Super Bowl 2012: Are Sports Stadiums Ripping Off Cities?

Building New York

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on February 04 2012 11:10 AM

Lucas
Lucas Oil Stadium

When the New York Giants and New England Patriots battle in Super Bowl XLVI on Sunday, they'll be playing in a stadium that was largely financed by taxpayers.

Lucas Oil Stadium in Indianopolis cost roughly $720 million, with the majority of costs financed by state and city taxes increases. The Indianapolis Colts, valued at $1.06 billion by Forbes, contributed $100 million and pays $250,000 per year in rent.

The stadium was projected by planners to contribute $2.25 billion in economic benefit over ten years and create 4,200 new jobs and 4,900 temporary construction jobs. But there's never been a conclusive study that directly ties the construction of new stadiums to economic growth, and some critics dispute the positive benefits of stadiums, which have collectively received around $20 billion in U.S. subsidies in the last two decades.

It takes an enormous amount of public investment to build stadiums, said Simeon Bankoff, executive director of New York's Historic District Council, a preservation group. The money gets routed to private enterprises. It doesn't help the city.

The
The old Yankee Stadium, with the new one being built in the upper left.

New York has seen a new wave of stadiums in the past three years, and government support for the projects has been vast.

The new Yankee Stadium in the Bronx, which opened in 2009, cost $1.5 billion, making it one of the most expensive structures ever built in the world. The Yankees received $1.2 billion in tax-exempt bonds and $136 million in taxable bonds, with some money going towards transit improvements. The new limestone stadium has 500,000 square feet more than the historic 1923 ballfield, and luxury suites were increased from 19 to 56.

The Mets received $697 million in tax-free bonds for the more modest Citi Field, which cost around $900 million in total. The city's Independent Budget Office estimated that the two stadiums cost the public a combined $1.2 billion.

Supporters of the stadiums say that the new structures rejuvenate the neighborhood, attracting an influx of game day visitors who spend locally -- although there are an array of food and retail outlets inside the stadiums.

Beyond the financial questions, stadiums tend to create disruptions in the urban fabric, creating hulking boxes that present a dilemma for infrastructure. One solution is to disperse them.

If you were to treat a stadium, to some degree, like an airport -- you realize it's its own destination, said Bankoff. You want good transportation out to it, but you also want to remove it from the general density.

The $1.6 billion MetLife Field, where the Giants and Jets play, sits on the relatively bucolic New Jersey Meadowlands. It was actually built without subsidies, but the team is seeking tax exemptions on the site, and New Jersey taxpayers were paying debt for the old Giants Stadium, which has been demolished.

The site is expected to bring economic growth to the region for at least one night. When MetLife Field hosts the Super Bowl in 2014's Super Bowl, the event is projected to attract 400,000 visitors and $600 million in revenue to the area, according to the Sports Management Research Institute.

The practice of government lending funding to subsidize stadiums goes back only a few decades, said Jeffrey Kroessler, a professor at John Jay College and author of The Greater New York Sports Chronology.

Although Madison Square Garden has a poor reputation for its lackluster architecture and being built on the ashes of the old Pennsylvania Station, it built as a purely private development in 1968. Even Robert Moses, the parks commissioner who reshaped the city, balked at subsidizing private stadiums with public funding.

But as sports teams became more powerful and demanded larger and flashier arenas, they sought government support. And many munipalities, seeing the value in keeping such organizations, obliged.

Tax breaks for new developments are common, but they tend to come only when the project presents a clear civic benefit, such as affordable housing.

I like the idea of public-private partnerships. I think this is public financing for private gain, said Kroessler.

Both Kroessler and Bankoff agree that stadiums offer more to cities than measurable financial impact. The reputation and presence of stadiums draw tourists and, supporters say, create a civic connection. But in dense New York, they tend to come with controversy.

A rare defeat for Mayor Michael Bloomberg was the proposed West Side Stadium, which was to anchor a 2012 bid for the Olympics and provide a home for the Jets. But citizens and politicians, including the powerful State Assembly Speaker Sheldon Silver, balked. Mixed-use development at Hudson Yards has continued in its wake.

Barclays
Barclays Center under construction in 2011. (Wikimedia Commons)

But the most controverial arena has been Forest City Ratner's Barclays Center at Atlantic Yards in Brooklyn. Conceived in the early 2000s, the project received $511 million tax free bonds in 2009, but had to clear lawsuits challenging the use of eminent domain to seize private property. A design by Frank Gehry was later dropped in favor of SHoP to cut costs, and prefabricated steel is being used on residential towers for more savings. The arena is set to open later this year.

Although Kroessler declined to speculate on the potential for tax subsidies for the next generation of stadiums, the trend appears to be continuing throughout the country.

I don't see any great pushback, said Kroessler. It has to be a political.

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