Wrong End of the Telescope

Wrong End of the Telescope

Everyone loves to root for the home team, but while the sentiment is charming, it also makes bookies rich. Why should government make the same kind of dumb bet, but at higher stakes? That’s exactly what happens when the dynamics of real estate speculation are magnified by taxpayer-funded sports stadium projects.

Objective assessment of athletes is difficult; inflating the merits of a sports team with hometown loyalty and wishful thinking is a sucker’s game. Likewise, a publicly-funded sports facility is a sucker bet for citizens and a speculator’s dream.

Yesterday’s local news featured pathetic interviews with DC baseball fans. Folks in Nationals ballcaps, standing near lots laid waste by stadium-fueled development delusions, said it had taken a decade for the downtown arena neighborhood to develop, so they were willing to endure ten years of unproductive desolation caused by Nats Park construction. With all this “Wait Until Next Decade” talk it was hard to remember that Monday was Opening Day, not the end of a losing season. 

It was precisely because of the arena project that downtown development took so long. Speculators bought cheap property near the site and sat on it for a decade. When international investors realized they had over-built suburban malls and moved chain stores downtown, speculators finally cashed in with inflated leases or cashed out with profitable resales. Abe Pollan paid for the arena, but millions in government-funded infrastructure improvements and security services made it possible. Bottom line: bad DC Government planning policy intensified market extremes and delayed development.

Direct government involvement in Nationals Park helped blast that vicinity into utter oblivion. Asking prices for property sales, leases, and rentals are twice what the market will bear, distorted beyond recognition as speculation was fueled by the  ill-advised infusion of public cash. Developers are not victims of this situation; they are the perpetrators, and DC government planners and development officials are their enablers and co-conspirators.

Anyone who thinks real estate speculators are victims of the global financial collapse and not its chief cause is looking through the wrong end of the telescope.

 

Image by Mike Licht. Download a copy here. Creative Commons license; credit Mike Licht, NotionsCapital.com

Comments are welcome if they are on-topic, substantive, concise, and not obscene. Comments may be edited for clarity and length.

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2 Responses to “Wrong End of the Telescope”

  1. Hattie Says:

    Really hard hitting. Everything in D.C. must be complicated beyond belief by the presence of the Federal gov’t plus not having your own Senator and Representative.

  2. Mike Licht Says:

    Hattie Says: Everything in D.C. must be complicated beyond belief by the presence of the Federal gov’t plus not having your own Senator and Representative.

    Emphatically so, but not in this case — it’s a home-grown disaster. There are similar cases in St. Louis and Chicago. Pro sports stadiums and arenas are extremely bad investments for local governments, simply welfare for billionaire team owners and millionaire athletes, just plain stupid public policy.

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