Phoenix Has Become Valley of the Subsidy

[Franklinnoble]

Interesting article from the Washington Post:

http://www.washingtonpost.com/wp-dyn...2004Feb26.html

Phoenix Has Become Valley of the Subsidy
Taxpayers Give $700 Million to Sports Venues

By Thomas Heath
Washington Post Staff Writer
Friday, February 27, 2004; Page D01

PHOENIX

In a former alfalfa field about 10 miles west of here, $250 million in public money is helping build a football stadium for the Arizona Cardinals -- a team with one winning season in the last 16. Across the street is the two-month-old Glendale Arena, built with $180 million in taxpayer funds and home to the NHL Phoenix Coyotes, who have failed to advance beyond the first round of the playoffs since arriving from Winnipeg in 1996.

Then there's baseball's Diamondbacks, who play in six-year-old Bank One Ballpark in downtown Phoenix, built with a $238 million assist from county taxpayers. The Diamondbacks won the World Series in 2001, but the team loses millions each year. Across the street from the baseball park is America West Arena, opened in 1992 with a $48 million public subsidy and home to the last-place Phoenix Suns, who haven't made a title run since Charles Barkley left after the 1995-96 season.

Across the Valley of the Sun, as Phoenix and its environs are known, municipalities have showered more than $700 million on sports stadiums and arenas over the last decade or so, creating one of the most modern and capable sports infrastructures in the country. It's the only metropolitan area in the country whose four professional sports teams play in separate, new facilities.

In championing the public-spending boom, state, regional and local officials hope to turn Phoenix into a truly major league city, a place that attracts Super Bowls, basketball Final Fours and all-star games that can boost the local economy and complement the area's burgeoning tourism industry. Along the way, they hope to make winners out of their historically lackluster professional sports franchises.

"As we grow as a state and as we're looking for ways to expand our economy and attract more people into Arizona, sports is an integral part of our formula," said Gov. Janet Napolitano. "Taxpayers will do better with this than without it."

But not everyone agrees that the money is worth it. Some citizens decry the construction as a waste of public funds, diverting revenues generated from sales, hotel and car rental taxes to undeserving teams -- particularly the long-suffering Cardinals -- and their wealthy owners and players.

"Buying a stadium for the Cardinals is not worth it," said Josh Ahlvin, 27, a Phoenix area retail manager. "The ownership is terrible."

"Being a taxpayer, why do I want to pay for something that the owner [of the Cardinals] doesn't want to pay for," said Chris Cafaro, 31, a probation officer from Queen Creek, south of Phoenix. "I try real hard to root for the Cardinals every year, but by the middle of the season I find myself booing them."

Urban affairs specialists say Phoenix has crammed too many teams and too many stadiums into the local economy, which doesn't create enough ticket-buyers from among the area's 3.5 million inhabitants as it is. The Cardinals draw the fewest fans by far in the NFL, with ticket sales of 36,062 per game last season. The Diamondbacks last year averaged 34,639 per game, a drop from 39,507 in 2002 and only 71 percent of the ballpark's capacity.

Mark Rosentraub is an urban affairs expert at Cleveland State University who sits on the board of that city's Gateway Project, which administers Gund Arena, home of the NBA Cavaliers, and Jacobs Field, the Indians' ballpark. He believes Phoenix may have overextended itself by separate facilities for football, baseball, basketball and hockey. On top of that, Rosentraub said, the region's high-profile college teams provide additional competition for fan interest.

"There's not enough wealth to sustain four professional sports teams, Arizona State's three major teams and the University of Arizona's two teams" in Tucson, Rosentraub said. "You add this into a small market and it's just not going to work. In five or six years it will hit. Meaning, you will have four teams that will be marginally competitive."

But supporters of the new sports facilities say the area is already benefiting. They point to last year's decision by NFL owners to name Phoenix the host of the 2008 Super Bowl -- in the new Cardinals' stadium, which promises to be one of the most modern ever, with a retractable, steel-and-fabric roof and a field that can slide in and out of the stadium like a cookie sheet

The annual Fiesta Bowl is already a fixture on college football's championship circuit. There's a good bet that the NHL all-star game will be visiting in the next few years, particularly since Wayne Gretzky became a part-owner of the Coyotes. There's even talk about an NCAA Final Four at the Cardinals' stadium, which is scheduled to open in 2006.

