Reality-BasedTM Political Numbers from Nicholas Beaudrot
Electoral Math
Reality-BasedTM Political Numbers from Nicholas Beaudrot
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The Seattle Sonics came up with a new public-private financing plan to move out of Key Arena and build a new $500+ million venue in either Renton or Bellevue. Details are in the P-I.
While there are other issues relating to traffic and how to direct regional growth, the main question there is the money. Fully subsidized stadiums are almost never a good deal for taxpayers, except for those taxpayers who enjoy sports. Lately, the trend is to get around this by raising taxes on those who benefit from the stadium parking lots, hotels, rental cars, restaurants, and event tickets. As for economic development, the available evidence suggests that pro sports simply moves entertainment spending from one category to another; without the stadium, people would go to the movies more often, or go bowling more often, or go to state fairs, or visit the zoo, and generally find other ways to have fun. The jobs creation argument is weak; the team & stadium 20-50 jobs in the front office, plus a number of mostly low-wage jobs for food service workers, janitors, ticket-takers, and the like. Indirectly, the stadium will help spur a modest amount of employment and business growth in shopping & restaurants around the stadium, but again, these are mostly low-paying industries. On the plus side, construction firms and their workers do very well, as will of course the ownership group.
Thankfully, recent stadium deals have limited taxpayer exposure to exorbitant construction costs. The city of Arlington agreed to pay only half the costs of the Dallas Cowboys' under construction stadium, and will pay none of the cost overruns (so in practice they'll pay just under 33% of costs). New York will pay only 25% of the costs of the soon-to-be-built New Yankee Stadium. The Sonics' current proposal is for $300 million from taxpayers to build a $530 million stadium, leaving us on the hook for 56% of costs. What's more, the government has tremendous leverage. The most obvious location for a new team would be Oklahoma City. But, that city's media market is 67% smaller than Seattle's (Arbitron data), and per-household income is 33% lower (census data: Oklahoma County; King County), so the team would risk losing substantial revenue from TV, radio, and gate receipts if they moved.
The ownerhip's estimated construction costs are also way out of line with that of. The Conseco Fieldhouse in Indianapolis, built in 1997, cost $216 million, after adjusting for inflation. Boston's TD Banknorth Garden (nee Fleet Center) cost $200 million in 1995, again adjusting for inflation. The AT&T Center (San Antonio), $199 million in 2002. The Toyota Center (Houston), $183 million in 2003. FedEx forum (Memphis), $250 million in 2004. The Sprint Center (Kansas City), $276 million, due to open in 2007. The New Jersey Devils new arena in Newark, $210 million (project cancelled in 2006). Bobcats Arena (Charlotte), $260 million in 2005. It's unclear why a new basketball stadium in Seattle would have a $530 million price tag, given the cost of recent stadiums. I find it unlikely costs have doubled in two years, when compared to Memphis, or almost tripled in 10 years, when compared to Boston (perhaps a more accurate comparison because Boston has union density and real estate costs closer to those in Seattle).
In short, there is little reason to accept the Sonics first offer. The State and the ownership need to figure out how to build an arena at much lower costs, and there must be a hard cap on the amount taxpayers will pay in the event of cost overruns. A total cost of $275 million, with ownership footing 60% of the bill (total taxpayer cost: $110 million), strikes me as a reasonable deal.
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updated by Nicholas Beaudrot on 09:42 19 January 2007
