Experts differ on economic impact of new multiuse stadium

April 07, 2012|By HEATHER KEELS |
  • Hagerstown Economic Development Manager Jill Estavillo says city officials believe building a multiuse sports and events center in the downtown site at the corner of Baltimore Street and Summit Avenue would bring more foot traffic to downtown Hagerstown, attracting new businesses and spurring property revitalization. She is standing on The Herald-Mail roof overlooking the proposed site.
By Joe Crocetta/Staff Photographer

Hagerstown officials are pitching a new, multiuse stadium as a catalyst for downtown revitalization, but experts’ opinions differ on how much of an economic impact such a project would have on the area.

When the city announced it was exploring building a sports and events center at the intersection of Baltimore Street and Summit Avenue, replacing the aging Municipal Stadium a mile to the east as the home of the Hagerstown Suns, city officials stressed that the project would increase foot traffic downtown, leading to increased business for downtown shops and restaurants, and spurring downtown business investment and property revitalization.

Dennis Coates, an economics professor at the University of Maryland Baltimore County, says it’s not that simple.

Shifting, not growing

Coates has studied the relationship between professional sports venues and economic growth and co-authored several papers and journal articles on the topic.

“It may well bring activity into the downtown area,” Coates said of a new downtown stadium. “The problem is, it happens to take most of that activity from outside the downtown area, so what you’re really doing is rearranging where that activity occurs, but you’re not generating any more of it.”

“It’s like refurbishing a movie theater,” he said. “Do people come to the movie theater more? Yeah. But are people spending more money in total on entertainment than they used to? They’re probably just doing less of other things, and that’s probably what would be the case” with a replacement stadium.

When a stadium is built to replace an existing one for an existing team, rather than to attract a team, the effect is even less pronounced, he said.

The trend for minor league stadiums to have playground areas and a variety of food vendors contributes to shifting of business away from other destinations, he said.

“Often times, what you see is the sort of tailgating kind of activities, going to dinner before the game — now you don’t have to. You can go to dinner within the game. And that’s not particularly great for the revenues of neighboring restaurants,” he said.

Del. Andrew A. Serafini, R-Washington, said he came across Coates’ writings while researching the economic impact of stadiums and contacted him to discuss the issue.

“He makes a compelling argument that you can’t say it’s a strong economic driver,” Serafini said. “Does it create some? Sure. But is it enough to pay for itself? He raises the question, and it is questionable. So we have to say to the community, ‘Is this something we want, and are we willing to forgo other types of public use of these funds to provide this?’ and I think that has to be the will of the people.”

Southern success story

The city has not released results of a feasibility study by Ripken Design, but Jill Estavillo, the city’s economic development manager and stadium project manager, pointed to Fluor Field at the West End, in Greenville, S.C., as an example of how a stadium can transform an area.

The $16 million privately funded ballpark opened in 2006 at the heart of the city’s west end, replacing the older Greenville Municipal Stadium, which was at the edge of the city near Interstate 85.

Four years later, 48 new businesses had opened within a quarter-mile radius of the new stadium, city officials were quoted as saying in an April 2010 story in The State, a Columbia, S.C., newspaper. Within a half-mile radius, 110 new businesses had opened.

The Greenville Department of Economic Development did not return a call last week seeking confirmation of those figures.

New west end businesses since the ballpark opened included 17 restaurants and bars, 10 retailers, 36 artist studios, a hotel, a dance studio, a health club and a special events facility, the story said.

Before that stadium was built, Greenville had a Double-A baseball team that played in its Municipal Stadium through 2004. In 2005, the Class A team now called the Greenville Drive relocated to Greenville from Columbia and played one season in Municipal Stadium before moving to the new stadium in 2006.

Retaining and attracting

Estavillo said that building a stadium to retain a team can have just as much economic impact as building one to attract a team because losing the Suns would mean losing the team’s current contributions to the local economy.

The Suns report that the team spends about $500,000 a year in local, direct spending such as buying supplies from local vendors and putting up players in local hotel rooms, she said. The team also reports it employs more than 100 people, including full- and part-time employees, and contributes $140,000 a year in taxes through hotel taxes, admissions and amusement taxes and payroll taxes, she said.

“So I think one way to look at this is as retention of a local business,” Estavillo said.

The Suns’ major league affiliate, the Washington Nationals, has informed the team’s owners that Municipal Stadium is not adequate for an affiliated team, Suns majority owner Bruce Quinn has said.

Major problems include the playing surface and clubhouse facilties, Quinn has said.

Another consideration, Estavillo said, is that the city’s proposal is for a multiuse center that would be used for festivals, concerts and private events as well as for sporting events.

“If you have new opportunities for programming, it might allow the attraction of events that are currently being held in larger cities in the region,” she said.

As for Coates’ theory that people might merely shift their dining and entertainment spending to the stadium area from other parts of the city, Estavillo said while some of that shifting might occur, there also is potential for people to shop and eat out more as a result of having more options.

Justifying public funds

Coates said another flaw he sees in cities’ decisions to contribute public funding to stadiums is a failure to consider alternative uses for that money.

“If you took that same money and you spent it on putting police on the streets, or keeping fire stations open, or more hours for park and recreation facilities, would society’s benefits be larger than for the stadium?” he asked. “It’s not just that it should produce a positive benefit; it should produce a larger benefit than any other alternative use of those public funds, and we never, never get an answer to that question.”

The other important question to ask is whether the stadium will produce something for the community that would not be produced by the private sector, he said.

“There’s no reason why the private sector can’t build a stadium,” he said. “... But if I’m a business and I can get the government to build my (project) for me, all the better for me, right?”

Estavillo said the project would be a public-private partnership with contributions from the team owner and other private entities.

“We’d certainly look for an aspect of private contributions,” she said. “I think the question would be whether a project could be solely funded that way. Early projections are it’s going to require both public and private participation.”

She also stressed that the city is still in the phase of collecting information.

“That’s part of making a well-informed decision,” she said.

Estavillo said she anticipates a public release of the Ripken Design study in mid-April.

The Herald-Mail Articles