"We've gone from one million to 3.5 million people over the last 20 years, and the ballparks are part of the infrastructure of amenities that we needed," said Maricopa County Supervisor Mary Rose Wilcox, who helped lead the basketball and baseball projects. "We have the weather. We have the people. We're in the major leagues now."

Said Diamondbacks and Suns owner Jerry Colangelo: "The bottom line is this: With three and a half million people in this marketplace, four venues vying for suites, club suites and major marketing packages, it's a stretch in the short term. Long term, we will grow into the marketplace because our population will double in size in the next 15 to 18 years."

As of 2000, the city of Phoenix had 10,556 households earning more than $200,000 a year, according to the U.S. Census Bureau, compared with 6,036 in Denver, 1,234 in St. Louis and 1,318 in Cleveland, all cities with multiple professional sports teams. But some of those Phoenix high-income residents may live there only part of the year.

The area is headquarters to giant Swift Trucking, whose owner, Jerry Moyes, is a partner in the Coyotes. Honeywell, Motorola and American Express also have large presences in Phoenix.

Glendale Arena, a sparkling hockey palace that looms above the flat desert terrain 10 miles west of Phoenix, is filled with signage from Toyota, America West, GEICO, Subway and the Arizona Lottery. The Coyotes have leased 65 of its 89 luxury suites, according to a spokesman.

"Phoenix has housed multiple professional sports teams for years, and that hasn't been diluted," Napolitano said. "I assume that the owners, before they entered into these financial arrangements, did their own due diligence and were satisfed that . . . this was not only sustainable, but potentially moneymaking."

The three businessmen who own the Coyotes, Steve Ellman, Moyes and Gretzky, won what may be the best deal in professional sports from local officials in their enthusiasm for luring the team to Glendale from downtown Phoenix. The Coyotes paid just $40 million toward their $220 million hockey arena, and keep all of the revenue from the arena's club seats, luxury suites and stadium signage. The franchise pays only $500,000 a year in rent to Glendale. By contrast, the Washington Capitals receive almost no income from the MCI Center luxury suites and club seats, most of which goes to pay the mortgage on the privately built arena owned by Abe Pollin.

The Coyotes also hold the naming rights (yet to be sold) to the arena and manage the facility as well, allowing them to earn back most of their rent payment. The city gets $2.45 on every ticket sold and has obligated Ellman to develop the real estate surrounding the arena, which he pledges "will become the Tysons Corner of Phoenix."

"We did it to make Glendale more than a bedroom community," said Glendale Mayor Elaine Scruggs. "We invested in a $180 million building that we own. It's a catalyst."

The Cardinals' deal is a good one for its longtime owners, the Bidwill family, too. The team will move out of Arizona's State's aging Sun Devil Stadium in two years and move into its new facility. The new stadium will earn the Cardinals, who are putting up $120 million toward the stadium's $370 million cost, tens of millions in new revenues from luxury suites, club seats, signage and concessions.

The Cardinals, who moved to the Sun Belt from St. Louis in 1988, are betting the new stadium will reverse their fortunes. This winter, the team hired Dennis Green, the widely respected former coach of the Minnesota Vikings, to be their coach.

"In anticipation of new revenues, we've changed our business model and have gone out there and targeted nine free agents and signed seven of them," said Cardinals Vice President Mike Bidwill. "We are very hopeful Denny is going to be able to turn it around very quickly. You look at all the success stories in the league, and they are tied to the new stadiums. We are looking forward."

The construction of the stadiums and arenas didn't take place without a struggle. It took two referendums before the Cardinals' stadium won voter approval in 2000 for a countywide 1 percent hotel tax and 3.25 percent surcharge on rental car fees, administered by the Arizona Tourism & Sports Authority, to fund the new facility. It also took a lobbying campaign by the Cardinals, then-Republican governor Jane Hull and business leaders before the referendum passed, 52 to 48 percent.

