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When stadiums are pitched to the public, they're often trumpeted as economic engines. Supposedly, the activity in the stadium on game day causes a chain-reaction of spending in the neighboring bars, restaurants and hotels. According to researchers, this is largely smoke.
"Smaller sports venues may have economic spin-offs, but they must anchor larger redevelopment projects, like Jacobs Field and Gund Arena being linked to the Gateway Project in Cleveland," Vroomman says. "In this large development scheme, there are linkages to the economic grid that can deliver multiplier effects. The irony here is that the new breed of stadiums are built to internalize almost all spending connected with the sporting events or concerts, and therefore there is really no new money injected into the local economy. If there is any spending down by the lake, then it comes at the expense of business somewhere else."
Cleveland is far from alone in the pain. It's become standard operating procedure in cities with sports teams for the owners to demand a new facility, often at public expense. To understand why, you have to throw your brain back into the mindset of the mid-'90s.
At that time, shock waves were still reverberating from the unthinkable: In March 1984, the Baltimore Colts packed up literally in the middle of the night and moved to Indianapolis. That gave team owners everywhere the threat, whether spoken or implied, to move their teams to more lucrative cities and venues. As a result, public officials across the country became terrified of having their careers or legacies tarnished by being branded as the one who let a beloved franchise get away. So when the time came to belly up to the bargaining table, they were willing to sign off on complex stadium financing plans that parked much of the fiscal burden on the public sector.
Vroomann's upcoming book slaps the time period with a fitting title: "the relocation/extortion derby expansion," a run when 13 franchises leveraged possible relocation to win heavily subsidized stadiums. According to Vroomann's research, an average of just 26.6 percent of the funding for these facilities came from the private sector; the rest landed on taxpayers.
Things were bound to change, but only after the NFL deemed the extortion had gone too far — which is to say, when the league's own money was on the line. In 1999, New England Patriots owner Robert Kraft announced that he was moving his team from Boston to Hartford, Connecticut. The move would have screwed the NFL out of one of its biggest television markets, prompting the league to step in with a new initiative.
Called the G-3 program, it allowed the NFL to loan out money for new construction in top markets. The loan is repaid by the team from the profits made on luxury boxes. With this new source of funding in place, more private money has gone into newer stadiums. According to Vrooman's research, the 12 stadiums constructed under a G-3 arrangement had an average private share of 59 percent.
But even with more private money feeding construction, the current stadium arms race has jacked up prices to the point where the public is still opening its wallet wide. "There are more deals where there is more private money, but thing are just so much more expensive, the public money is still pretty high," deMause says. For example, Cowboys Stadium in Dallas opened in 2009 after racking up $1.3 billion in construction costs. The public share totaled $325 million — more than the entire Browns project.
The key piece of the Browns Stadium funding, the sin tax, was originally passed in 1990 to pay for construction of the Gateway complex. In 2005, the tax was extended to fund Browns Stadium.
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