On Monday August 12th @ 2pm The Wake County Commissioners will have a work session with county
staff concerning both stadium projects , DowntownSouth & Friends Of Wake County / Raleigh Stadium Projects . This is open to the Public . It will be at The Wake County Justice Center Room 2800 .
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Meanwhile, David Tepper plans to meet with Major League Soccer…while Raleigh City Council plans to hold “public forums” so we can listen to all then naysayers bitch & moan about whatever…instead of actually doing something meaningful to progress this forward. Raleigh went from having a lead on charlotte USA, even without a clear stadium plan to now who the hell knows… our council and commissioners are literally willing to debate us to death and lose a chance at a major transformative economic project for the City.
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I actually just got off the phone with the communications director for NCFC and we had a really great 30-minute conversation about the project. (He had seen my tweets opposing spending public money on the project, which is why I got a personal phone call from the team.)
He and I obviously strongly disagree about whether the request for taxpayer money is a good idea, although we actually agree about a lot of other aspects of this–we both think it would be good for this area to get redeveloped with housing, retail, hotels and office space. (I’m treating the details of the conversation as off the record, so I don’t have any juicy stuff to share with you guys.)
But I think that if the communications director for NCFC and the guy who is literally putting out the most Twitter posts opposing the request for funds can have a really friendly, productive conversation about this, then surely we on this forum can discuss the pros and cons of it without resorting to name-calling or bad language. It’s fine to disagree with people–I do it a lot on this forum, and I plan on continuing to do so!–but we don’t have to hurl insults.
BTW, I don’t think that Charlotte getting an MLS team is really any impediment to Raleigh getting an MLS team. (At least no more so than candidates in other parts of the country.) The cities are far enough part, and the fan bases are geographically contained enough, that there would be very little overlap or competition between the teams for fans. I don’t think Raleigh should be too concerned about what David Tepper is doing.
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Ohio has two teams for goodness sakes, and if Columbus and Cincinnati can both support teams, then Raleigh and Charlotte could as well. Teams in both cities would boost over all coverage in the state, and would create a natural rivalry that could drive fans to the stadiums. I really love the idea of a Carolina Derby, or whatever they want to call the derby.
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David, I’m curious as to what projects you feel the hotel & meals taxes (most of which are paid by out of towners) should fund? The laws explicitly state the kinds of projects to which those funds can be directed (ie: tourism-related that in turn further fill those same coffers). The ROI generated by the proposed stadium project dwarfs the museums, Marbles, etc $10X. While I love the museums just like the next guy, I’m also a believer of using public funds for the use case that provides the best return to the City…in this case it’s the stadium project. NONE of the other projects come anywhere close when we look at “real” dollars returned to the City.
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If you are going to be ideologically opposed to funding this stadium project with taxpayer money then you must also be opposed to the very existence of this specific tax fund and its intended purpose.
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Ooh, this is literally the topic of tomorrow’s Twitter thread!
The hotel portion of the taxes are paid largely by visitors, but most of the meal tax money is paid by locals. And there’s robust empirical evidence to suggest that a sports stadium would actually produce an exceptionally poor ROI. A study of data in Charlotte found that the Carolina Panthers—who draw far more fans than MLS teams do—had almost no effect on hotel stays. Hotel tax revenue attributable to the team was less than 1% of what the city had to pay each year for the stadium. Panthers-game-related sales tax revenue is about 2.5% of what Charlotte pays in debt service, but remember the substitution effect–most of that is local residents spending money on Panthers stuff instead of spending it on other things.
As you and I have bandied about before, the overwhelming majority of professional economists dispute the notion that sports stadiums produce a good ROI for the public, so if you believe in using public funds for the projects that provide the best return to the city, that’s a reason to oppose the project rather than support it.
I do believe that expanding the region’s preeminent children’s museum should be the top priority and that Marbles should get the full amount they’ve requested. In fairness, though, that certainly would not exhaust the fund–you can fully fund Marbles and still have plenty of money left over.
But giving NCFC the funds they’ve requested would be like maxing out the credit card. They’re asking for $13 million a year, and I believe there’s only $11 million projected in revenue for next year that isn’t already spoken for. Now, the annual revenues will keep going up due to population growth and inflation, so we could probably patch over any short-term holes, but long-term, this would eat up a huge chunk of the budget for 20+ years, constraining the city’s ability to fund any promising future projects that might come along during that period.
Finally, as @Phil alluded to, I think the whole concept of this tax is fatally flawed. If there’s really no higher or better use of this money than building sports stadiums, then the law needs to be revised so we can spend the money on things that people in this county place a higher value on: Schools, transportation, public safety, parks, libraries, human services, etc. Laws can be changed.
