Sports stadiums: Who really should pay?

Washington's decision to fund a baseball stadium highlights a debate over sports funding.

For Anthony Williams, the mayor of Washington, this week's deal to return Major League Baseball to the nation's capital after a 34-year absence represents the crown jewel of his career.

In his view, and in that of other baseball supporters, the agreement for a new stadium - to be located in a blighted section of Washington's southeast waterfront - will provide economic development and a psychic boost to a capital city that often feels the poor stepchild of the federal government it hosts. "It's more than baseball," Mayor Williams exulted Tuesday, counting off projected benefits, such as 3,500 jobs and $15 million added annually to the city's tax base.

To the plan's detractors, the deal to build a new stadium for the former Montreal Expos - renamed the Washington Nationals - with largely public funds smacks of corporate welfare at a time when the national trend has, in fact, moved toward increased private financing for Major League Baseball stadiums.

Since 1998, the last 10 new major-league ballparks have averaged 60 percent public financing, according to the Sports Business Journal. Financing for the D.C. stadium could end up at 90 percent, funded through a gross-receipts tax on business. The ultimate cost of the stadium package, including purchase of the land and infrastructure improvements, has been estimated to be between $440 million and $584 million.

To economists, after years of analysis, the bottom line on ballpark financing deals is unquestionable: Stadiums do not generate net economic growth.

"Subsidized stadiums require subsidies forever," says Scott Wallsten, a resident fellow at the American Enterprise Institute in Washington. "And they don't generate benefits to the neighborhood, typically. The jobs they create are small in number, low paid, and temporary."

What's stunning to Andrew Zimbalist, an expert on the economics of baseball at Smith College in Northampton, Mass., is that Washington did not use its inherent leverage to cut a better deal for itself with Major League Baseball. Of the cities trying to lure the Expos their way, including Portland, Ore.; Las Vegas; and Monterrey, Mexico, Washington presented the most lucrative profile: Its metropolitan area, the nation's eighth-largest media market, contains some of the wealthiest ZIP codes in the country.

Even when the stadium deal appeared on the brink of demise a week ago, after City Council chairwoman Linda Cropp passed an amendment requiring that half the stadium cost be covered by private financing, city leaders still did not play hard with Major League Baseball - even though no other city in the running had any kind of firm stadium proposal on the table.

There was little time to spare. Washington faced a Dec. 31 deadline to agree to a stadium deal, and the Nationals are scheduled to play their first game on April 4, 2005. Their first home game is to be played on April 14, 2005, at a renovated RFK Stadium, the Nationals' home field until the new Anacostia River stadium is built.

"Washington could have done better," says Professor Zimbalist. "The main advantage here for D.C. is cultural, not economic. It's like having the Kennedy Center [for the Performing Arts]. Having a sports team in the national pastime is something that's enjoyable, presumably, at least for a good portion of the citizens, and could be a cohesive factor for the community."

It may even be good for politics, in this time of polarization, writes Washington Post columnist David Broder. He noted in Wednesday's issue that "political conditions" began to go downhill in 1971 - the year the Washington Senators left town and became the Texas Rangers. Gone was the opportunity for political adversaries to step off a tough day on Capitol Hill and head over to the ballpark to watch Frank Howard pound one out of the park.

Among the city's cognoscenti, Mr. Broder represents a slice of public opinion that is saying, in essence, the cost is worth it. Another in this vein is Mark Plotkin, a longtime analyst of D.C. politics and commentator on WTOP-FM radio. "The national pastime should be played in the nation's capital," says Mr. Plotkin. "We don't have US senators, we don't have US representatives, but now we'll have this. It fulfills a psychic need. It was something we had and was taken away, and now we're a big-league city."

The bulk of Washingtonians may feel differently. An opinion poll released Monday by The Washington Post found that 53 percent of District residents favored requiring that half of the stadium's cost be funded privately, even if it meant losing the team. Some of those surveyed called the mayor's priorities misplaced, in a city with crumbling schools and libraries and a large underclass that will hardly be able to afford pricey baseball tickets.

Now, the requirement for financing to be half private has been swept away, though even critics of the stadium deal say the plan agreed to Tuesday is better than the one the mayor had cut with Major League Baseball - if only slightly. The city is still seeking to secure at least 50 percent of the funding from private sources, but now it is not a requirement. In another concession, the District and Major League Baseball will now split the cost of insurance against cost overruns. And baseball waived the right to compensatory damages if the stadium is not completed by the start of the 2008 season.

If the stadium plan had been put to a public referendum (which was not possible under the rules of D.C. government), it may well have gone down - as has happened in many such referenda on pro sports stadiums around the country. In San Francisco, four referenda voted down public financing for a new baseball stadium for the Giants, so the team owner financed the park himself.

"Peter McGowan, the owner of the Giants, said, 'This market is too good to give up, so if they give me a good site, I'll pay for it myself,' " says Zimbalist of Smith College, adding: "The San Francisco market is good - but it's not as good as D.C."

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