Americans certainly are passionate about sports, which translates into magnificent facilities and unique architectural, engineering and construction opportunities. Since 1990, construction of stadiums and arenas for professional sports franchises has boomed. In that time, Major League Baseball (MLB) has opened 19 new stadiums and, as of 2008, started construction on three others. The National Football League (NFL) has opened 17 stadiums and completed major renovations to four others. In 2008, three more NFL projects were under construction, and four were in various stages of planning and negotiations.
One of the ongoing policy debates is whether local and state governments should help finance and subsidize the construction of these facilities, and to what extent. The public share of stadium costs has ranged from 58 percent to 63 percent since 2000. A September 2006 report from the U.S. Government Accountability Office found municipalities borrowed a total of $61 billion between 2000 and 2004—$5.3 billion of which was for stadiums and arenas.
According to a 2007 paper by Chad Seifried and Dave Shonk (“American Professional Sport Facilities: Considerations for the Future”), between 1990 and 1999, $4.4 billion was spent to engineer and construct 18 MLB and NFL facilities across the United States. While the 1990s saw aggressive stadium building, it pales in comparison to the current decade. According to the same source, between 2000 and 2010, nearly $13 billion will be spent to build 28 MLB and NFL facilities.
Some economists argue that these sports facilities frequently represent net fiscal liabilities to communities, with the benefits of construction and operations concentrated among a few and the costs spread out among many. In general, studies find the economic and fiscal benefits fall short of the cost of the investment. According to University of Maryland-Baltimore County professor Dennis Coates, “There is little evidence of large increases in income or employment associated with the introduction of professional sports or the construction of new stadiums.” Indeed, Coates and author Brad Humphreys found in many local economies, “employment in the retail and service sectors has dropped because of professional sports.”
Other economists find these facilities represent effective mechanisms for stimulating the redevelopment of communities, including those in distressed urban settings. They also point out the benefits of these facilities are not properly measured because analysts fail to consider that sports can yield quality of life improvements. Sports are among the great unifiers in America, which is particularly important given the diversity of the nation’s population.
In addition to construction of facilities for professional sports, opportunities are generated by minor leagues, colleges and universities, and high schools. Much of this construction is publicly financed, at least in part.
Limiting Opportunities
Debates regarding stadium and arena construction are often fierce. Not surprisingly, among the key participants in the politicking are labor unions, which seek to limit the number of bidders by requiring the use of union workers. Union-only project labor agreements (PLAs) often become part of the construction process, robbing open shop contractors of significant opportunities in sports construction. Policymakers often acquiesce to union demands because it may help build public support for financing deals. As an example, 23 labor unions lobbied in Harrisburg, Pa., for funding of the Pittsburgh Pirates’ PNC Park, which then was subjected to a PLA.
Opponents of PLAs have argued for years that union labor requirements produce inefficiency and drive up costs; costs ultimately borne by the taxpayer. One of the most prominent examples is the Seattle Mariners’ Safeco Field. The original cost estimate for the new stadium was $320 million. According to a 2005 report by Venable LLP attorney Maurice Baskin (“Union-Only Project Labor Agreements: The Public Record of Poor Performance”), the stadium’s final price tag exceeded $517 million—roughly 60 percent more than the original estimate. At the time, the cost overruns made this union project the most expensive stadium ever built in the United States.
By contrast, the Baltimore Orioles’ Camden Yards, often considered one of the finest facilities in MLB, was built without union-only rules and suffered no cost overruns.
In another example, the Cleveland Cavaliers’ Gund Arena incurred $12 million in cost overruns during the mid-1990s. Additionally, safety problems plagued Milwaukee’s Miller Park and allegations of discrimination arose during construction of Detroit’s Comerica Park.
The Future
Given the state of the economy and public financing, the nation likely faces diminished sports construction volumes in the years ahead. Moreover, the demand for new facilities has been dampened by the wave of construction that has taken place during the past two decades. This period of respite represents an opportunity for the industry and for academics to determine the true costs and benefits of PLAs, and to improve the policymaking environment in advance of the next wave of sports construction that is sure to come.
![]()
Friday, September 3, 2010