BASEBALL AND THE AMERICAN CITY: An examination of public financing…

BASEBALL AND THE AMERICAN CITY:
  An examination of public financing and stadium
   construction in American professional sports.


                       By

                  Brian Reich
                 April 30, 2001
         http://www.stadiummouse.com/




                 POLITICAL
           The sports lobby is powerful and broader than many think. It's not just teams, fans, and
           the major leagues. Locally, powerful development and real estate interests and business
           organizations near the site are strongly in favor. And, lately, funding issues have throw-ins
           like improving public facilities that lead a few more marginal political interests to mildly
           favor construction/remodeling.
                                                              -- Rodney Fort (Questionnaire response)




In her widely acclaimed book, The Death and Life of Great American Cities, Jane Jacobs proposed urban
renewal that emphasized the importance of diversity. She argued that cities were natural habitats for the
flourishing of commerce, culture and community and urged urban planners to draw on the human vitality of
existing neighborhoods, because they have "energy enough to carry over for problems and needs outside
themselves."1 Jane Jacobs launched an urban redevelopment revolution that continues today.


Since Jacobs first offered her vision, city planners and local government officials have tried to build successful
urban neighborhoods by incorporating a combination of residential, business, and entertainment interests.
Over the past two decades, sports stadiums and arenas have become a key component to this design, often
serving as the nucleus for urban renewal efforts. Early on, designers built stadiums in the suburbs. In the
modern design scheme, massive sports complexes are constructed in downtown urban areas and then
surrounded with spin-offs including retail shops and restaurants, new theaters, office buildings, and eventually,
housing. Candlestick Park in San Francisco, CA, for example was a sprawling suburban stadium ringed by
parking lots. The new home to the San Francisco Giants, Pac Bell Park, by comparison, is a compact urban
building, accessible by public transportation and can be reached by foot in about twenty minutes from
downtown. If prognostications prove correct, the City and the team will benefit from a more comfortable
microclimate than prevailed at the team's previous home of 40 seasons.




1
    Jacobs, Jane. The Death and Life of Great American Cities. New York: Vintage Books, 1961.
Stadium Construction and Urban Development

Massive urban development efforts ­ designed to create more livable cities and regions ­ take many different
forms. Some cities seek to maximize land use in already dense areas by redeveloping neighborhoods that have
failed over time, or to expand their size and influence by developing areas that were previous unused. Some
regions seek to develop their job and housing base to entice new residents. Regardless, all of them share a
common goal ­ to generate new economic and social interest, which can attract new residents and additional
visitors to the region.


There are two ways to approach the use of stadium construction as a part of urban development. One option is
to construct a stadium and work to create a vibrant neighborhood around it. The other option is to insert a
stadium into an existing, or developing, neighborhood with its intended use being limited to entertainment.
But, urban development based solely on the value of the entertainment dollar, is risky, and limited by
geography. "Cities have become popular places to visit," says Fred Siegel, a senior fellow at the Progressive
Policy Institute, "not to live."2 For most cities, however, property taxes from residential use generate the
necessary funds to support local services. Wilbur Rich, author of The Economics and Politics of Sports
Facilities, concurs, noting, "cities are now tourist and entertainment businesses. Sports are a part of the post-
modern city and the new service economy."3


A popular tool of modern urban development is entertainment. In cities all across the United States, tourism,
entertainment and retail development are being bundled together in a `themed' environment, and marketed as
the saviors of declining downtown cores and of stagnant suburban shopping areas. Sharon Zukin, argues that
these new entertainment centers have "become a driving force shaping fundamental economic activities such as
business services and real-estate development.4 A key component in this entertainment model of development
is the construction (or reconstruction) of sports stadiums.


City planners acknowledge that they would rather see a company that pays top manufacturing wages than a
ballpark. However, consumer confidence determines success, and professional sports are popular. Consider
that a home game for a football team, or similar big sporting event will "will fill up hotel rooms, restaurants,
and keep long lines at grocery stores and gas stations....throw in the taxes being paid, [and] revenue is being
generated for the city."5




2
  Koerner, Brendan. "Cover Story: Cities that Work" U.S. News & World Report (6/8/98)
3
  Questionnaire response ­ Wilbur C. Rich
4
  Zukin, Sharon, The Culture of Cities. Blackwell Publishers, 1995.
5
  Questionnaire response ­ Richard Middleton
Stadium Construction as a political priority

There are several aspects to any long-term urban development in a city. The development of cities can stretch
over several decades, involving every level of government and giving citizens ample opportunity to become
actively involved. Recent history demonstrates, however, stadium construction often advances so rapidly that
citizens have little time to react. Further, evidence suggests that a single type of infrastructure is unlikely to
induce widespread private investment without others. In many cases, this results in a conflict between
traditional urban planning projects and plans to develop sports infrastructures.


