Opinion: Carolina Beat

Publicly Subsidized Sports Stadiums Still Do Not Deliver the (Financial) Goods

It has not been a good summer for government-subsidized sports stadium deals in North Carolina. Two expensive, high profile stadiums have disappointed, one slowly and subtly, one loudly and obviously.

It’s easy enough to understand why local governments are so fascinated by professional sports. At its core, it’s a numbers thing. Professional baseball, basketball, and hockey teams, even at the minor league level, play a lot of games. And a lot of games times even modest attendance can deliver a lot of new people to an area.

City and county government types are quite well versed in the aspirations of their community’s downtowns. That is, after all, where they work.

Put the two together, and you have a ready mix for economic development schemes that involve using public money to help build stadium and arenas for privately-owned professional sports teams.

Of course, these deals are always sold as providing broader benefits, that the “investment” in the sports-related infrastructure is the key to revitalize a larger part of a city’s downtown.

If only it were so simple. It’s highly questionable whether these sorts of deals bring the sorts of benefits claimed. Professional sports are ultimately a form of entertainment.

As such, it simply draws money that would otherwise have been spent on other local entertainment options. There’s scant evidence that putting government money into these sorts of ventures increases economic growth or local incomes.

And it all depends upon everything going as planned, that the local government’s de facto business partner does a good job of running the team. That hasn’t been the case in Charlotte and Winston-Salem recently.

In Charlotte, Bob Johnson announced that he’s putting the NBA’s Charlotte Bobcats up for sale. This doesn’t necessarily come as a surprise. The Bobcats have been an expensive disappointment for both Johnson as an owner and Charlotte for some time.

The story is simple enough: The Queen City lost its first NBA team, the Hornets, in 2002. It then took all its hotel-motel tax money for the foreseeable future to build a new arena to attract an NBA expansion team.

It’s doubtful, though, that the vision included the Bobcats finishing 26th among the 30 NBA teams in home attendance, but that’s what happened this past season. Talk has shifted from about the economic impact the Bobcats will deliver to how good the city’s lawyering was in negotiating the arena deal to keep the Bobcats in Charlotte for at least a few more years.

By comparison, Charlotte’s situation looks great compared to the mess Winston-Salem has gotten itself into. In late 2006, the city committed $12 million to what was then a $22.6 million project, building a new stadium for minor league baseball’s Class A Winston-Salem Dash.

By this year, the stadium had become a $40.7 million project, with the owners unable to secure private financing for completion. The city, deciding the project was too important to fail, stepped in and provided another $15.7 million for the project, mainly in the form of loans.
“I think the biggest concern is not getting it done,” said Winston-Salem Mayor Allen Joines.

Except, of course, that this deal may still fail. To repay their loans, the Dash estimates they will have to sell 300,000 tickets a year. That works out to about 4,400 a game for each of their 70 home games or about 80 percent of the seats available in the 5,500-seat facility. That would be an impressive draw indeed for a single-A baseball team, especially with nearby Greensboro having its own minor-league team.

One would hope that local government officials would learn from these projects, but that may be asking too much.

Michael Lowrey is an associate editor of Carolina Journal.