City and Sport: A Look at How Stadiums Can Be Built Responsibly

The Minnesota Vikings recently reached a tentative agreement on how their new $975 million stadium will be financed.  Although the deal is still very preliminary and there are many details to be fleshed out, the StarTribune reports that it will look as such:

Under the preliminary deal, the city would contribute $150 million in construction costs to the downtown Minneapolis project. The state would add $398 million, while the Vikings would pay $427 million. The city also would pay approximately $180 million in operating costs over the next 30 years, multiple sources close to the negotiations said.

With huge numbers getting thrown around, there are bound to be some questions raised.  Why do the Vikings need a stadium that costs nearly a billion dollars?  What benefits does the city get to justify spending tax dollars on a stadium?  And, most importantly, is this deal fair for the taxpayers, the team, and the city?

The reality is that billion dollar stadium deals aren’t particularly unique in America.  Cowboys Stadium in Dallas, widely regarded to be the best stadium in the NFL, cost well over $1 billion.  The economics between stadiums and their cities deserve a closer look.  Because of the large portions of taxpayer dollars that get spent to build these stadiums, it is important that the parties involved act responsibly. 

State of the art Cowboys Stadium

Background

There has been an unprecedented boom of stadium construction in America over the past two decades.  21 new ballparks have opened since 1991 in Major League Baseball (MLB).  In the National Football League (NFL), 29 of the 32 teams are playing in stadiums that are new or have had significant renovations since 1990.  New NFL stadiums regularly cost upwards of a billion dollars now, while MLB ballparks typically cost over half a billion dollars. 

Stadiums are unique buildings, however, because they are typically financed with large portions of public money.  Because professional sports teams provide intangible benefits to cities and their communities, it is not uncommon for cities or states to pay for over half the cost of new stadiums.  The teams also make promises of economic development that will come with the construction.  Teams say that thousands of new jobs will be created for the community, which of course every city jumps at.

The reality is that the economics of these deals rarely make sense (Ford, 303).  That isn’t to say that they aren’t beneficial to their community, however (Weiner, 444).  Just look at Staples Center in Los Angeles.  The arena was almost entirely privately financed, the surrounding area has seen huge developments spring up as a result of the people coming in to downtown on a nightly basis, and the residents of Los Angeles have benefitted from a shiny new arena to see their games or concerts in. 

Staples Center and LA Live

Because these deals are all extremely unique to their respective cities, it is difficult to make sweeping generalizations about whether stadium developments are good or bad.  It is better to look at a few examples to learn lessons that can be applied elsewhere.

St. Louis Rams

Edward Jones Dome, home of the St. Louis Rams

With such large sums of money spent by the public on these stadiums, it is not uncommon for the sports teams to take advantage of cities to get better deals.  An example of this the Edward Jones Dome in St. Louis.  The St. Louis Cardinals of the NFL had recently moved to Arizona, which left the city upset because they felt they were deserving of a professional football team.  Thus, St. Louis built the Edward Jones Dome on speculation of luring an NFL team back to the city.  At the time, the Los Angeles Rams were playing at a renovated baseball stadium in Anaheim.  Looking to improve their situation, the Rams decided to pack their bags and take the offer from St. Louis. 

While this was unfair to Rams fans in Southern California at the time, it has the potential to create a future disaster in Missouri.  The city paid for 100 percent of the stadium’s $280 million cost.  Part of the team’s lease with the city includes a stipulation that the stadium must be in the top 25% of all NFL venues in 2015, or else the team is able to go elsewhere.  Because the stadium was built early in the stadium boom, the Edward Jones Dome is clearly not in the top-tier of professional facilities.  It would require hundreds of millions of dollars in renovations to make the dome the envy of the league once again.  St. Louis, like many large cities, has been struggling lately and cannot afford to be spending public dollars on sports facilities.  In a touch of irony, this has made it so the Rams are now mentioned as one of the most likely teams to move to Los Angeles, should a stadium get built there. 

The Edward Jones Dome cannot be considered a complete failure - the Rams did win a Super Bowl while in St. Louis and the dome has been used for major concerts and conventions.  However, if the team ends up leaving, it will be embarrassing to the city.  St. Louis in the early 90’s was willing to do anything to bring a NFL team back, which meant that they made some major mistakes when writing the lease agreement with the Rams.  This scenario has proved that teams are more than willing to take advantage of a city if it makes business sense to do so.

San Francisco Giants

AT&T Park and its surrounding neighborhood

Not all cities have gotten the short end of the stick when it comes to stadium developments.  Perhaps one of the best examples of this is in San Francisco, where the Giants privately financed their AT&T Park.  Just a few years before this ballpark got built, it appeared that the Giants were bound to move to another city.  They were playing at the antiquated Candlestick Park and their owners were losing money. 

However, because Silicon Valley was doing so well in the late 90’s, the Giants were able to pay for their new park by themselves.  The city did contribute some money to infrastructure improvements, but it is fair to say that the city made a great deal with the team.  There has been significant economic development in the area around the stadium and the surrounding neighborhood has been revitalized.  AT&T Park has a great downtown location on the waterfront, which makes Giants games attractive to both baseball fans and tourists.  It is safe to say that the San Francisco Giants should serve as a model to professional sports franchises who are looking to make a deal to build a stadium in a city. 

Conclusion

With sports being a huge business, it is extremely important that stadium deals are made with care.  There is a lot at stake for the teams, the taxpayers, and the cities involved.  All sides need to take certain steps to make sure that fairness and equity are ensured. 

The teams need to realize that although they are businesses, they are also an important part of their city.  The billionaire owners of these teams need to take the responsibility to pay their fair share for stadium costs.  They also need to be honest with their fans and their city when trying to get a deal made; making threats to move elsewhere just makes everyone angry.

The taxpayers need to be vocal members of their community and hold their politicians accountable when they are making deals for stadiums.  At the same time, the taxpayers need to make sure their favorite teams are responsible and not let them tug at their emotions.  If a team holds its city hostage and threatens to move elsewhere, then the fans need to stay strong and show that they are unified. 

Cities administrators also need to exercise due diligence when working with teams.  They need to make sure that the teams aren’t making hollow promises of economic development that they can’t follow through on.  They also need to make sure that the teams are picking sites for their stadiums where economic development can actually happen.  For example, a baseball stadium in the suburbs, surrounded by parking lots is not going to turn the city into a major metropolis.  A ballpark on the water, downtown, however is likely to make a positive impact on the surrounding neighborhood.

Stadium developments need to be looked at on a case-by-case basis.  However, with the recommendations I listed above, the teams, taxpayers, and cities can all benefit when billion dollar deals are made.  Responsibility and accountability are the keys to making sure the money is spent wisely. 

Farmers Field, proposed NFL stadium for downtown Los Angeles

Works Cited

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of the Holy Cross, Jan. 2011.  Faculty Research Paper.

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“L.A. Eyes Luring NFL Rams From St. Louis.”  Morning Edition.  NPR.  KWMU, St. Louis.  17

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