10. Siting Stadiums for Fun and Profit: Prospects for Spin-Off Investments

Sometimes inflated promises of commercial benefits are made to help sell public investments in athletic facilities, including major and minor league baseball stadiums and hockey and basketball arenas. The actual rewards in terms of added out-of-stadium purchases, increased employment and taxes paid to local governments are greatly affected by the location and design of the facility and the frequency of use. Where a substantial number of fans walk to games near restaurants, bars and shops, these benefits will be greatest. The more fans arrive in cars remote from the city’s commerce, the less economic benefits may be anticipated. However, city commerce is increasingly competing with in-stadium sales of food and other items in the new facilities. Arenas offer the best chance for generating economic benefits’ they fit more easily into the existing commercial fabric and they operate more frequently.

The view of Baltimore’s illuminated skyline, the location of the Oriole’s stadium at Downtown’s edge and the facility itself are credited with selling an astonishing number of tickets to out-of-towners as vvell as locals, far more, fans concede, than can be accounted for by the team’s win-loss record. Downtown stadiums have produced their own winning streak, generating higher hotel occupancy, restaurant turnover, retail sales jobs and city revenues where fans can walk to games and later walk to pubs to celebrate or commiserate.

The trend extends beyond big cities and major league baseball teams. Some minor league teams, such as Buffalo’s Braves, have long been a Downtown feature. New to Bridgeport, CT, are the Blue Fish. Staten Island is likely to see a new stadium for a Yankees minor league affiliate. Basketball and hockey arenas fit comfortably in central business districts. In Newark, NJ, plans are underway to relocate the New Jersey Nets from the distant Meadowlands to the heart of downtown, near shops, hotels and transit. Debates over new stadiums, including Downtown ones, typically focus on who will pay for the facilities and how much. There is a good deal of jockeying among the potential financial partners about how to share the costs. Another source of friction can be siting the facility where nearby residents see professional sporting events as a potential neighborhood nuisance. Still, many owners and government officials have a compelling desire to produce Downtown stadiums that will yield added revenues to both private and public sectors. The Baltimore vision is compelling and has attracted a growing number of imitators.

This article addresses the prospects for secondary economic benefits, sometimes called spin off in the commercial sector. It is on this element that stadium projects are typically sold promising otherwise unattainable growth in jobs, business opportunities and the taxable revenues. Specifically, the article examines the potential relationship of land planning and facility siting to the prospects for actually attaining some or all of the promised benefits. It offers an alternative to formula-driven estimates that approximate everywhere without being specifically applicable to anywhere. It argues that economic benefits need to be recognized for what they are or are not in planning stadiums and arenas.

Location Factors

While it is true that some fans may drive downtown to spend before and/or after games, in general, the economic benefits to downtown commerce are in inverse proportion to the share of fans who drive to stadiums and park on site. Downtowns facilitate pedestrian driven commerce. You have to walk in order to spend.

The location factors influencing downtown consumer spending by sports fans can be summarized:

  • • About a 10-minute walk (0.5 mile) from:
    • A major population concentration
    • A major employment concentration and/or
    • Significant transit
  • The walk is attractive, raising no concerns about safety
  • There is relevant retail along walking routes
  • Major parking facilities do not separate sports facility from commerce

In addition, economic benefits correspond to the number of fans attracted and the number of games per year. Eighty-one games are typical for baseball. The dozen home games for pro football suggest one reason why there are few advocates for locating these facilities downtown.

Table 1 compares the locations, actual and planned, of 10 teams with the five factors that affect spending potential by fans. The intention is not to produce a score card. Rather, it is to suggest a method for addressing these questions relevant to downtown planning:

  • Is a proposed site likely to produce promised secondary benefits?
  • If the prospects are poor, what changes could be made to improve the potential yield from that site?
  • Are there better prospects at another site?

Where two ratings are shown, this reflects probable improvements in a new or planned site. Specifically, significant increases in retail, dining and/or hotel offerings are anticipated at the sites of the Wilmington Blue Rocks, New Jersey Nets and Washington’s MCI Center, all new or planned facilities.

Looking at selected sites helps indicate the variables on the ground. The handsome new Bears Stadium in Newark, NJ, sits at the northern edge of downtown near an office district whose one restaurant, ten minutes from the stadium, is closed at night. It’s doubtful that there is enough potential demand even given 81 home games to extend its hours and generate baseball-related opportunities for spending.

