The Biggest Sport in Town

The Biggest Sport in Town

The Council of the District of Columbia is voting again on giving waterfront property and $150 million to a private business.  The business, the D.C. United franchise of Major League Soccer, happens to make a product I enjoy: fun.  The waterfront property, Poplar Point, was criminally neglected by (of all people) the National Park Service, and needs renewal as badly as other stretches of the Anacostia River shore.

But public financing of sports facilities is always a losing propositon for taxpayers, and the $150 million subsidy would be raised by the old Shell Game.

The new Nationals Park baseball stadium is already losing the city $100,000 a day, since the office space was not completed by opening day. It costs the city $1.5 million a year in police costs (and takes police from regular patrols) for security and traffic duty on home game days. This is nothing compared to the opportunity costs of the hundreds of millions in bonds and interest on those bonds.

I bring these costs up because the city is planning to pay $150 million towards the soccer stadium through construction bonds financed with excess tax revenue the city collects to pay for the baseball stadium.

Excuse me? Does this sound like a dependable revenue stream to you? Can’t the city pay down the stadium bond debt with that money? Better yet, can’t it reduce the stadium tax rate that is crippling DC small businesses, or even grant them rebates?

The city knows it is going to have to kick in several million more in capital improvements if a stadium is built at Poplar Point simply to handle all the additional auto traffic. The stadium developer’s plan calls for a new light rail system from Metrorail to the sports facility. The stadium would allegedly be the focus of a multi-billion dollar “mixed use development” at a time when construction financing has tightened up. Does anyone honestly think there will be funding for this ambitious plan? I think not, but it got a developer the contract.

Infrastructure improvements are long overdue in the Ward 8 neighborhood, but these investments will not benefit residents at all, and are clearly bad economics and politics. If this public funding goes through, Ward 8 voters should hand officials well-deserved Red Cards for unnecessary cynicism. 

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Additional references on publicly-funded sports facilities:

Are Pro Sports Conning Our Cities? 

IS THERE AN ECONOMIC RATIONALE FOR SUBSIDIZING SPORTS STADIUMS?

Stadiums, Professional Sports, and Economic Development: Assessing the Reality

SPORTS AND ECONOMIC DEVELOPMENT: A LITERATURE REVIEW

SPORTS PORK: The Costly Relationship between Major League Sports and Government

Publicly Funded Stadiums Don’t Pay Off

How do stadium proponents get governments and taxpayers to ignore the economic evidence and pay for sports stadiums as if they were good economic development investments?

They rhetorically and politically “neutralize” the facts:

The Devil is in the Details: Neutralizing Critical Studies of Publicly Subsidized Stadiums

 

7 Responses to “The Biggest Sport in Town”

  1. Sports Shell Game — Second Half « NotionsCapital Says:

    […] Ignoring forty years of bad municipal stadium deals and the advice of every uninvolved analyst, the DC Council and Mayor had offered the team land and $150 million in public financing or a soccer stadium at Poplar Point. With the same strategic acumen that puts them last in the Eastern Conference, United has come back with a demand for $225 million. […]

  2. sam Says:

    Except, as I understand it, the $150 million is going to get spent no matter what goes on the site. It’s not accurate to say the money is an investment in a sports stadium. It’s an investment in city infrastructure. The money isn’t going for steel and glass and seats, but for the roads and pipes and infrastructure that a city provides. Whether it’s a stadium or condos or roller-coasters, $150 million is going to be spent at Poplar Point.

    Also, the developer doesn’t call for a light rail system. Again, that’s getting built completely separate from the stadium. It’s part of a city-wide light rail/street car system.

  3. Mike Licht Says:

    The $150 million issue is now moot, since the soccer club owner now wants $225 million. Think he wants fancier sewers?
    Infrastructure costs are not tallied up in this deal. They never are for publicly-financed stadiums. Don’t take my word for it — look at the studies linked above, from Brookings, Cato, and dozens of universities.

    The light rail system is featured in the Clark company’s brochure, right under the picture of the Metro platform, part of the pretense that the project is served by mass transit.

  4. sam Says:

    Yes, light rail is getting built. But again, that’s completely separate of a development deal at Poplar Point, that’s getting built either way, across the entire city. The developer includes it in the brochure because it will be there. Again, it cannot be overemphasized, streetcars are being built across DC completely independent of the Poplar Point development. Saying that the developer is building on the pretense of mass-transit being there is like saying the developer is building on the pretense of the Anacostia River being there.

    As for $225 million, look, I’m sure DC United wants a lot of things. Like ponies and sunshine. But $150 million is the deal on the table that’s being negotiated, as stated by the article you link. So $225 million is a red herring. If a deal happens, it will be at $150. The pro-stadium coalition on city council is drafting legislation at $150 million.

    As for whether or not infrastructure is or is not included in the $150 million, you say it’s not, but then you use as proof a Brookings articles that talks about a whole bunch of other stadium deals but not the one we’re talking about. And in my mind, you lose a lot of credibility when you say that infrastructure costs are never included in stadium deals because that’s exactly what’s being proposed in Houston for their new soccer stadium. So, you know, you’re wrong. Sometimes, infrastructure is included in public financing.

    Believe me, I don’t want to see public money spent on the actual stadium. So if you produce something that shows that $150 million is being spent on the physical building, I’ll concede the point. I just haven’t seen that yet. It’s worth noting that it’s an impossible task, because the legislation hasn’t been written or approved as of yet. So in truth, nobody knows, least of all me.

  5. Mike Licht Says:

    Sam:

    There is a literature review here, and others are on the post. They cover about 30 years of stadium flim-flam. If you don’t like Brookings, try Cato — they know these stadium deals are welfare for sports millionaires, too.

    See the article on stadium deal obfuscation methods. Method one is “our city is different.” It never is. Method two: “this deal includes all infrastructure costs.” It never does.

  6. sam Says:

    Mike, now you’re straight up ignoring my plea for relevant evidence. If your point is that developers often make creative or misleading arguments to get lucrative stadium deals out of cities, of course, that’s obvious. But we’re not talking in abstraction or about the general issue, we’re talking about a specific proposal.

    You’re saying the deal doesn’t cover all the infrastructure costs and you’re using as evidence a previous pattern. Fine, that’s a reason to have a prejudice against stadium financing in general, but a previous pattern is not proof of anything in this case. In fact, it can’t be, because the legislation hasn’t even been written. How can you be against legislation that hasn’t even been written? I don’t understand.

    I’m done, this is silly. Feel free to have the last word.

  7. Mike Licht Says:

    Sam:

    A professional sports team wants the city to give it land for free and finance its new stadium.

    That is a bad deal for the city and taxpayers, as evidenced by dozens of previous cases.

    What more do you need to know?

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