On suburban stadiums, MLS expansion, and small market charm

One of the questions asked of Don Garber during the state of the league was how MLS was going to support private owners while being responsible stewards of public money and trust. The question, asked by Malena Barajas, surprised Garber who wasn't expecting that from someone in the supporter queue. It is, however, a question worth a legitimate answer.

Especially with articles like this one published two days ago by Bloomberg which claims the stadiums in Bridgeview, Illinois and Commerce City, Colorado have actually hurt the towns over time. In both cases, AEG was able to convince local governments to subsidize stadium construction which has benefitted the franchise but hasn't paid off for the local community.

Toyota Park itself was built at a cost of $98 million, but the village of 16,500 people sold $134.6 million in debt to finance the project as a whole. The article claims property taxes have doubled and are about to go up again in Bridgeview to try and pay off more than $200 million in stadium debt. While Bridgeview residents have seen property taxes double since the stadium was completed, they have a poverty rate higher than the states average and haven't seen the development around the stadium that was promised.

In the case of Commerce City, the city purchased 917 acres for $4.69 million that previously was used by Shell Corp. and the US Army's Rocky Mountain Arsenal. That last association led to this rumor for awhile, that Colorado was going to rename as Arsenal Colorado.

Stan Kroenke invested $102 million, $81.6 million which would be returned to the company in tax rebates. Commerce City voters approved $64 million in bonds to subsidise the $182.5 million project. Development has happened on the Denver side of the stadium, but has yet to honor agreements saying development in Commerce City must start by October 2014.

AEG took a different route with their original stadium in Carson, CA. The City of Carson lists the project as privately financed for $150 million, and since it's on the campus of California State University, Dominguez Hills the city didn't turn over potentially valuable land.

The site claims the StubHub!/Home Depot Center has contributed over $5 million to community based organisations, but one needs only to visit the Center to know it hasn't led to the type of development that surrounds the Staples Center. The Kentucky Fried Chicken across from the entrance was notable enough to make Grant Wahl's book The Beckham Experiement. It's a stark contrast from the entertainment mecca in downtown LA.

Suburban communities like Bridgeview and Commerce City expect stadiums to come with LA Live type development, but that works best in downtowns where those restaurants and hotels have guarantees of foot traffic outside of the 17 home games MLS can promise. The NFL suffers with the same issue, where stadiums sit empty three-hundred and fifty odd days a year. The suburban stadiums have rarely paid off for the surrounding community.

There have been several academic papers written on the topic, and they're fairly unanimous in their findings. Coates and Humphreys (1999) found that new stadiums and sports teams actually reduce per capita income in the host communities. That would follow a trend of rising property taxes without better jobs created to compensate.

Don Garber has gone on record repeatedly recently saying MLS is not yet profitable. With the cost of adequately supporting an MLS franchise estimated to be half that of supporting an NBA, NHL, or NFL franchise, it's not hard to conclude that MLS' economic impact isn't going to be what these small suburban communities expect.

In "Economics of Sports Facilities and their Communities" Seigfried argued that "The vast majority of consumers has a relatively inflexible leisure budget. If a sports team moves to town, the money one spends taking a family to a game typically is money that is not spent [on other leisure activities]." This makes the net effect on spending very close to zero.

The hope would be a wellspring of bars and restaurants that earn the food dollars that would have been spent elsewhere. However, that's not how regional pulling suburban stadiums have worked. Parking revenue and concessions stay inside the stadium itself.

For someone living in the community, a season ticket to the local team is money not being spent at the local bowling alley. If taxes are being raised to pay off the debt of building the stadium, a season ticket might not even been economically viable.

The pendulum in MLS seems to be swinging away from suburban stadiums and toward downtowns. This of course only works in major cities that have downtowns and not in suburban areas which only have major highway access to offer. That still leaves the question raised by Malena; if it's responsible to ask for public subsidies in cities where they're closing libraries and laying off teachers.

Especially in a city like Miami where they just spent $347 million in taxpayer money to build a ballpark for the Miami Marlins which sat empty as the team struggled, the David Beckham group is likely going to have to come up with a large portion of the stadium funds on their own.

How MLS plans to support these potential owners is a great question. Is MLS willing to let the project die, even with the Beckham name attached to it? San Antonio already has the stadium and a soccer culture of its own. With only the Spurs for competition, doesn't that make more sense than trying to work their way into Miami again?

Jeremiah Oshan wrote this morning about the small-market charm of MLS, which has a championship this weekend featuring franchises from markets as small as Kansas City and Green Bay who met in Super Bowl I. The NBA expanded successfully going into places like Portland and San Antonio.

Run with what works, and stop trying to force what doesn't.