If you build it, will they come?
Twenty years ago, when Paul Mickle moved to Trenton, N.J., the city’s waterfront was dominated by a defunct steelyard. U.S. Steel had abandoned the facility years before, taking with it some of the city’s highest paying jobs and leaving behind mountains of slag and rusting metal.
For three decades, the steelyard was the unfortunate focal point of Trenton’s downtown. “The city was bleak,” says Mickle, now the city editor of The Trentonian, the local daily newspaper. “I’ve witnessed the renaissance.”
If Trenton has undergone a renaissance, the role of Leonardo da Vinci was played by Clark, Caton, Hintz, the local architectural firm that created Waterfront Park. Home to the Trenton Thunder, the AA affiliate of the Boston Red Sox, Waterfront Park sits on the banks of the Delaware River on part of the 31-acre brownfield site that once housed the steelyard. Opened in 1994, it has spawned what most Trentonians consider nothing less than an economic miracle, turning a dilapidated and unloved downtown into one of the hottest spots in Mercer County.
Mickle calls the ballpark “a real jewel,” despite the fact that he has written critically about its cost overruns and other problems. “There are critics,” he says. “I was one at one time. But it has changed the image and appearance of the city. It has become a desirable place that people want to come to.”
People are coming for more than minor league baseball. The ballpark has become the hub of a downtown redevelopment process that now includes office buildings, shops and restaurants and a multi-purpose arena that is home to the Trenton Titans of the East Coast Hockey League. It also hosts college and high school basketball games, and concerts and shows. (This month, Marriott will open a hotel and conference center — the first hotel opened in downtown Trenton in 27 years — in a redevelopment triangle that includes the waterfront, the steelyard site and the capitol.)
“[The ballpark] has been the catalyst for hundreds of millions of dollars worth of development,” says Mayor Doug Palmer. “We set out to accomplish four goals: We wanted to bring people downtown after 5 p.m.; we wanted to keep people here after work; we wanted to change people’s perception of the safety of the city; and we wanted to set the stage for private development. We have accomplished all four goals.”
The very idea that stadiums can serve as economic development sparkplugs makes economists apoplectic. Critics could paper a trail from San Francisco’s PacBell Park to Boston’s Fenway with reports and studies showing that, far from being catalysts for nearby development, stadiums actually are black holes where tax dollars go to die.
“Our research suggests that professional sports may be a drain on local economies rather than an engine of economic growth,” concluded University of Maryland, Baltimore County economics professors Dennis Coats and Brad Humphreys in their 1996 report, “The Stadium Gambit and Local Economic Development.”
“Public funding of sports, including funding of stadiums, is not a sound civic economic investment,” wrote Robert Baade in “Stadiums, Professional Sports and Economic Development: Assessing the Reality.” The 1994 report was published by the Heartland Institute, a Chicago-based think tank.
“A new sports facility has an extremely small (perhaps even negative) effect on overall economic activity and employment,” wrote Roger Noll and Andrew Zimbalist, economics professors for Stanford University in Stanford, Calif., and Northampton, Mass.-based Smith College, respectively, in a 1997 article, “Are New Stadiums Worth the Cost?”
Pro-stadium forces argue that, theoretically, new stadiums offer a wealth of promises, both tangible (job creation and revenue from ticket, concession and memorabilia sales) and intangible (civic pride). However, the critics counter that, in reality, while new ballparks certainly serve as sources of pride, they fail to deliver on most of their other promises.
There are a number of reasons why that is true, but critics most often cite “public subsidy” as the crux of their arguments. In effect, they say, the vast amounts of tax money that go into the construction of new stadiums and arenas (and the associated infrastructure necessary to sustain them) negates any economic benefit to the community created by those facilities.
Before the explosion of interest in sports (sometime in the 1980s), it made sense for cities and counties to direct their tax revenues into sports facility construction because they generally kept the revenues generated by those facilities, as well as the rent paid by the teams that used them.