Napolitano, a Democrat who took office after the Cardinals' stadium deal was approved, said the battle over the merits of the team's arrangement with local authorities was over. But she cautioned that the team no longer has any excuses, and will soon need to start showing results on its state-of-the-art playing field.

"The Cardinals have to establish some credibility," the governor said.

[rkmsuf]

That's crap to saddle the taxpayers with the bill...absolutely horrible...

[Franklinnoble]

When I lived in Phoenix, I didn't mind the stadiums for the Suns and the Diamondbacks - because Jerry Colangelo generally tries to put a winning team out there for the fans. The Cardinals, however, suck badly, and always will, as long as the Bidwell regime is in charge. They don't deserve a new ballpark, and Phoenix deserves a better football team.

I have no opinion on the Coyotes... I could give a rats ass about hockey.

[Arles]

Bank One Ballpark has already paid back the city's investment nearly double based on the World Series and increased tourism to Phoenix over the summer (normally everyone leaves, now some stay and watch the D-Backs). The two stadiums in Glendale are paid by the city inhabitants and should increase their property value immensely, not to mention bring a great deal of sales tax revenue to what was a pretty barren city three years ago. In 2-3 years, Glendale will probably be one of the more active areas in Phoenix - maybe even passing Tempe. So, local businesses there are thrilled.

You also have to look at how these were paid. Most use bonds (some have even already been paid off), while others used an increase in the car rental/hotel tax for tourists. Given the payoff this city has already received (host one World Series, College Championship - Fiesta Bowl) and will receive (Super Bowl in 2008 and potential Hockey All-star game), these moves look to pay huge dividends for what was a second-rate city just 4 or 5 years ago.

Plus, there was no increase in sales tax or state income tax needed to cover it, so the city inhabitants didn't really get stuck with the bill the way it seems in the story. If you went to a D-Backs game, you paid slight more for a few things. But, if you stayed at home and never went to one sporting event, this entire thing didn't cost you a dime.

[Franklinnoble]

Originally Posted by Arles

Bank One Ballpark has already paid back the city's investment nearly double based on the World Series and increased tourism to Phoenix over the summer (normally everyone leaves, now some stay and watch the D-Backs). The two stadiums in Glendale are paid by the city inhabitants and should increase their property value immensely, not to mention bring a great deal of sales tax revenue to what was a pretty barren city three years ago. In 2-3 years, Glendale will probably be one of the more active areas in Phoenix - maybe even passing Tempe. So, local businesses there are thrilled.

You also have to look at how these were paid. Most use bonds (some have even already been paid off), while others used an increase in the car rental/hotel tax for tourists. Given the payoff this city has already received (host one World Series, College Championship - Fiesta Bowl) and will receive (Super Bowl in 2008 and potential Hockey All-star game), these moves look to pay huge dividends for what was a second-rate city just 4 or 5 years ago.

Plus, there was no increase in sales tax or state income tax needed to cover it, so the city inhabitants didn't really get stuck with the bill the way it seems in the story. If you went to a D-Backs game, you paid slight more for a few things. But, if you stayed at home and never went to one sporting event, this entire thing didn't cost you a dime.

First of all, the Bank One Ballpark DID include a county sales tax increase. People were so pissed off about it that every one of the county supervisors that approved it (without voter consent) either resigned or were voted out of office, with the exception of Mary Rose Wilcox. And she got SHOT over it. So, yes, if you lived in Maricopa county and never went to see the D-Backs, you DID pay for it with a 1/2 cent sales tax increase for a period of 2 or 3 years.

I don't know the details of the financing with regards to the Cardinals and Coyotes stadiums. Will they be good for Glendale? Probably. But don't have delusions of that place being a more popular destination than Tempe. Unless ASU re-locates and takes their 20,000 college hotties with them.

Personally, I think both stadiums are a bad investment. The Coyotes are bleeding money, like many other NHL teams, and have never been successful. The NHL will probably be facing a major work stoppage just in time for the grand opening of the new hockey rink. That's BAD. And Glendale HAD to know that there were labor problems brewing. Not to mention that the Coyotes just aren't very successful on the ice.