A study conducted in the 1970s by the Port Authority of New York and New Jersey concluded that adequate
infrastructure - water, sewers, bridges, streets and mass transit - are vital to the economic health of urban
centers. The study concluded that comprehensive public capital plants are one of the major competitive
advantages held by large, older cities.6 Moreover, though public infrastructure clearly influences land use and
development patterns, so do zoning policies, the general economic environment, labor markets and quality of
life issues (including available open space). The locations and scales of proposed infrastructure investments
need to be coordinated with these elements as well as with existing public capital in the metropolitan region.


Local government officials ­ at the city and county level ­ are left to decide how best to manage the course of
projects that will change and grow a city. This process must be considered in context with other related issues
including the daily management of the city and what the effects of one development project will have on the
potential for other city services to operate and improve. Susan Barnes-Gelt, a member of the Denver City
Council supports some public funding for sport, because she believes "that great cities in the USA are a mix of
attractions and uses.'"7 She continues, "stadiums can be important parts of civic infrastructure, but they must
have quality, longevity, connectedness and street appeal to add value."8 Philip Porter, a professor of
Economics at the University of South Florida disagrees. He claims, "No city needs a sports franchise to be
competitive."9


Fans, supplemented and mobilized by local corporate interests and the local media, then, constitute the base of
political support for subsidized sports facilities. With their emphasis, professional sports have joined
education, public safety and preservation of open space as a priority for local officials in many cities. Thomas
Bruggink, an Associate Professor at Lafayette College argues that, "if the team is a winner, politicians better
favor it. If the team is lack luster, then politicians are more free to act in the best interest of the city." Similarly,
sports fans are likely to accept higher taxes or reduced public services to attract or keep a team, even if they do



6
    Advisory Committee on Intergovernmental Relations, Financing Public Infrastructure; June, 1984.
7
  Questionnaire Response ­ Susan Barnes-Gelt
8
  Ibid.
9
  Questionnaire Response ­ Philip Porter
not attend games themselves. And, as a result, local government officials ­ whose constituencies overlap with
all these interests ­ face tremendous political pressure to support sports as well.


That's not to say that stadiums construction ­ like all urban development ­ doesn't present political
opportunity to local officials as well. These projects mean new taxes, new revenues, and call for the creation of
more departments and commissions and therefore more power for politicians and their decision-making
processes.




Political Support for Stadium Construction


The main reason local governments began investing in stadium construction was to keep the teams in town.
Team owners insist on subsidies to maintain their lucrative professional franchises, and when faced with what
they consider inadequate public support, will threaten to move their teams to a city where the public is more
generous. This threat to move a team, whether openly stated or implied, is considered by most to be
"economic extortion."


Rodney Fort, an economics professor at Washington State University, notes that no baseball team has actually
moved since 1971 when the Washington Senators moved to Texas and became the Rangers. Owners threaten
to uproot a team to get a new stadium deal that can provide the millions in added revenue from luxury seats
and suites, naming rights, seat licenses and other amenities.10 Wilbur Rich notes, "the competition for sport
franchises is intense. [Houston] refused to build a new facility and lost the Oilers. Now they are backtracking
and doing everything the NFL wants to accommodate the Texans."11 Meanwhile, Safeco Field in Seattle was
actually built despite failing with voters at the polls -- the 1995 Washington State Legislature stepped in and
approved the combination of tax increases and lottery proceeds after owners stepped up their threats to sell the
team.




