Pay to Play: The Stadium Scam

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On May 15th, plans to build a new arena for the Sacramento Kings were finalized. Part of a long effort to keep the Kings in Sacramento, it was seen as a huge success by NBA fans, and a boon for the city of Sacramento. But is it really? For years, the Maloofs mismanaged the Kings, failing to make an impact on the court, and constantly lobbying for taxpayer funding to build a new stadium. Under a new owner, the Kings have been kept in the town, but the plan is the same. build a new stadium, on the taxpayer’s dime.
 
 
 
So while NBA fans are celebrating the Kings, we have to look at the building of the new arena in real terms. The new arena would only conceivably hold around 2,000 more fans than Sacramento’s current Sleep Train Arena, but is being built at a cost of $448 million, in the heart of downtown Sacramento. The benefits will come in other areas. Not only will a new arena make the Kings a show worth going to see, but also bring rejuvenation into the downtown Miami area. Sacramento Mayor, and former Phoenix Sun, Kevin Johnson said “I didn’t win a championship on the court… This is Sacramento winning a championship.” 
 

But the cost is undeniable, and the future incredibly uncertain. Of the $448 million being used to build the stadium, $258 million is being paid by the city – a city already facing an $8.9 million deficit for the next year. The Kings hope to break ground on the new project immediately, so the money will likely need to be raised through bonds issued by the city – bonds that will need to be repaid, and through other avenues that amount to the city being on the hook for over half the cost of the stadium. Cincinnati, another city which assumed debt to build their team’s Paul Brown Stadium, now faces a $30 million deficit.

 

Throughout the United States and Canada, 64 major league sports teams have stadiums built through partially or wholly taxpayer funded means. The largest, the 80,000 seater Cowboys Arena in Arlington, Texas, will be an undeniable boon to the area. The Cowboys are a destination team, and have long had a reputation as being one of the titans of the game, despite losing seasons. Fans can, have, and will flock to the stadium in droves, giving Arlington the financial kick in the pants it wanted.

But the situation isn’t as rosy for other teams, and other cities. The University of Maryland’s Dennis Coates looked at papers that studied the economic effect from new stadiums. Most studies found “lack of evidence for widespread growth in income and employment, or even increased hotel occupancy.”

Meanwhile, an investigation by the Miami Herald into occupancy at the new Marlins Park complex painted an even bleaker picture. Marlins representatives pitched the complex as an economic renewal of the area. The stadium’s pitch was, it would bring in new stores, and new retailers by the dozens. As of 2013, there are still open tenancies, as several businesses have pulled out of previous commitments. Sitting on prime real estate, the stadium also generates nothing in tax revenue – it’s owned by Miami-Dade County, not the Marlins. The ownership of Sacramento’s new stadium is still yet to be determined, though with the city paying over half of the cost, it’s not unusual to guess who.

 

If you’ve noticed a common thread, it’s a universality that new stadiums have failed to revive failing teams.  Instead, the teams struggle to fill in shiny new stadiums.  Exceptions like the Cowboys are nothing to look at.  They’d be successful if they built a new stadium on the moon.  So Sacramento taypayers and Kings fans should look at the new deal to keep their team in town with some skepticism.  At least the city will have the stadium’s naming rights. Have we considered “Taxpayer’s Arena?”

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