Mapfre Stadium, former home of the Columbus Crew, which team owner Anthony Precourt claims is too far from downtown Columbus to be suitable for the team. Image: Wikimedia Commons
Cities subsidizing private sports stadiums with public money is a racket. That’s not my opinion, it’s the conclusion of nearly every economist who has ever studied the issue.
So, why doesn’t anyone listen? There are a few reasons.
First of all, Americans love sports — probably too much — and as a politician, who wants to be the guy resisting something that brings your constituents joy? Second, sports often means big business. Even the worst teams attract hundreds of thousands of fans to their games, where they pour even more money into the local economy by buying overpriced refreshments and memorabilia. The teams hire thousands of construction workers to build their stadiums, and later maintain a large workforce of white-collar and blue-collar employees.
Given all of the above, how could a city not see the benefit of bringing a sports team to town, even if it means the taxpayers have to pony up a little seed money? The problem, according to economists, lies in “opportunity costs” and “substitution effects.” Basically all of the good stuff teams provide — jobs, consumer spending, and so on — would probably happen somewhere else if the stadium weren’t there.
At least one study concluded that the impact on the local economy would be negligible if Chicago lost all of its major sports franchises. Chicagoans would find something else to spend their money on if the Cubs weren’t playing: concerts, restaurants, bars, museums.
As I mentioned earlier, economists have been making this case for decades.
“In every case, the conclusions are the same,” wrote Roger Noll and Andrew Zimbalist in a paper for the Brookings Institute in 1997. “A new sports facility has an extremely small (perhaps even negative) effect on overall economic activity and employment. No recent facility appears to have earned anything approaching a reasonable return on investment.”
But you can find an economist to say any damn thing you want, right? That may be true when it comes to tax policy or healthcare, but the consensus on stadiums seems a little more concrete:
“Economists have found no evidence of positive economic impact of professional sports teams and facilities on urban economies,” wrote Dennis Coates and Brad Humphreys, professors of economics at the University of Maryland, Baltimore County, in a 2003 literature review of academic papers on the economics of sports stadiums.
So it’s a good sign that no city leaders have suggested our taxpayers should pony up to build a stadium in Austin for Anthony Precourt, owner of Major League Soccer team the Columbus Crew — at least not yet. Precourt, who is considering moving the team to Austin, has said that any stadium here will be privately financed. He’s stated that the motivation for moving stems from a failure to secure investors for a new stadium in Columbus, a city almost exactly the same size as Austin. Although he has not publicly asked for public funding from Columbus taxpayers, fans and business leaders there have speculated that courting Austin is part of a scheme to lure the city of Columbus to cough up a subsidy.
So, we don’t have to worry about paying to build a stadium here if the team does move. Instead, we’re talking about handing over another valuable asset: public land.
First, Precourt suggested that Butler Shores would be a nice location for a future stadium, but backed off in response to fierce resistance from neighborhood groups and Austin City Council Member Ann Kitchen, who represents the area. The council appears open, however, to parting ways with a large city-owned lot on McKalla Lane in North-Central Austin.
A view of the city-owned land at McKalla Place, which may become the site of the Columbus Crew’s new stadium if Precourt Sports Ventures relocates the team to Austin. Image: City of Austin
The lot, formerly home to a chemical plant (and possibly still a little toxic) serves no purpose now, but has been previously considered as a potential site for affordable housing. The city purchased it for $1.5 million in 1996, and Travis County’s most recent appraisal for the land’s value is $8,733,321.
Another view of the land at McKalla Place. Image: City of Austin
In recent months, Precourt has aggressively courted public opinion, notably with a blatantly astroturfed interest group, MLS2ATX, that describes itself as “a community of supporters working together to bring Major League Soccer to Austin” but is in fact run by Precourt. Not only is the group’s website registered to his company, Precourt Sports Ventures, but it’s apparently been caught tweeting with a geotag from Columbus, not Austin.
In a letter to city council, Precourt stated the team would bring $326 million of “community benefits” in exchange for a home at McKalla. However, $234 million of that, he indicated, is just the cost of the wages paid to build and staff the stadium. He also promised millions of dollars in contributions to local nonprofits and said the team would set up youth soccer clinics and make the stadium available to a certain number of community events.
Whatever all of that means, common sense dictates that whatever the club offers the city will not exceed the value of what it’s receiving from the city. Precourt is likely counting on Austin to either hand over this land for free, or lease it for a price well below its fair market value.
The club is also very likely expecting fee waivers for the cost of the substantial burden the stadium would place on city services, including the time city planners will spend evaluating the stadium plans, the necessary infrastructure improvements for its operation, and the police presence that will probably be needed for stadium security and traffic management.
BBVA Compass Stadium, home of the Houston Dynamo MLS team. Image: Wikimedia Commons
For possible funding strategies, we could look to Houston, whose Dynamo MLS team constructed its stadium privately — paying Harris County, which remains the owner of the land it sits on, $65,000 a year in rent. As part of the deal, the county also pledged to spend $20 million on infrastructure improvements near the stadium.
When I asked Precourt Sports Ventures lobbyist Richard Suttle whether the team was counting on buying or receiving land, he said “all options [are] on the table.” Whatever Precourt asks, the city needs to demand something significant in return. If what the club’s offering is simply the promise of future economic stimulus, that’s a bad deal, pure and simple, and we’ve got decades of research backing this conclusion.
Actual banner which was towed behind an actual plane in downtown Austin yesterday re: Anthony Precourt/#SaveTheCrew. Folks, that’s….. pretty good, honestly. Amazing. pic.twitter.com/t3F0gsMqQf
— Pablo Maurer (@MLSist) March 2, 2018
One promise the city might consider demanding is that a percentage of tickets be offered below a certain price. The Houston Dynamo pledged to price 10 percent of its tickets at an “affordable” level, whatever that means. MLS supporters point out that tickets for soccer games are generally cheaper than those for other major sports, but that’s not saying much — the cheapest tickets for a Dynamo match are $24, more than twice the cost of going to a movie theater for 90 minutes of entertainment.
Of course, there are plenty of other reasons to support bringing a sports team to town, even if it doesn’t provide an economic benefit. Teams become prized local cultural assets — the Columbus Crew’s outraged fans could tell you that. In Austin, some have highlighted soccer’s popularity among the Hispanic population, arguing that MLS games could provide a rare opportunity for this very segregated city to mix.
The Ohio attorney general and the city of Columbus have sued #MLS and Precourt Sports Ventures over the proposed Austin move for #CrewSC – https://t.co/Lpml4wNnnv pic.twitter.com/LXV6pDMjOJ
— SBI Soccer (@SBISoccer) March 6, 2018
Fair enough. In that case, a soccer stadium should be evaluated just like any other public program that doesn’t necessarily pay for itself — parks, museums, Willie Nelson Boulevard street signs. How much would you, the taxpayer, be willing to pay for a stadium? No matter how you feel about MLS in Austin, that’s money you’re not going to see again.
Finally, whatever you think about our museums and parks, at the very least there is no threat that they’ll ever leave for another city. Austinites would be fools to expect that in 10 years or so, we wouldn’t find ourselves in the same position as Columbus today, facing Precourt’s “let’s see what other markets will give us” indifference towards local fans. How far would we go and how much public money would we spend to keep the team in Austin once it’s here?
If this private enterprise can exist without public subsidy of any sort, then I’ll welcome the team with open arms. There’s plenty of suitable private property for sale in Austin — maybe Precourt should start looking there.
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