Stadium Shutout

Local governments are no longer as willing to take on the risky business of building a ballpark.
September 2017
The Potomac Nationals' stadium in Prince William County, Va. (Flickr/Luigi de Guzman)
By Frank Shafroth  |  Columnist
Director of the Center for State and Local Government Leadership at George Mason University

Years ago, a colleague of mine became an economic development director for a large city. One of the first assignments the mayor gave him was to complete a study to assess whether building a large public stadium would provide fiscal benefits to the city. When the study found it wouldn’t, he was ordered to re-study it. When that produced similar results, he was directed to bury the studies. The mayor made it clear that the stadium was important to the city’s reputation -- if not its bottom line.

I was reminded of this as I watched Prince William County in Virginia struggle this summer to reach a deal to keep a minor league baseball team, the Potomac Nationals. It is the kind of struggle that dozens of large cities, counties and smaller municipalities face: The owner of a professional sports team needs a new facility and wants the city or county to pay for it. Sound familiar? What’s new is that localities are resisting what used to be irresistible. The razzle-dazzle of hosting a professional sports team is dimming. The financial risk of fronting money for a stadium and dedicating available land to it has its limits.

In Prince William, minor league teams have been playing ball at the county’s Pfitzner Stadium since 1984. The current team’s owner wanted the county to replace the three-decade-old stadium with a bigger, more modern facility. The county’s Board of Supervisors weighed whether to borrow $35 million to build a 6,000-seat stadium, plus pay for $11 million in updated infrastructure. The team would repay the bond out of proceeds from higher attendance at the new ball field.

This past spring the board spent $200,000 on a fiscal economic analysis of a new ballpark. The study found that the proposed stadium would generate 288 jobs, $175 million in economic impact and $4.9 million in county tax revenues over a 30-year lease. Under the terms of the deal, the county would borrow money to build the ballpark. It would own the stadium and lease it to the team, which would repay the industrial development bond the county issued. But the study suggested that it would be “challenging for the team to generate the projected revenues in a ballpark built to their proposed budget.”

Issuing a bond raises several critical issues. One is whether to put the bond deal to voters. While the board does not legally have to do so with an industrial development bond, most jurisdictions do it anyway since, should the team default on its payments, taxpayers would be responsible for the debt.

The board decided against a referendum. Instead, the supervisors planned to vote on the deal at a mid-July board meeting. But the team owner pulled out before the supervisors could vote, saying the proposal was “suicidal business-wise and would create tremendous risk” for his team. Which suggests, of course, that the owner wanted the county to take the risk.

Will other nearby jurisdictions step up to the plate? Beyond the risk of floating a bond, the fiscal challenge for local leaders in Northern Virginia is to balance land availability and the highest, best use of it. The suburbs that are located closer to Washington, D.C., don’t have as much open space or available land assessed at lower values as Prince William County does.

Baseball stadiums are often undertaken to rejuvenate decaying urban areas, but in Northern Virginia, the closer-in jurisdictions do not have an area where a stadium would act as an effective economic stimulus. Given the challenges in the closer jurisdictions in finding available land to build schools, provide recreational space (parks and trails), and maintain space for the less sexy government requirements like parking buses and the staging of construction material to support capital projects, the efforts to build a stadium would likely lead to a shutout.