Economic Development

Empty Bowls

Building a sports venue to attract a team or spark redevelopment is an increasingly risky venture.
by | November 2006

Kansas City, Missouri, is building itself a spanking new arena, a $250 million facility just right for a professional basketball or hockey team. The only problem is that Kansas City doesn't happen to have any such team.

Fifteen to 20 years ago, it was fairly common for cities to build new stadiums on spec, believing that having a major league facility ready to go was an important step in landing a franchise. "The leagues often require that you have a wonderful facility before they'll commit to you," says Bill Dorsey, of the Association of Luxury Suite Directors.

About a decade ago, though, cities seemed to grow more skeptical about taking such risks. With so many economic studies showing that they wouldn't recoup their investments in stadiums, even if they had a team, cities started to press team owners to share more of the load.

And city planners started focusing less on the stadium and more on its setting. Local officials now believe that a well-financed stadium in the right location will spark the revival of the surrounding area. That's why stadiums nowadays are generally built downtown rather than alongside huge parking lots out by the interstate.

Kansas City's new arena is just one piece of a $3 billion downtown redevelopment effort featuring hotels, condominiums, office towers and other projects. "We're building not just an arena, but a destination opportunity for ourselves," says Kevin Gray, of the Kansas City Sports Commission and Foundation, who expresses optimism that the new arena eventually will find a tenant.

Still, even the notion that ancillary developments will recoup a major public investment in a stadium or arena is being met with some skepticism. Sacramento has been negotiating a complicated deal to build a new downtown arena for the Kings--one of the NBA teams that Kansas City is eyeing. Vice Mayor Rob Fong says Sacramento officials hope an arena "will not just anchor new development but will serve as a catalyst."

But the Kings' owners broke off negotiations recently, wanting final say on what new restaurants and businesses could open next to the arena. "The team owners want a clause that in the redevelopment area, there will be no restaurants that compete with what's in their new facility," says Neil deMause, coauthor of "Field of Schemes: How the Great Stadium Swindle Turns Public Money Into Private Profit."

Washington, D.C., is building a new, $600 million stadium for the Nationals, the major league baseball team the city landed last year, hoping the facility will open a decrepit section of the city south of the U.S. Capitol to development. But there, too, a plan to build condos, shops and parking garages next to the coming ballpark collapsed recently, in part because team owners were worried that such projects would interfere with stadium parking.

That's a disappointment to Vincent Gray, the District of Columbia's incoming city council president. "The attraction to me was less about baseball and more about it being a catalyst to attract development to a section of the city," he says. "That was the principal reason I voted for this."

Some sports facilities have clearly helped draw people and new investment to previously forlorn areas. But whether they can jump- start a neighborhood by themselves remains an open question.

While acknowledging the success of Coors Field, Denver Mayor John Hickenlooper maintains that the city's LoDo section was staging a comeback anyway--a process the ballpark accelerated but didn't create.

All of which means cities should think long and hard before deciding that a stadium or an arena will prove to be a wise investment-- especially when they don't have a team to put in the new building.

Municipalities such as Kansas City may find that their arenas serve as little more than stalking horses for teams trying to negotiate better deals to stay where they already are. "You have that building sitting there and you're desperate, and every team in the country knows it when they sit down to negotiate with you," deMause says.

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