The Wilmington Blue Rocks Stadium today seems beyond downtown’s southern limits. Yet an aggressive state redevelopment agency is filling in the gaps between cultural facilities and office buildings with a major retail outlet and residential conversions. A mammoth nightclub is a short walk from the stadium. Downtown is growing toward the Blue Rocks.

Looking at the five factors that affect potential spending in Downtown, three lessons emerge:

  • Downtown sites vary greatly in their potential to generate spending outside the stadium. It matters a lot where they are placed.
  • Arena (e.g., MCI) can operate 300 times annually and provide a better basis for bars, restaurants, and hotels than baseball stadiums
  • Small facilities are easier to fit into commercial centers (e.g., MCI Center).

In Philadelphia, neighborhood opposition to a new Phillies stadium at Board and Spring Garden streets stalled action on the new facility, possibly sending the Club back to South Philadelphia, an auto-dependent location is a sea of macadam or asphalt. Some have pointed to an alternative site with acceptably short walks to three subway lines, a regional rail hub, hotels, and two million square feet of retail. No site is perfect, including this option. The comparison is made to illustrate how a site change can improve commercial prospects (Existing, Proposed, Alternative, Table 2).

Philadelphia is among the nation’s most walkable downtowns and the alternative site is no exception. Fans could and would connect with existing hotels, bars and varied restaurants, including 100 dining choices in adjacent Chinatown. Because economic spinoff is not the sole criterion governing stadium siting, however, this site might reasonably fall by the wayside on other planning grounds.

To illustrate further the variables affecting spinoff, comparisons were made among three sites -the MCI site in downtown Washington and the proposed and alternative Phillies’ sites in Philadelphia. How close is the site to concentrations of fans? Exhibit 3 illustrates the potential for resident and office workers to walk to the stadium because of their nearby concentrations. Actual walking experience for these city-savvy fans may exceed the half-mile or ten-minute rule-of-thumb, but the data illustrates the relative advantages of the three sites. The proposed Phillies’ site has more nearby residents with good household incomes. The proposed and alternative sites have about the same number of office jobs.

Table 4 illustrates the relative advantages of each to those sites in terms of the proximity of types of businesses fans are likely to use to the three stadium sites. The alternative Phillies’ site is closest to the greatest number of retail businesses of the three and is especially strong in eating and drinking places, an important element in appealing to fans both before and after games.

It is interesting to note the assumptions that the Phillies’ management made in planning the proposed stadium at Broad and Spring Garden Streets. They anticipate at this Downtown site:

  • A 50 percent increase in attendance over the Existing South Philadelphia site,
  • An average admission price increase from $13.65 to $15.65 and
  • An average in-stadium expenditure from $6.62 to $10.00.

At the existing Phillies’ site in South Philadelphia, surveyed fans currently spend an average of $12.12 before games and $11.20 after games in locations as far away as New Jersey. Those who spend in Center City, however, reported spending twice as much as the average for all spenders. The Phillies predicted that out-of-stadium expenditures at the proposed site will increase to an average of up to $35.25 because of the proximity of Center City restaurants, bars and hotels and the establish pattern of more spending per fan in this downtown area.

Transportation experts Rothe Johnson estimate that 80 percent of fans would drive to the Proposed Spring Garden Stadium site. If the game attracts 40,000, then 8,000 will walk from home, office or transit. The Eighth and Race Street Alternative site has substantially greater transit access than the other two locations. Moreover, the popular High Speed transit line’s massive free parking lot on Interstate 295 in South Jersey and thousands of existing shopper parking spaces within two blocks of the stadium would lessen the need for new parking facilities, reduce the amount of land required and put fans closer to spending opportunities. If this site also enabled 25 percent of attendees to avoid auto use, the additional 2,000 walkers would spend an additional $70,500 per game outside the stadium, more than $5 million of added spending in a season.

Summary

Arenas and stadiums are significantly different in their potential for secondary economic benefits. An arena can often operate more than 300 times a year, with non-sports events filling in between games. In addition, arenas require far less land and can more easily fit into areas where there are potentially benefitting businesses close at hand. In contrast, 80 baseball home games do not by themselves offer enough comings and goings by fans to stimulate redevelopment. If there are bars or restaurants nearby, they will sell more food and beverages and perhaps add employees and pay more taxes. But, economic development planners should not assume that baseball trade will encourage an investor to build nearby.

Of course, economic spinoff is not the only issue that must be addressed in stadium or arena siting. Nevertheless, analyzing What fans are likely to spend outside stadiums and arenas is a site planning consideration that is vital in challenging secondary impact estimates, planning the best site or making an imperfect site better through redevelopment or other measures.

Advertisements
%d bloggers like this: