Field of Dreams

Cities pay a steep price to attract professional sports. Is it worth it?

They want a professional baseball team in St. Petersburg, Florida, so badly they can taste it. Even with its booming economy, the things the fourth-largest city in Florida can brag about sound a bit lame these days—particularly with Tampa just across the bay, putting on airs about its airport, its hotels, and its National Football League team.

But just give St. Pete a baseball team, and things would really turn around. People would want to come to St. Petersburg. St. Petersburg would be in every newspaper in America every day for six months. Millions of baseball fans from Buffalo to Denver would wish they lived there. Tampa would be jealous; Miami would be steamed.

St. Petersburg wants all that. It wants to become a Big League city.

But the price is steep. Major-league baseball owners play a little game with cities desperate for the ultimate municipal status symbol. Build a stadium, baseball tells a hungry city. Paint the seats. Pave the parking lot. Spend the money till it hurts. Then we'll talk. For St. Petersburg, the multimillion-dollar price tag for a new stadium just represents the cost of being put on baseball's waiting list.

So city fathers went ahead and took out a $110-million mortgage to pay for the Florida Suncoast Dome, a 43,000-seat stadium in the middle of a nine-block waterfront area already slated for redevelopment. Increased resort and property taxes stand behind the bonds issued to build the ballpark.Forty percent of the Pinellas (County) Sports Authority bonds are backed by local resort taxes, with the rest coming from excise taxes and revenue sharing from the state. About $22 million comes from "tax increment financing" on downtown St. Petersburg property that has become more valuable than initially projected. "The property taxes have risen faster, so we can bond the difference," notes sports authority spokesman Bill Bunker.

The Suncoast Dome's planners have hedged their bets a little, preparing for a long dry spell of conventions, tractor pulls, and rock concerts until baseball comes to town. Rock star Billy Joel inaugurated the Dome with a concert in March. But the Dome "needs baseball to be economically feasible," Bunker says.

It's a gamble, but one that came close to paying off before the Dome had even been capped. In 1988 the Chicago White Sox were worried about the fate of rotting old Comiskey Park, a stadium so riddled with safety problems that the American League laid plans to forbid the White Sox to play there. Tired of negotiations with the Chicago government, the White Sox owners announced plans to move the team into the Suncoast Dome.

The euphoria over the arrival of the "Florida White Sox" lasted a few weeks, just long enough for Chicago to come to terms with the White Sox. Alas, St. Petersburg was just a pawn in a larger game that sports magnates are fond of playing. The White Sox owners got to soak Illinois taxpayers for a stadium across the street from Comiskey's present site. St. Petersburg got nothing but a valuable lesson.

The lesson was this: If you have a stadium, you might get a team. No one would have returned St. Petersburg's phone calls if the Suncoast Dome hadn't been fully funded and under construction. That was not lost on other cities which were jealous of St. Pete for having come even that close to The Show.

Burned once, St. Petersburg will probably stay out of the loony market for existing franchises and concentrate on convincing baseball to place an expansion franchise in the Dome. Will baseball comply? According to George Mason University economist Jerome Ellig, St. Petersburg ranks no higher than sixth on a list of the most profitable cities baseball has yet to move into.

St. Petersburg desperately wants to attain major league status. Baltimore just as desperately wants to keep it. In 1984 the city fathers played chicken with Bob Irsay, the owner of the NFL's Colts. Irsay wanted new facilities for his team; Baltimore said no. Late one night, Irsay packed his team's equipment into some moving vans and shipped everything to Indianapolis, home of the brand-new $77-million Hoosierdome.

Irsay's midnight departure earned his team the derisive nickname "the Bolts," but Baltimore was the real loser. Since the team had already lost a pro basketball franchise, only baseball's Baltimore Orioles stood between the city and sports-page oblivion.

So when then-Oriole owner and Washington legal sharpie Edward Bennett Williams heightened his longtime demands for a new stadium, the Maryland government said, Let's talk. It didn't hurt that the new governor of Maryland was William Donald Schaefer, Baltimore's mayor at the time the Colts bolted.

"You look at prestige, you look at jobs, you look at the things it generates in a city," Schaefer said about the baseball team. "You won't be able to replace them, and once they're gone, they're gone."

In 1988 Schaefer used that argument to justify signing what baseball insiders called a "sweetheart of a deal"—a new, publicly funded stadium for the Orioles in downtown Baltimore. The state government promptly issued $201 million in new bonds for a downtown stadium complex. The Orioles' only concession: The government did not have to pay for $11 million of hot dog cookers, beer taps, and other food stand equipment. Williams, who claimed he was holding the Orioles "in trust for the city," died after making the deal that will keep them there into the next century.

What will Maryland get for the lottery proceeds and state taxes used to back the 30-year bonds it had to float? The Orioles' new home will be a gem of a stadium, a throwback to the good old stadiums like Wrigley Field and Fenway Park, with an old-timey brick facade and excellent sight-lines within. The park—which will stand on land in the Camden Naval Yards once inhabited by warehouses—will sit near the Inner Harbor, the "festival marketplace" built on Baltimore's waterfront.

But such downtown amenities do not come cheap. Land acquisition alone will run $85 million; construction itself will cost about $75 million. For a paltry $72 million more, Maryland will build a football stadium next door, in the confident hope that the NFL will not be able to see a big stadium in a good media market stand empty.

A market for professional sports franchises exists today as never before, and the asking price is high. For over 40 years, city and county governments have traditionally been asked to pay for huge new stadiums in the hope of luring—or retaining—big-league baseball and football teams like the White Sox, Colts, and Orioles.

That tradition shows encouraging signs of change, but not before local citizens are tagged in the next few years for huge construction bills.

In addition to the stadium in Baltimore and St. Petersburg, pro sports will spawn a number of expensive additions to city skylines around the country in the next few years:

• In San Antonio, voters approved a sales-tax increase to finance the construction of the $88 million Alamo Dome;

• Illinois tax revenue stands behind $150 million worth of bonds to construct that new baseball stadium for the Chicago White Sox;

• Atlanta passed a hotel tax increase last summer to pay for the $160-million Georgia Dome, scheduled for completion by 1996;

• And in Sacramento, sports maven Gregg Lukenbill, in a switch, offered to spend up to $125 million of his own money for a stadium in the California capital. He did ask the local government to put up a $50-million bribe, in the form of a "franchise loan," to lure the Los Angeles Raiders northward. But he was outbid by the city of Oakland.

All told, as many as 20 North American cities are laying plans for new football or baseball stadiums in the next few years. Over three-quarters of a billion dollars was spent for sports facilities in the past decade, most of that from the public purse.

What do these cities and counties get for their money? Many stadiums don't even earn back their yearly operating costs, and only one built in the past 30 years has paid back its original investment.

Local boosters claim that even stadiums operating in the red pump billions of dollars into flagging local economies. Indeed, pro sports may have some beneficial effects, but not nearly the ones claimed. As put by economist Robert A. Baade, who once chaired a panel investigating a new stadium for Chicago, "looking at pure economic benefit and pure economic costs, stadiums are not worth the limited resources put into them."

Cities do receive what Baade calls an incalculable "psychological dimension which we can't discount or completely ignore." And in order to host a pro team these days, a city has to build a stadium. It's as simple as that.

Intangible psychological benefits, however, sound suspiciously airheaded in times when most governments face yearly struggles to balance their budgets. So pro-stadium forces traditionally turn their arguments toward the bottom line.

In St. Petersburg, for example, stadium boosters commissioned a study showing the Suncoast Dome adding $750 million to the local economy each year. Numbers from Maryland's Department of Economic and Community Development put the Baltimore stadium's value to the state economy at a more modest $134 million a year. Indeed, everywhere a new stadium proposal pops up, someone will be churning out numbers to justify its economic existence.

The new Baltimore ballyard, says Governor Schaefer, "is one of the most important economic benefits to the state. There isn't any question about it."

Schaefer may not be a trustworthy source for hard facts on the stadium—it does, after all, primarily benefit his hometown and particularly the Inner Harbor, the small piece of Baltimore's downtown which was Schaefer's theme-park legacy to the future. But the governor was merely engaging in the same optimistic crystal-ball gazing that happens in every city about to build a stadium. In Sacramento, stadium forces crowed about the $1.6 billion that a baseball or football team would add to the Greater Valley economy—and that privately funded facility didn't even have to meet taxpayer approval.

In most cases, those rosy estimates come from consultants who add up all the money from tickets, food, beer, parking, and souvenirs, plus all construction wages, hotel receipts, new jobs, and other economic shifts. Then, the consultants assume those construction workers and hot dog vendors will spend this extra money somewhere else in the city, thus doubling or even tripling the benefits of this new infusion of cash and spreading it to local citizens who don't work at the stadium, even those who don't particularly like pro sports. The consultants usually conclude that the stadium will pay for itself and contribute mightily to the area.

But adding it up a different way—as some spoilsport economists have done—makes stadiums seem a much shakier investment. They may benefit the local economy (there is some dispute on that) but they rarely pay back that initial investment.

Stadiums fall short of their rosy predictions in a number of ways:

• Covering their costs. One problem is that construction companies want their money now. But those tickets, hot dogs, and souvenirs won't be sold until the distant future. The $100 a family of four will plunk down at the ballpark some afternoon in the year 2000 has some value, but not as much as $100 spent today, when the concrete and steel bills are due. That smaller figure—the "present value"—is a number consultants rarely use when adding up how much money a stadium will earn.

But Pepperdine University economist Dean J. Baim did use those more realistic estimates in a study of 14 stadiums across the country, and he concluded that only one—privately owned Dodger Stadium in Los Angeles—has paid back its original cost. (Other stadiums in Anaheim, San Diego, and Oakland may one day reach that point.) "From a financial standpoint, the net present value of stadiums is invariably negative," Baim concluded. Indeed, based on net present value, his study's 14 stadiums are a collective $136 million in the red, with the New Orleans Superdome at the back of the pack with a whopping $70-million debt in current dollars.

• Spreading the wealth. A common comeback from sports magnates is that government subsidies allow them to lower ticket prices, in effect passing on the savings to the consumer. But Baim found that little, if any, of those subsidies are passed on to the fans. If that government aid is coming from an urban tax base, it may wind up as a transfer payment from poorer taxpayers to rich team owners.

• Boosting the local economy. Baade, the economist who helped Chicago wade through stadium proposals, has done his own nationwide study of claims that stadiums pump millions of dollars into the surrounding community. His conclusion: "Economic landscapes don't seem to change much."

Baade, a professor at Lake Forest College, found no significant changes in retail sales, personal income, or other economic indicators in his before-and-after look at cities with new stadiums. Much of that, in Baade's view, is because sports teams just soak up the money from local patrons who would have spent it on other leisure activities in the same city. "Spending for leisure activities is highly substitutable," he says. "What you're really seeing is an economic realignment rather than new spending."

Under certain circumstances, stadiums achieve limited economic benefits—but economists with different methods see different advantages. Baade noted some economic improvement in regionally isolated cities such as Seattle and Denver. Pepperdine's Baim found an increase in service and nonagricultural employment in many cities, though Baade saw no rise in manufacturing employment. Furthermore, expansion teams seem to need some assistance in getting their feet off the ground, according to George Mason's Ellig, who has followed the rise and fall of baseball franchises from an economic point of view.

But those conclusions don't really address another concern. Publicly built stadiums are saddled with regulations, guidelines, and political expectations like any other public project. Even those that improve the local economy might have produced greater benefits if they had been built by private interests. Ellig noted that "it is not clear whether public ownership of stadiums represents the lowest-cost way" of capturing the economic benefits a sports facility brings.

• Making investment sense. Even if further research adds to the list of circumstances in which a subsidized stadium is a mild economic plus, cities should worry about whether those benefits are the best they can get for the money they spend.

Baade cautions cities that the millions of dollars sunk into stadiums might be better spent luring new businesses into town. "If you exhaust a large part of your city's capital budget on sports facilities, you might be losing the chance to promote the development of highly skilled, nonseasonal, nonwage jobs."

In other words, there is an opportunity cost to that investment, even if it pays off in the long run. A major-league city might become a town full of hot dog vendors while a cross-state economic rival might fill up with Ph.D.s. Even in the unlikely event that the stadium pays for itself, it would have crowded out more valuable investments of local tax dollars.

And yet, it is a fact of American life in the 20th century that the rich city full of Ph.D.s, for all its advantages, might envy the poorer city with the sports team.

The path from clown town to super city seems simple: Build. Build a few nice hotels. Build an airport. Build a convention center or a festival marketplace. Build a library, a concert hall, a university, if you have to. And, finally, build a stadium. Unfortunately, the number of ballet troupes is not limited and the number of baseball teams is. That makes the stadium the most expensive and riskiest proposition of all.

Perhaps the most sought-after brass ring is national exposure. "There's no other way a community can be in newspapers all across America," says Mike Seward of the Sacramento Sports Association. Other sports officials compare the effect of a nationally televised game from their city to an hour-long commercial—but the publicity is free.

Sacramento is one of the most recent additions to the ranks of big-league cities with the arrival of a moribund National Basketball Association franchise from Kansas City. Since the Kings, a league doormat, have moved to Sacramento, "the self-image of the people has gone up tremendously. Someone planning a building is willing to build it 30 stories, not 10.

[Contributors] will go with a first-rate museum. That's an attitude that we can never attach dollars and cents to," Seward reported recently. In fact, it is tough to prove or disprove the link between a new team like the Kings and new construction or downtown development. New teams and boom times usually arrive hand in hand, so it's a chicken-or-the-egg question—one that makes a city feel good about itself, regardless of the answer.

All nouveau major-league cities claim to get that same psychological shot in the arm, and all say that it cannot be measured in dollars and cents. The boost to civic pride is undeniable and highly prized. But city fathers have generally oversold the economic benefits in attempts to hide their edifice complexes, and that's what makes some people mad. "Taxpayers have a right to be leveled with," Baade says. "If the argument ultimately is that the city will feel better about itself, tell them that."

When taxpayers are not leveled with, they usually get the picture anyway. Stadium proposals put up for a vote in recent years have gotten the thumbs-down in referenda from Oklahoma City to Cleveland. The classic example is last November's referendum in San Francisco, when voters decided that they had better things to do with their money than pay for a new stadium for baseball Giants' owner Bob Lurie.

Lurie had threatened, for the second time in a decade, to move his Giants elsewhere unless the city coughed up enough money for a new stadium. But voters, unimpressed by the Giants' standard claim that the city would get its $115 million back in due time, saw more immediate uses for that money around them. The earthquake and AIDS funding were on the minds of the voters who by a 51-to-49-percent margin turned down a replacement for Candlestick Park. Rumors that the team would move near its spring training grounds in Arizona had died after Phoenix voters had rejected a baseball stadium there by a 59-to-41-percent vote in October.

Ironically, it was Candlestick, a 59,000-seat behemoth built in 1960, that ushered in the modem era of the "super stadium." Unfortunately, bitter cold and winds fierce enough to blow pitchers off the mound pushed attendance down. Yet after Candlestick withstood the earthquake that disrupted last year's World Series—and earned it the adoring nickname "Wiggly Field" in the process—voters saw no need to replace such an amazingly sturdy structure. The Giants may now move to Denver, Sacramento, or another sports-hungry area.

It wasn't always like this. For pro sports' first 70 years, constructing a ballpark was the responsibility of individual teams. Local governments, if anything, were hostile. When the Giants were still in New York a century ago, the city government broke down the wall of the original Polo Grounds and pushed 111th Street through the team's outfield. It was up to the Giants to find new quarters on the Harlem River and slap together a new grandstand.

In the past 30 years, however, only one man has been able to go it alone. The late Joe Robbie, owner of the Miami Dolphins, constructed an aqua-and-orange football palace in 1987 entirely with private funds. He called it Joe Robbie Stadium.

For years the Dolphins had played in the Orange Bowl, a stadium that no less an authority than Hunter S. Thompson described as "hell." It was dirty, it was old, and it was in the middle of a slum. (While Joe Robbie Stadium hosted 75,000 fat cats at last year's Super Bowl, the neighborhood around the Orange Bowl was cleaning up the debris from Miami's latest race riot.) After three attempts to improve the facilities had been turned down by Miami voters, Robbie struck out on his own.

Robbie knew how unreliable local governments can be, possibly from his days as a state legislator back in South Dakota. An individualist who bragged about his "Irish dander" and "Lebanese tenacity," the Dolphins' owner decided it was time to play bet-the-franchise in the hope of getting his own way.

Robbie charged diehard Dolphins fans up to $650,000 for 10-year leases on luxury boxes, those moneymaking sky suites that almost all football owners are blackmailing their hosts to get. For less affluent fans, Robbie built 10,000 air-conditioned "club seats" which went for as much as $140,000 for a 10-year lease. With that revenue, Robbie was able to borrow the money for 432 acres 30 minutes north of the Orange Bowl and put up his $115-million football octagon.

