counties have to rely on their general tax base to make the payments that it has a direct impact.

[crazylegs]

SB, All Stare Game and Final Four are economic benifits.


Your math doesn't add up.

Even if you where lucky enought it get 1 of each of the above over a 20 year span that would add up to what? $25 million dollars?

So let's see $25 million in, minus $750 million out, equals $725 million out!

How hard is that math?

Does it help the merchants? Yes, but if that's the case just give them the $750 million to stay.

So you see that's exactly what this boils down to, either way the city wants to spend $750 million, now the interesting part of the story who gets it, the merchants or the stadium builders?

If you're tilting your head at this moment, then you might just be "getting it"!

[Lord Sun]

Your math doesn't add up.

Even if you where lucky enought it get 1 of each of the above over a 20 year span that would add up to what? $25 million dollars?

So let's see $25 million in, minus $750 million out, equals $725 million out!

How hard is that math?

Does it help the merchants? Yes, but if that's the case just give them the $750 million to stay.

So you see that's exactly what this boils down to, either way the city wants to spend $750 million, now the interesting part of the story who gets it, the merchants or the stadium builders?

If you're tilting your head at this moment, then you might just be "getting it"!


(I keep saying I'll stay out of the stadium debate.)

(That said...)

The difference in the math is that if you just give merchants money, they can apply it however they want, whereas if they get money through actual business, it filters down to the people who actually spend it. Events tourism is the toughest niche to understand, in my opinion, because there are so many "invisible" dollars involved.

Not saying that that addresses your entire post, but it's just my take on one aspect of what the facility can achieve.

(That's it. I'm done. No more.)

(Lemme go find a nice, safe, Quincy Carter thread!)

[jay cee]

(I keep saying I'll stay out of the stadium debate.)

(That said...)

The difference in the math is that if you just give merchants money, they can apply it however they want, whereas if they get money through actual business, it filters down to the people who actually spend it. Events tourism is the toughest niche to understand, in my opinion, because there are so many "invisible" dollars involved.

Not saying that that addresses your entire post, but it's just my take on one aspect of what the facility can achieve.

(That's it. I'm done. No more.)

(Lemme go find a nice, safe, Quincy Carter thread!)

I agree with Crazylegs. But your response is too funny.

I always felt if the city of Houston had just spent the money upgrading the downtown area they spent building stadiums they could have achieved the same goal for a lot less money.

For example, once it was passed that the baseball stadium would be built downtown many merchants opened businesses and many people started going downtown. Now this was while games were still being played at the Astrodome.

So it seems the people really only needed venues downtown, not the actual stadiums.

[jterrell]

In Houston we are starting to see some results around the new stadiums once the realstate dorks lowered their asking price (which was way over inflated)

Cleveland has also benfited from the stadiums built downtown

So saying it does not help at all depends on the city

The blanket statement that it does not help is just as much a farce as it will
San Fran is another example.

It hasnt been a big boon yet for the AAC but that is due to the ecomony as much as anything else. Not much interest in spending big cash with the economy in the toilet for the 3 years the arena has been in place.

JJ isnt stupid. His new stadium will be built in a recovered economy not a staggering one.

Memphis also saw a revitalization by building that basketball arena

Its all in how you plan it. How big a draw the team is and where it is located.

As the article mentions theres no room for build up around Texas Stadum because it is literally just flanked by major highways. In downtown Dallas those highways are already in place and have been for years. The state fair is already there and the ability to simply build that area up and draw year round interest would be a huge boon to that areas property values as well as a serious spike to Dallas's tax base.

Another issue with The Mavs/Stars Arena is that people were already hitting West End and the new Arena isnt far enough away to cause them to change favoprite pre/post game hangouts.

FWIW though, propery values did skyrocket around the arena. Apartments over there in areas I wouldnt walk at night go for over 1 grand a month.

[jterrell]

Your math doesn't add up.

Even if you where lucky enought it get 1 of each of the above over a 20 year span that would add up to what? $25 million dollars?

So let's see $25 million in, minus $750 million out, equals $725 million out!

How hard is that math?

Does it help the merchants? Yes, but if that's the case just give them the $750 million to stay.

So you see that's exactly what this boils down to, either way the city wants to spend $750 million, now the interesting part of the story who gets it, the merchants or the stadium builders?

If you're tilting your head at this moment, then you might just be "getting it"!

Remedial Math 101. 4 weekends does not an equation make.

Those 4 events he speaks of are already handed out. That doesnt include increased city revenue because they bring in 3 to 4 times as much cash on taxes EACH year.

Dallas has a city sales tax. Selling 20+ mil in crap food, beer and foam fingers equates to a whole lot of tax being handed to Dallas as opposed to Irving. Bringing in events that would go elsewhere bring in not only extra cash in taxes but extra income to the businesses which in turn hire more dallasites which in turn buy more crap and pay more taxes.

The lower you are on the pyramid the more you get screwed but thats the way the system has always worked. A sales tax is a flat tax so it hurts the lesser incomed the worst. Same as increases in gas prices.

