Shockingly bad news out of Bridgewater: Perhaps this is unique to the Bridgewater situation, but I am really suprised that Fire Stadium hasn't been more financially successful. Soccer stadium deal kicks Bridgeview taxpayers in the teeth
Related article from Chester http://www.philly.com/philly/sports...er_and_soccer_get_along_.html?cmpid=137039853 the Philadelphia deal sounds a bit like Harrison. Stadiums are terrible drivers of economic development as a general rule and not really good investments for cities. Even areans (with their greater range of use) tend to be bad deals. The Bridgeview outcome seems somewhat corrupt from a city standpoint (article didn't focus much on the team at all) while the Chester issues seem rooted in the fact that there's a reason why development was slow there to begin with.
Interesting. A big "sell" for our stadium was that it would be the first step in revitalizing the East End. The best part is that there really isn't any money to pay back for our stadium (at least not to the City/County) per se.
There appears to be some double-counting in that article. The article says, "Today Bridgeview is suffocating under nearly a quarter of a billion dollars in debt." So let's recall: $11.5 million short on debt payments from '06 to '10. $14 million for shortfall insurance. $50 million in '08 to cover stadium debt $22.5 million in '11 for old/future losses. Comes to a total of $98 million. So, maybe an accountant can tell me if I'm missing something here (it's entirely possible). But it appears to me that either a) the article writer is counting the original $100+ million borrowed to finance the stadium originally, even though he admits later in the article that those debts have been paid off, save the $11.5 million, as of '10; or b) he's counting other Bridgeview debts not enumerated here or not related to the stadium, and conflating the two because it makes a sexier newspaper point. So, mind you, I'm no fan of publicly-financed stadiums. And even less of a fan of the crony capitalism that appears to be going on in this instance. But unless I'm missing something, it appears we're getting a slanted picture.
Why don't teams build their own stadiums? Every stadium in Boston was built/renovated with private money, and our teams are still solvent.
You're right, it's not clear. But the central point here is that most of the MLS stadiums were built by communities anxious to spur additional -- taxable -- development surrounding the stadiums. New mixed use commercial and residential construction was supposed to create additional tax base to offset the stadium costs. And, in 2008, the bottom fell out of the real estate market. The impact in Chicago has been especially brutal. It's not typically considered one of the sub prime mortgage meltdown spots, but 44% of homes in Cook County that have mortgages have negative equity -- the homes are worth less than the mortgage amount. http://articles.chicagotribune.com/...-underwater-homeowners-zillow-chief-economist And you'll find Illinois banks figure prominently on the FDIC list of closures: http://www.fdic.gov/bank/individual/failed/banklist.html Alleged cronyism aside, many of these deals were predicated on development that never came.
Articles like this make me mad. This is why soccer sucks. I bet you the Union do nothing to help to help out the African-American population of Chester.
If it weren't for the fact that the Union are apparently late on promised payments (nice job Nick S! cue Metro fans whistling 'I told you so'), I really wouldn't feel too much sympathy for Chester in this situation. The city has been mismanaged for years and as sad as this is to say, what they should be getting out of the stadium is more than they'd get without it. Both sides really need to hammer out what the Union actually owes the city, because if Chester really does decide to tap the well of PPL and Harrah's then they can kiss any future development in that area goodbye. After reading the Bridgeview piece it's interesting that there really isn't a whole lot of scorn thrown at the Fire themselves. For the most part the Fire took what was given to them and have let the city run the stadium into the ground. Par for the course for Cook County politics really. The pols over here make the Philadelphia politicians look like angels.
And ironically, in San Jose, where the Quakes stadium will be 100% privately funded, it looks like the economy has recovered enough for Wolff and his development buddies to build out the adjacent acreage at the Airport West stadium site. (The stadium will be to the left, you can see the Quakes logo in the bottom corner And yes, those are soccer fields towards the top, a city soccer complex that is to be built there that the Quakes will operate. http://www.bizjournals.com/sanjose/print-edition/2012/06/08/new-hotels-offices-eyed-in-san-jose.html
Oh, I see the central point. And in some cases in the past (not with MLS stadiums, because of the timing that coincided with the market crash, but other sports), development has occurred around stadiums and "created" income. But that's not a legit argument for use of tax dollars in the first place, and it all relates back to the crazy argument politicians put forth, that they have the ability to "create" income or "create" jobs with what they do. Which they don't, but that's a point for the BigPolitics board. The point I was making though is, two wrongs don't make a right here. There's apparently a good amount of shady business that went down related to Toyota Park, and a lot of unfulfilled promises, and it's contemptible. But that doesn't excuse a newspaper writer twisting the facts to paint a picture to appear worse than may be the reality of the situation, either.