"This stadium is a monument to a free, competitive enterprise system and showed that anything the government can do, we can do better," Robbie said at the stadium's dedication in 1987. "What I have done is caused the politicians to look toward the private sector to build what are essentially public facilities." Before his death early this year, Robbie was laying plans to bring a major-league baseball team to his city. His son, Tim Robbie, has taken over the team and the stadium.

Is Joe Robbie Stadium the wave of the future? Well, yes and no. Stadium experts say that other teams might find it hard to duplicate Robbie's economic position—specifically the presence of thousands of fans willing to pay new-house prices for football tickets. Florida's booming economy also helped. "This was a real estate play, in part," reports Sam Katz, a Philadelphia financier who helped Robbie find banks willing to front him money for the stadium.

A few sports bigwigs have talked about constructing their own stadiums, ' including Washington Redskins owner Jack Kent Cooke and Sacramento's Gregg Lukenbill. For Cooke, like Robbie, the advantage of actually owning a team makes his dream complex in the northern Virginia suburbs a possibility. Lukenbill, who owns no team, planned to recoup his investment by gathering in most of the "externalities" that usually benefit the local economy. With plans for owning the hotels, bars, restaurants, and parking garages within a wide radius of his facility, Lukenbill, in a sense, would have been the local economy.

But the wave of the future is probably best represented by the plans of the Milwaukee Brewers to build their own ballpark on $50 million worth of land secured by the county government. The reason for the private construction plans? A new Milwaukee stadium won't get the tax breaks that have underwritten so many stadiums of the past.

Through the 1980s, the federal government gave bonds issued for stadium construction the same tax-exempt status given to bonds for building roads or schools. Since debt service can represent three-quarters of a stadium's costs, that meant something to local governments. "Competition between cities for sports teams had been financed by the federal government," says one Wall Street analyst.

But three separate changes to the tax code in 1984 and 1986 changed all that. Stadium bonds now get tax-exempt status only if they meet difficult criteria, and the difference could mean an extra $100 million or so tacked onto the cost of a particularly expensive stadium. Sports-hungry cities have deep pockets, but none are that deep.

But so many sports projects were grandfathered into the 1986 tax reform bill that the effects of those changes are only being seen now in places like Milwaukee. Cities are serving notice that there is a limit to what they can be asked to pay for. "You'll see more public-private ventures. You'll see more cost sharing—and risk sharing," predicts Katz, a top sports financial consultant.

Most analysts note, however, that the private sector is probably better equipped to handle construction. "By keeping this private, we'll build a better stadium at a cheaper price," says Maurice Reed of the Sacramento Sports Association. "We think that's the new way to do things." And, as Baade notes, a team "is much less likely to leave a stadium built with its own funds."

Even the new breed of sports owners with dreams of owning their own stadiums are not diehard private-enterprisers. Redskins' owner Cooke is still negotiating with the Washington, D.C., government in the hopes of getting a sweetheart deal. Sacramento's Lukenbill had to turn to the city government to ante up the bribe the NFL's Raiders demanded. Robbie himself admitted in 1987 that he thought building arenas was still a "normal function of government," and he left the state to build $25 million in road improvements to end eight-hour traffic jams at the Dolphins' new home.

And even private development cannot make a stadium affordable to more than a handful of men. Only those who already own teams can contemplate taking that next step. "The prospects for doing another Joe Robbie are going to be somewhat limited," says Katz.

The wave of the future is some type of joint public-private venture in all but the biggest sports markets. By one count, at least six new stadiums on the drawing boards have both public and private funds committed to them. For the foreseeable future, local governments and private developers will continue the relationship they have found themselves in by chance if not by choice.

Cities in search of a new team will still think subsidy. A pro sports franchise can cost $50 million or more; some fat cats in San Antonio or St. Petersburg might shell out that kind of cash, but add the $100 million or so for a place to play and they will likely bow out. This means, for the cities that want the exposure and prestige of major-league status, that continued subsidies will be inevitable.

But the record argues that those subsidies bring intangible benefits rather than economic good times. The public should know this. And the public should also know that those intangibles come with a steep price tag that may never be worked off. "Put it that way," urges Baade. "Let's see if the taxpayers are willing to go along with the program."

T. Keating Holland is a free-lance writer living in Washington, D.C.