However, increasing interest in sports meant more leverage for team owners, who began demanding sweetheart deals from their host communities in exchange for not shopping their teams to other locations. For those charged with keeping an eye on local government finances, those sweetheart deals would be laughable if they were not so serious.
For example, Philadelphia is putting up some $600 million to build new stadiums for its NFL Eagles and MLB Phillies, both of which had threatened to leave. In return, the Eagles and Phillies will stay in Philadelphia. The teams also will get the revenue from ticket sales, stadium advertising, parking, salvage from the old stadium and stadium naming rights (a fairly recent and extremely lucrative phenomenon with some small potential for embarrassment, as with the Houston Astros’ Enron Field).
It did not have to be that way. Had either team left the city’s old multi-use stadium, it would have been in breach of contract, and no other cities were clamoring for either of them. “The city had all the leverage in the world,” says Philadelphia Controller Jonathan Saidel. “But there were powerful political interests pushing for the deal, and the city capitulated.”
It did so against Saidel’s advice. “My position was: If it’s too costly, and there’s no good rate of return, we should use the resources for the betterment of the people of the city,” he says. “If the owner of the Eagles can’t make money on the Eagles, he needs to sell them to someone who can. He doesn’t need to be holding up the city.”
Saidel even authored an incisive and comprehensive report called “Stadium Overview: Myths and Realities,” in which he concluded that “if the city’s investment in new stadia will not be repaid by taxes associated with new economic activity or revenues generated by the stadia then the city is wise to use its scarce resources to address other concerns.” At the bottom of each page in the report, Saidel invited “proponents of public funding for new stadia to present verifiable financial data to challenge any of the assumptions regarding new stadia and economic development in Philadelphia.”
Because he is an elected official, Saidel’s strong stance against the publicly funded stadiums could have put him in jeopardy in Philadelphia, where public sentiment ran strongly to the stadium deal. Still, he never wavered. “I was pretty damned out front with my opposition,” he says. “But I still got 85 percent of the vote [when I ran] last year. It hasn’t hurt me politically, but it hurts the city economically. We’ve got a school district and an infrastructure in crisis. Building two stadiums is not what we should be doing with our money.”
That the Eagles and the Phillies would blackmail Philadelphia, a city with so many other priorities, provides ammunition for critics of public funding of sports facilities. And Philadelphia is not even the worst example.
Just across the state line, the Yankees and the Mets convinced outgoing New York Mayor Rudy Giuliani to guarantee them a total of $1.6 billion for the construction of new ballparks that would replace Yankee and Shea stadiums. Giuliani’s promise was galling to New Yorkers because the city obviously has other immediate priorities — and because the Yankees and the Mets are two of baseball’s wealthiest teams and could easily afford to build their own parks. (New Mayor Mike Bloomberg reneged on Giuliani’s deal but did offer the two teams $5 million a year for the next five years to study plans for new stadiums.)
Philadelphia and New York are hardly the exceptions. In recent years, Nashville, Tenn.; Seattle; Pittsburgh; Cincinnati; Milwaukee; Detroit; and Charlotte, N.C., picked up most of the tab for the construction of new stadiums worth at least $200 million each. Of major cities, only San Francisco has bucked the trend. Of the $255 million paid to build PacBell Park in 1998-1999, the city contributed just $10 million in tax increment financing. The Giants and private investors ponied up the rest.
Since then, construction plans have faced tougher going. For example, in Fresno, Calif.; Miami; Minneapolis; and Boston, voters failed to approve stadium referenda; and in St. Louis, four Missouri legislators went on record to oppose public funding of the Cardinals’ new park. “Let’s face it, we are not going to revive this state’s economy with the construction of a new baseball stadium,” Sen. Sarah Steelman told the St. Louis Post-Dispatch.
Small is beautiful
So, is Trenton the anomaly? Not necessarily, says Bridgeport, Conn., Mayor Joe Ganim. Bridgeport’s new ballpark, the Ballpark at Harbor Yard, has been “the jumping-off point for a lot of other major economic development projects downtown,” Ganim says.