I saw the increase in parking costs between Reunion Arena and AAC. Not even in a different zip code but I pay 30% more each and every time I park. That increase it because it costs businesses more in taxes to own and operate those lots. They are paying the cities.

For Reunion it was a move that just kept two teams who were already in that part of town. For the Cowboys it would be bringing back the biggest draw in professional sports.

Does anyone think that the city of New York would lose money by building the Yankees a new stadium?

No offense to the Texans but good lord they are helping that part of town up and they are an expansion team that hasnt won jack.

[Kangaroo]

The issue of I always felt if the city of Houston had just spent the money upgrading the downtown area they spent building stadiums they could have achieved the same goal for a lot less money.

I have to disagree no one wants to go to downtown just because the building look better etc etc

You could have built all the restraunts till the cows came home in Houston and no one would have went downtown

Because Houston has Restraunts everywhere trust me on this I live in H-town and spent some time working downtown;I-10;Galleria;290 area Woodlands etc etc

A large portion of Houston avoided downtown at all cost unless they worked there. even the George R Brown convention ceneter is hosting more events than it use to. I know other than when I worked down there off and on (thank goodness it was not my main support site) I avoided it at all cost.

The Ballpark brought people to the downtown area and made it a hip place to be. I can say I been downtown more times for pleasure since the ballpark has been built. Than I did the 1st 6 years in Houston I went 3 times in six years not work related. 2 plays and one concert that is it. In the last 2 years I been downtown non work related over 10 times and have spent money.

Since that time other places are starting to pop the Aquarim restraunt which is a big hit in Downtown. Do you think that by itself could have generate traffic to downtown Houston; I doubt it people are now use to going downtown it is a culture change and a mindset change that was needed to make it grow it started with the Stadium

[jterrell]

The issue of I always felt if the city of Houston had just spent the money upgrading the downtown area they spent building stadiums they could have achieved the same goal for a lot less money.

I have to disagree no one wants to go to downtown just because the building look better etc etc

You could have built all the restraunts till the cows came home in Houston and no one would have went downtown

Because Houston has Restraunts everywhere trust me on this I live in H-town and spent some time working downtown;I-10;Galleria;290 area Woodlands etc etc

A large portion of Houston avoided downtown at all cost unless they worked there. even the George R Brown convention ceneter is hosting more events than it use to. I know other than when I worked down there off and on (thank goodness it was not my main support site) I avoided it at all cost.

The Ballpark brought people to the downtown area and made it a hip place to be. I can say I been downtown more times for pleasure since the ballpark has been built. Than I did the 1st 6 years in Houston I went 3 times in six years not work related. 2 plays and one concert that is it. In the last 2 years I been downtown non work related over 10 times and have spent money.

Since that time other places are starting to pop the Aquarim restraunt which is a big hit in Downtown. Do you think that by itself could have generate traffic to downtown Houston; I doubt it people are now use to going downtown it is a culture change and a mindset change that was needed to make it grow it started with the Stadium

That is precisely what is needed in downtown Dallas.

Right now Restaurant Row has moved from about 2 minutes away from Texas Stadium to the far North in Addison. I live even farther north near Frisco and it the next big thing. Crowds are huge and Frisco is raking in literally millions in taxes on property that used to sit with waist high weeds in it only 2 years ago.

Getting Downtown to be seen as a hip, to be, type place will draw major income to that area. It isnt far at all from Deep Ellum or the West End so the crowd will go there with even a modicum of clean up and safety procedures.

[Doomsday101]

The issue of I always felt if the city of Houston had just spent the money upgrading the downtown area they spent building stadiums they could have achieved the same goal for a lot less money.

I have to disagree no one wants to go to downtown just because the building look better etc etc

You could have built all the restraunts till the cows came home in Houston and no one would have went downtown

Because Houston has Restraunts everywhere trust me on this I live in H-town and spent some time working downtown;I-10;Galleria;290 area Woodlands etc etc

A large portion of Houston avoided downtown at all cost unless they worked there. even the George R Brown convention ceneter is hosting more events than it use to. I know other than when I worked down there off and on (thank goodness it was not my main support site) I avoided it at all cost.

The Ballpark brought people to the downtown area and made it a hip place to be. I can say I been downtown more times for pleasure since the ballpark has been built. Than I did the 1st 6 years in Houston I went 3 times in six years not work related. 2 plays and one concert that is it. In the last 2 years I been downtown non work related over 10 times and have spent money.

Since that time other places are starting to pop the Aquarim restraunt which is a big hit in Downtown. Do you think that by itself could have generate traffic to downtown Houston; I doubt it people are now use to going downtown it is a culture change and a mindset change that was needed to make it grow it started with the Stadium

Excellent post and very true. I started working in Downtown Houston 18 years ago and I see major changes since the ball park was built and I was one of those people who was very skeptical about building the stadium. I was wrong it has been a big boost to Downtown Houston.