To use an analogy, it is nice to have tourists coming to Raleigh. It is also nice that we have a thriving tech industry in Raleigh–and in fact, tech is a much bigger economic driver here than tourism. And there are certainly things the city can do to help grow that tech sector. But I think the vast majority of us would agree that it would be a bad idea for the city to have a dedicated “tech tax” that could only be used to directly invest in local start-ups. Using public money to provide venture capital to tech start-ups would generate a horrible ROI. Likewise, using public money to provide venture capital to tourism start-ups is going to be woefully inefficient, because governments are really bad at angel investing.
But unless or until the law is changed, I would say that we avoid making huge all-in bets on mega-projects, because putting a huge chunk of your capital in one project is inherently very risky, just like you shouldn’t sink your whole retirement fund into a single company’s IPO–especially when the industry in question has a lengthy track record of being a terrible investment.
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But they are asking for $11m a year of a $55m per year (and growing) surplus. Not exactly all eggs in one basket. Panther stadium is an island with no integrated mix use. It’s very much a suburban model stadium plopped into a downtown, like many other stadiums around the country. The Kane Malik proposal is a different model. Have you seen the warehouse district before and after Kane?
Taxing restaurants and hotels to fund schools and libraries, albeit socially good, is nonsensical. This would be another example of downtown subsidizing the suburbs, as a large proportion of the tax would be generated at downtown hotels and restaurants (partly tourism - think about world of bluegrass) but the improvements around the county would likely benefit the growing burbs.
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The revenue for this project does not come from the stadium itself. It is the property taxes generated from the surrounding project. These are projected to bring in more revenue to the city than what they are receiving. Of course, these are two separate funds and the coffers for the hotel and meals tax would not be refilled. It is difficult to compare a stand alone stadium project with one that includes commercial development around the stadium.
One note about the Panthers Stadium, a large portion of it was actually financed with seat licenses. So, I don;t know how much Charlotte initially had to shell out for it. I know that they have since paid for some renovations.
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Its all about image and prestige. ROI be damned. No one cares what the “economists” think. We want a stadium!
Since when do governments base their decisions on logic anyways?
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Something I have thought about is what would happen if Cane just wanted to build a Downtown South without the stadium. Like if you had never heard of the Stadium and you saw his plans for downtown South with like a cool park where the stadium is. I bet everyone on here would say, “Wow Cane is going to transform that area! this will be a huge success!” Would anyone have any doubt Cane could pull it off? We would all be referencing the 5 Horizons Gateway project & how this who area will be coming up and creating so much tax money. But, now we are in this strange place where the dude who makes all his projects work without tax brakes has us convinced that he can’t build another North Hills without funding. You have to admit this is a bit of a stretch.
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I mean, I think the easy answer to that from the developers standpoint is, why not? If the occupancy and food and beverage tax is written to subsidize projects like this, why not apply for the funding and hold your cards close until you win it?
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They initially said that they would build something even if they did not get the funding. My speculation is that they want the tax money to leverage financing for the various phases of the project. Since, they are asking for way more than what the stadium was originally supposed to cost. $330 million vs the original $150 million.
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They’re actually requesting $13 million a year. And that $55.734 million figure represents all revenues from 2018. Much of that money is already committed to other projects. $13 million a year would eat up most of what’s not already spoken for.
I’ve been to BOA Stadium, and I’m really not sure in what way it’s a suburban model. It’s an easy walk* to a lot of bars, restaurants, other cultural amenities in the area. (*Obviously what constitutes an “easy walk” will vary from person to person.)
I am actually in the Warehouse District right now, in an office that sits catercorner from The Dillon. The Dillon is super nice! It’s great that the Dillon exists and is helping to make the Warehouse District such a vibrant place. But how much in interlocal funds did Kane ask for to build The Dillon? How much in interlocal funds did he ask for to build North Hills? How much is he seeking in interlocal funds to build Smokey Hollow? If he can build all of those great things without any taxpayer subsidies, why would we offer $300M+ in taxpayer money to subsidize this one project?
Meals are already subject to the generic sales tax, which is used for general funds, so we already do this. And the vast majority of the county’s hotels and restaurants are outside of downtown anyway.
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I’ve read almost all of these studies on stadiums and they all kind of say the same thing. The ROI just isn’t there for the city to warrant tax dollars.
Every time I read these pieces they use an NFL stadium as an example. NFL has 8 home games and averages 68k fans per game. That means they bring 737,468 fans to the stadium on average.
Here is my question…
– What is the break even point? How many days of usage do you need and how many fans do you need to bring to the stadium in a year to make it a good investment for the city (for say a $300 million ask)?
I find it hard to believe that every single publicly funded stadium built in America has ended up putting the tax payer in a hole. There has to be some examples out there of stadiums that are staying filled, being used, and generating a great ROI for the city/county that funded them.
Maybe that would be a beneficial conversation to have on here, if people can find that data. What makes a stadium produce a solid ROI?
