An Economic Development Case for Building Sports Stadiums

An Economic Development Case for Building Sports Stadiums

Above: Site of the proposed Atlantic Yards Complex in Brooklyn

Just last month, we posted a blog entry asking readers whether building convention centers in inner city neighborhoods are worth the public subsidies required to do so. Since then, an almost identical conversation has been happening about whether sports stadiums are worth the public investment.

In an article posted in The Nation, Neil DeMause asks, “Why Do Mayors Love Sports Stadiums?” He argues that tax breaks, free land, government-subsidized tax-free loans and discounts to offset operating costs are not recouped by cities after stadiums are built. Indeed, many stadium plans include benefits to the surrounding community but these plans never bear fruit.

The Atlantic Yards project, which will bring the New Jersey Nets basketball team to Brooklyn, was suppose to include a “Miss Brooklyn” office tower that would attract jobs, as well as 6,000 new residential condos, 30% of which were designed to be affordable units. After New York’s real estate market collapsed, these plans were scrapped. Meanwhile, the stadium is on track to be completed by 2012, thanks to $511 million in tax-exempt bonds.

At the same time, the thought of losing a sports stadium makes local officials’ skin crawl. If the Staples Center lost the Lakers, what could possibly fill that void? Houston certainly hasn’t found an answer. After the city lost the Oilers, followed by the Astros relocation downtown, the Astrodome sits vacant. Talks of building a hotel, convention center, or massive IKEA at the location have not come to fruition; and as a result, the stadium has sat vacant for over a decade.

In his article, DeMause describes the “mayors’ fear” phenomenon by detailing the case of the Pittsburgh Penguins. Apparently the Penguins owner, after threatening to move the team to other cities, has been quoted as saying: “Our goal was to remain here in Pittsburgh all the way. Those trips to Kansas City and Vegas and other cities were just to go, and have a nice dinner and come back…That was just the way for us to put more pressure, and we knew it would work at the end of the day.”  Gotchya, Pittsburgh!

But are the public subsidies always a bad deal for cities?

In a Forbes article last week, Adrian Melville explains that “Sports is Helping to Spur Growth in Boston.” During the 163 Boston sports home games last year (Red Sox, Celtics and Bruins) fans injected $300 million in to the local economy. (For the sake of full disclosure—I’m a die-hard New England sports fan, and often contribute to this spending.) It’s hard to miss the craze that happens each time the hometown team plays.

But Boston’s stadiums aren’t new – so let’s take a look at Foxborough, MA, home of the New England Patriots. Owner Bob Kraft wanted to complement the new Gillette Stadium, and as such, built Patriot Place. This mega-mall comprises the 500 acres surrounding the stadium and includes a four-star hotel, 16 restaurants, a 14-screen movie theatre, a full-service hospital, and myriad shops and retail outlets. It is estimated that Patriot Place brings in $2 million in tax revenue to Foxborough each year.

With sports and retail covered, now the Kraft family is working to support the local arts and culture community as well. Last month, the Krafts made a 1,300 sq. ft. vacant storefront available to The Artist’s Studio & Gallery as a means of highlighting the work of local artists.  This is a classic example of a corporation creating “shared value” for its local community.

Though Gillette Stadium has been largely privately-funded, the Kraft family sought public subsidies for infrastructure improvements to accommodate increased traffic flow from the development.

People seem to be either very strongly in favor of or very strongly opposed to attracting sports teams and developing stadiums as a means of economic development. So we post the question to our readers:

Should cities offer subsidies to attract sports teams and build new stadiums? Are the economic benefits worth the investment (and risk)—even if plans for associated affordable housing and office developments fall through?

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Learn more about these topics at "Urban 2.0" being held Oct. 3-4 in Chicago!

awesome blog, do you have twitter or facebook? i will bookmark this page thanks.

By Andre on 08/25/2011

Thanks for the responses! We do have both a facebook and twitter account.

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Twitter: icicorg

By Amanda Maher on 08/25/2011

Just for the record, that photo is not “the site” of the Atlantic Yards development. It shows perhaps 25-30% of the site—the railyard that gives the project its name is less than 40% of the site. Better map here:

By Norman Oder on 08/31/2011

Oh, and here’s my comment on Neil deMause’s piece, clarifying some of his numbers re Atlantic Yards;

Norman Oder
Atlantic Yards Report

By Norman Oder on 08/31/2011

Just thought I

By Million Dollar Pips on 11/02/2011

August 23rd, 2011


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