Agreed. And even if a lot of work was politically "steered" in a form of "pinstripe patronage", and even if that increased the cost of the stadium, that doesn't change the fact that there was probably too much debt to carry even if the stadium had been built at the best possible price because the other development hasn't materialized. But I disagree with the poster who suggested any form of public financing of stadiums is illegitimate. When redeveloping a blighted area, a tried and true strategy is to build around anchors that attract a lot of people and stabilize the surrounding area. Lots of buildings can do that -- community colleges, hospitals, corporate headquarters office complexes to name a few. And, yes, stadiums. There's a value to having these facilities, not just for the direct job creation or the ancillary growth that follows to serve the audience they attract, but that they create a level of confidence for largely unrelated development that occurs because of the belief that the stabilizing anchors will increase the likelihood that other investment in the area will hold value. It can and does work, but a healthy does of caution is needed here. It is utterly foolish to load huge amounts of debt that can only be serviced if entirely unrealistic levels of development rapidly occur, and, sadly, too many governmental bodies have done that IMO. The problem isn't that Bridgeview or Harrison or Chester wanted MLS stadiums, but rather how much debt they took on to do so -- and what growth was needed to service that debt. When the growth doesn't come, there are limited ways to service the debt -- usually the taxpayers. It's painful. But it isn't only stadiums. We are focused on these projects because they house MLS teams, but trust me there are all sorts of dumb deals out there for all kinds of projects that assumed a wave of growth would follow that simply didn't happen.
“Yes, yes, I know that, Sidney… everybody knows that! … But look: Four wrongs squared, minus two wrongs to the fourth power, divided by this formula, do make a right.” The Far Side
It's rather misleading to title this thread 'stadium profitability,' since this really isn't about the stadium's profit margins at all, but rather about Bridgeview's poor municipal finance. Take a look at this S&P downgrade recommendation for Bridgeview's debt: https://s3.amazonaws.com/s3.documentcloud.org/documents/351979/sp-feb-2012-downgrade-2.pdf First, they made a bad deal - they paid for 100% of the stadium, and financed all of it with bonds. Then, they make it worse when they can't make the payments because they don't want to raise taxes, so they borrow more money to make the payments - this is like putting your mortgage payments on your credit card. Then, they doubled down on that deal, borrowing more money for economic development deals around the stadium. Lots of debt, long repayment term. It's worth noting that S&P downgraded Bridgeview's debt before construction on the stadium even started.
It will be interesting to see how it develops. Although as you point out, with no tax money funneled toward the stadium, the "bar" for measuring success will be lower as they don't need to have "so much" development as to cover a large debt bill. Really, any positive amount of growth and increased tax base will be a success. Frankly, most cities get wide eyed at the hint that a team may be leaving because of the loss of revenue but you wonder how many have someone with math acumen able to perform the math and figure out that several hundred million in debt is not the best approach.
This post about sums it up. The city "may" have made a poor choice in financing the stadium in totality, but the truly stupid moves came after when they kept taking debt to pay for existing debt.
Someone refresh my memory: Didn't the original plan for what became Toyota Park involve more of a public/private partnership with the Fire, and didn't the city come in and say later that they would just go ahead and shoulder the whole thing? I remember wondering why they would do that at the time. I guess now we have the answer.
There is money to be paid to the bank for fronting the money and the local TIRZ coffers need to be filled by the increase in land value for the area, which is supposed to happen with the stadium in place. Just wanted to clarify that the team does indeed have a few bills to pay, and a few hopes to fulfill as well. More to your second point, I honestly wonder if anyone truly believes that argument. Most people should realize by now that the teams are a luxury. An expensive one, but a luxury none-the-less. If you want it, you pay for it.
I was speaking more of the cost to the city/county so the bank repayment falls to the team. Regarding the TIRZ, you are correct the expected tax increase is meant to pay that debt, BUT it is such a small amount it won't take much over X amount of years. Supporting the gift of land and some minor infrastructure is much lower than the cost of a 100 million+ stadium. Fact is, the cost of infrastructure improvements would have been part of ANY revitalization project so the decision was not whether to spend some money for the stadium but rather do we believe in the east end or not.
An interesting contrast to this situation might be Saputo Stadium and the Impact. The team is actually a non-profit that is co-owned by the Quebec government, Hydro-Quebec(the government owned power utility) and the Saputo family/corporation. As such the $23 million granted by the government to upgrade the facility (the first phase of which only cost $17 million) was a direct investment in an asset. (By what sorcery we got such a nice looking 20k facility for $40 million, I don't know) Canada does not lack for publicly funded stadia, but what are the reasons behind a lack of direct investment by government entities in sports ventures?