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Does a domed stadium work the best because it guarantees no cancellation and opens up the option for more concerts and other events?
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Does a multi-use (more flexible) sports stadium that allows multiple sports to use it, help keep the calendar booked and the revenue flowing?
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Are certain sports simply not great ‘main-tenants’ for stadiums because they don’t play enough home games and thus don’t bring in the volume needed to create that ROI?
I think the answers to these questions would be interesting and help us, as a city, guide our decision making on the current, and possible future scenarios of stadiums being built with our county Tourism Tax dollars.
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Thank you Alan. This is what I’ve been ‘screaming’ forever. Those ‘studies’ that David is referencing are just like the ones used for mass transit (to shoot down mass transit at least). The ‘empirical analysis’ bounded about by these supposed ‘economic analysts’ COMPLETELY IGNORE the property tax revenue generated by the MASSIVE growth around rail stops and thereby the property, sales, meal, hotel, etc taxes generated by the development around the stadium site. If these ‘analysts’ use those dollars the ROI tends to support the stadiums or light rail…but that would not suit their ‘anti-everything’ argument. The proposed NCFC stadium integrates all of the above into one massive project. The property tax alone would be double, maybe triple the $13MM/year. David, can you explain why these analysts continue to fail to use ancillary revenue generated as a ‘DIRECT’ result of a stadium or rail stop in their “analysis”?
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Stadiums more or less fall withing the public domain (more so than office buildings) and I’m sure, as you have pointed out, the economists are right - which is why government funding is often involved in these things. If we want MLS then to some extent we have to be willing to pony up the cash. ROI is irrelevant. Sports and entertainment are high risk. We wouldn’t have Duke Energy, DPAC, Carolina Theatre, or any other cultural institution without public funding. This is what public money is for.
However, there is validity to the argument that the money could be put to better use. I would like to have a glorious fountain. No expenses spared. Its worth it.
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The projected property tax increase would come from the other stuff that’s being proposed–the housing, retail, hotels and office space–not from the stadium per se. And I absolutely agree that we should build all the other stuff. The Dillon, North Hills, Smokey Hollow, [insert dozens and dozens of other projects] all significantly increased property tax revenue, too. But none of those projects required a single penny in taxpayer subsidies, because the city/county are not in the business of handing out huge cash grants for constructing housing and such, nor should they be. If the economics of the project don’t pencil out without $300M+ in taxpayer money, the project is a bad project.
I think the difference between sports stadiums and mass transit is that there’s not actually any evidence that building sports stadiums leads to an increase in development in the surrounding area. We can, and folks on this forum have, cited many, many, many examples of sports stadiums where the promised development in the surrounding area never occurred.
By conflating the rest of the proposed development with the stadium, NCFC is trying to turn two “No’s” into a “Yes.” Sports stadiums themselves don’t generate an ROI for the city. Kane and Malik are planning to build a bunch of nice stuff near the proposed stadium and calling it one project, but we’re just not in the business of handing out nine-figure checks to subsidize the construction of housing and retail. Trying to combine the two projects into one as an accounting trick doesn’t change the fact that neither project merits public subsidies.
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I don’t think that I or anyone else is expecting that the stadium is going to generate a lot of hotel stays in Raleigh, rather I think that Kane is saying that he’ll build hotel rooms that the city needs if he can get something in return for creating a revenue stream that will come from those hotels.
What may be tricky to wrap your head around is whether or not the complex, inclusive of the stadium, will drive more visitors through the growing number of festivals + the hotel capacity that could drive more convention business. Isn’t it true that Raleigh can’t compete for many larger and week long conventions because of the lack of hotel capacity to support them?
So, it goes something like this: We can’t expand the convention center, because the demand isn’t there, and the demand isn’t there because the hotel capacity isn’t there. It seems as if Kane is passive-aggressively saying that he’ll build hotel capacity if he can get targeted tax revenue to provide the community an amenity that it doesn’t currently have.
As for ROI, there’s also an experience return on investment that never seems to be considered in naysaying narratives. These are less measurable soft benefits when corporate relocations are being considered. What does the community offer to my employees? While Raleigh and Wake have always been able to rest on their laurels regarding good schools, safety, mild-ish Winters, etc., these are no longer the only considerations. People also want walkable environments and cores that are amenity rich, and experience heavyweights. Is it any surprise that Nashville’s differentiators in that regard are accelerating their visibility and success as of late? Raleigh was poised to be the next “Austin” and now we now have to fight to be the next “Nashville”, unless some other city emerges that pushes us back another rung.
Lastly, how come community investment and ROI, that is applied to stadiums with scrutiny, is not applied to museums? Where’s their hard, measurable ROI? Don’t get me wrong, I LOVE museums. I am just saying that they aren’t the only thing that enrich our community and provide experiences.
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except the fountain doesn’t create an ROI…the stadium does
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