The Cardinals are highly unlikely to improve with the addition of the new stadium. People just don't show up to their games, and they won't as long as the Bidwells are content to leave a ton of salary cap money on the table every year while they put a mediocre team on the field. What Glendale will have is a half-empty state of the art facility that only sees real usage every few years when they get to host a Super Bowl or a Final Four or maybe the Fiesta Bowl. Otherwise, it will sit empty, and the Sun Devils will continue to draw a bigger crowd than the Cardinals.

I have no comment on the Suns arena. I moved there just after it opened, and don't know much about the financing. I can say that it's much nicer than the "Madhouse on McDowell" where they used to play, and it's a sucky place for hockey because of the obstructed view seats in half the place.

[Arles]

Well, the Cardinals stadium doesn't cost most Phoenix inhabitants a thing as they were paid by hotel and rental car tax. The Glendale Arena is covered by the city, so I don't know if their inhabitants have to pay a higher tax, but I'm pretty sure there's no increase on sales tax for them. Plus, I know non-Glendale residents don't pay anything. As to the D-Back, there was a small Phoenix sales tax, but it only last a couple years and has passed and is no longer in effect. Plus, it was relagated to only certain locations (hence my comment on going to the games).

Going into this entire thing, Phoenix had the suns and cardinals. There was absolutely no traffic in Glendale (it was essentially a bunch of farm land) and downtown Phoenix had businesses hemorrhaging cash and the area was very bad. Since the DBacks Stadium was put there, hotels, restaurants and overall commerce has increased significantly. They've made so much money that they are going to redesign the Civic Center over the next 4-5 years. The same thing will happen to Glendale.

I'm not a huge fan of government subsidies to sports teams, but I think they can work in certain situations. Essentially, by paying $100-$200 million for a stadium you can increase in commerce, tax revenue, conventions, and even increase your city's prestige. But, and here's the big caveat, you must get an increase in tourism/conventions to bring in the outside revenue so that your citizens aren't saddled with a huge bill. A place like Phoenix can do this, but I doubt it would work in Milwaukee.

[Franklinnoble]

Well, there's been a lot of hot air over re-designing the Civic Center for years. Nothing has ever happened, and there are too many people in Phoenix that have delusions of making the city a convention destination, a la Las Vegas.

The politics and business corruption in that city are staggering, if you know how to look for it. You'll never know it from reading the Arizona Republic or watching channel 12 news, because both media outlets have a rich mob history to their origins. Do some research on this... start with John McCain. Look up names like Don Bowles and Kemper Marley. Find out who "the Phoenix 40" were, and what they're calling themselves these days. After a while, you'll see that every major business and civic organization in the city is connected, and the connections aren't pretty.

[Arles]

Originally Posted by Franklinnoble

Well, there's been a lot of hot air over re-designing the Civic Center for years. Nothing has ever happened, and there are too many people in Phoenix that have delusions of making the city a convention destination, a la Las Vegas.

The politics and business corruption in that city are staggering, if you know how to look for it. You'll never know it from reading the Arizona Republic or watching channel 12 news, because both media outlets have a rich mob history to their origins. Do some research on this... start with John McCain. Look up names like Don Bowles and Kemper Marley. Find out who "the Phoenix 40" were, and what they're calling themselves these days. After a while, you'll see that every major business and civic organization in the city is connected, and the connections aren't pretty.

As opposed to the non-corrupt and clean histories in other major cities like Chicago, New York and LA

Every major city has some skeletons. My point here is that valley has benefited immensely from having the DBacks. Just look at the sheer revenue brought into downtown Phoenix in the past three years compared to years before. The difference is staggering. Knowing what we do now, there can be no case made that the city would be better off if they didn't pass the stadium.

The same looks to be true in Glendale over the next 3-4 years. The Super Bowl itself projects to bring more revenue to Glendale than the past three years of commerce combined. Plus, the number of conventions and business trips planned to the valley figures to double by 2007. All the while, Phoenix inhabitants still pay extremely low property tax, income tax and somewhat low sales tax when compared nationally. So, I'd say that the valley has come out pretty well from this deal so far.