Like Trenton, Bridgeport is using its ballpark to anchor waterfront revitalization efforts. The city has invested about $17 million in construction of the Harbor Yard ballpark and a popular nearby arena that hosts Fairfield University’s basketball team and the Sound Tigers minor league hockey team. “We were very businesslike in our transactions,” Ganim says. “We made sure we got the best bang for our buck.”
The ballpark was not without its critics in the beginning. “It was controversial,” Ganim says. “A lot of people didn’t want to spend the money. The city council was split. Now they’re its biggest fans.”
(Bridgeport and Trenton share another phenomenon; once their ballparks were built, they quickly became so popular that, when the cities decided to construct arenas, the decisions drew virtually no opposition.)
In Bridgeport and Trenton, ballparks do spur economic development. The reason is simple: “We came from nothing,” says Mercer County Executive Bob Prunetti, who was instrumental in coordinating a consensus for the construction of Trenton’s Waterfront Park. “State government was the city’s whole industry. There was nothing else.”
That is not true in many places, where museums, nightclubs, restaurants and theaters vie for consumer dollars. “To judge success [of economic development efforts], you have to measure where you’ve come from,” Prunetti says. “Prior to building our ballpark, we had no hotel in our capital city. We had no theaters and no McDonald’s. Now we have a hotel, and we have a McDonald’s. Two out of three’s not bad.”
The ballpark made all that possible in a way other kinds of facilities — museums or theaters, for instance — could not have, primarily because of the regional affection generated by sports teams.
“Some urban [sports] facilities built in blighted areas have had positive spinoff effects that no other type of development could have matched [because of] the regional support for professional sports,” notes a 1998 report by the National Conference of State Legislatures. “Not only did the facilities stimulate development in the immediate area, but it happened with help from entire metropolitan areas. It is unlikely that suburban counties would ever subsidize core-city development in any other circumstance.” (The report, “Playing the Stadium Game: Financing Professional Sports Facilities in the ’90s,” argues for caution in using public money to finance sports facilities.)
Regional support was critical in Trenton, where Prunetti managed to convince skeptical suburbanites that the ballpark belonged downtown. “I would only agree to build it in the city because I couldn’t justify the economics of sending money to the suburbs,” he says. “They’re already doing well. We needed to use the money as a stimulus in a depressed area. That was our public policy purpose.”
It also makes a difference that, in Trenton, Bridgeport and similar cities, ballparks are not designed as one-shot monuments; they are considered part of a larger development vision. “We didn’t plan to build a ballpark,” says Trenton’s Palmer. “We planned to develop the waterfront. You need an overall vision, or you will fail.”
“Stadium construction has a limited life in terms of an economic development impact,” says Lisa Petraglia, director of economic research for Economic Development Research Group, a Boston-based consulting firm that specializes in measuring economic development performance, impacts and opportunities. “When there’s a vision that the stadium is part of a revitalization and not just an end point, then it can have an economic development aspect.”
Petraglia says that “vision” is easier to achieve in smaller communities. A project like construction of a ballpark takes on more importance in a city that is not dotted with other entertainment opportunities, she says. That is why Bridgeport and its small-community cohorts in baseball’s Atlantic League (the New Jersey cities of Newark, Camden, Atlantic City and Somerset, plus Nashua, N.H., and Central Islip, N.Y.) are “good case studies for using stadiums as economic development catalysts,” she says.
Even so, the argument persists that a community’s economic development is better served if public money is directed into real infrastructure (sewers, roads, water pipes) and education. Petraglia says that a valid argument against public funding of sports facilities can be made because non-fans should not be forced to support facilities that they will likely never use.
Palmer is not so sure. “People without kids pay school taxes,” he says. “People pay taxes to build those concrete sound barriers even when they don’t live near them.”
Like schools and concrete sound barriers, sports teams go to a city’s quality of life, Palmer says. “We used to be Trenton, the capital of New Jersey, and that’s great,” he says. “Now, we’re Trenton, the capital of New Jersey and the home of the Thunder and the Titans. [Red Sox shortstop] Nomar Garciaparra played here. It may not sound like much, but it’s a big deal to us.”