Stadium Construction and the Political Process

A new emphasis on private sector involvement in urban development rose out of the 1970s with the hope of
bringing about renewal and revitalizing the downtown areas of cities. One of the private sector interests that
received local government focus during that time was professional sports. As Charles Euchner points out,
"cities decided to stress economic development, and sports franchises became a means to that end."12 Cities


10
   Bruscas, Angelo. "My stadium's better than your stadium . . . " Seattle PI ­ Wednesday, July 14, 1999.
11
   Questionnaire Response ­ Wilbur C. Rich
12
   Euchner, Charles C. (1993) Playing the Field: Why Sports Teams Move and Cities Fight to Keep Them.
Johns
found themselves competing to provide new markets and economic incentives for professional sports teams.
In the end, cities that enjoyed the presence of a professional team were subject to much national recognition,
along with a localized sense of autonomy. They had won.


Overwhelmingly, cities still consider the incorporation of a new professional sports franchise, or similarly the
construction of a new stadium or arena to be a victory. Richard Middleton, a political science professor at
Jackson State University in Jackson, Mississippi doesn't agree. He argues that "the building of a stadium [only]
demonstrates that city leaders and big businesses are all about spending money to add trophies to their trophy
cases."13


The process. How then, does stadium construction become a priority for local city officials ­ given the tradeoff
with other important interests that are also considered for funding? The process differs in every city, and with
every stadium construction proposal. However, there are several components that can be found in every
process, including:

            -   A team owner describing the challenges he/she faces with the team's current situation. Those
                challenges include: escalating player salaries, rising travel and hotel costs, and the pressure to
                compete with large-market teams who are amassing huge cash reserves they will use to buy the
                best players.

            -   The team owner, expressing his fundamental loyalty to the community, but nevertheless
                regretfully reporting that unless a new stadium is built, he will be forced to relocate his team to
                another city. Along with the potential for new revenue, owners often suggest that the fans
                deserve a more comfortable stadium with the modern conveniences common in the newest
                facilities.

            -   Local officials, with the support of the local media, circulating reports describing the economic
                and image benefits to a city and region of having a championship team and first-class facility.
                These benefits are identified as the 'returns' to the public sector from its investment and its
                commitment to building a winning team, a first class facility, and a first class image. Raymond J.
                Keating of the Cato Institute refers to many of the reports by hired consultants supporting plans
                for a new stadium as "the worst kind of economic guesswork.... More realistic economic
                analyses examine actual changes in the economy resulting from the presence of stadiums and
                arenas. These studies have consistently found no positive impact from professional sports,"
                Keating argues.

            -   Local politicians, in conjunction with the local media, promoting the construction of a new
                sports facility as a potential economic and civic asset; a monument worthy of the public's
                support.

            -   In some cases, voters are asked to support public financing through referendum. On other
                occasions, local government officials approve the proposal in a council meeting.




Hopkins University Press. Page 6
13
   Questionnaire response ­ Richard Middleton
In the end, history has shown that funding for the facility is approved regardless of voter consent, but with the
full backing of the labor, corporate, and media interests (described by Metropolitan King County
Councilwoman Maggi Fimia as the "iron triangle.")14 When construction begins, it is not surprising to realize
an increase in the cost of the facility. In many cases, the responsibility for cost overruns is left to the public
sector. In other notable examples, such as in Seattle, the team that will occupy the stadium incurs the loss.




Conclusion

There is an extensive political process by which local communities make decisions about which activities
provide the greatest net benefits to their citizens. Within this political process, communities must decide how
to allocate public funds among many alternative uses. They must satisfy all their current obligations ­ including
the funding of basic local services ­ as well as plan for future growth to accommodate change over time. One
alternative is to plan for long-term growth, which, over the course of time, will improve the status of a city.
Another alternative is to build or attract things that will have a more immediate effect. This latter alternative is
typified by the building of a new stadium or arena as a component of a city's entertainment infrastructure.


The desire by major sports franchises and owners for significant public support of their enterprise has resulted
in a dramatic shift in how and where resources are allocated. Cities have used stadiums to anchor urban
redevelopment plans and/or enhance newly renovated neighborhoods. They have also been used to satisfy
requests by teams and owners, or lure new teams to their region ­ without consideration for the long-term
effects on other city priorities. In many cases, where stadium construction takes priority over other, existing,
local projects, both the political process and its outcome ­ the funding of vital local services ­ are
compromised as a result of attempts to satisfy the needs of major sports franchises.




14
     Interview ­ Maggi Fimia