No, I’m not on board with contributing $330 million in taxpayer money (that’s Bryce Harper money!) to subsidize this private-sector development. But I’m also against the use of any taxpayer money to subsidize the construction of sports stadiums, so I’m completely and totally unpersuaded by the argument that we should block this development and let this real estate in a great location sit there undeveloped for another decade in the hopes that maybe there’s a chance we could end up paying even more in taxpayer subsidies for a baseball stadium there someday.
Whether Malik gets his tax breaks or not, it’s extremely unlikely that there’s ever going to be an MLB stadium on this site. Also, building on this site doesn’t materially impact the chances of Raleigh someday getting a franchise, so there’s really no good reason to conflate the two issues. There are perfectly good reasons to be intensely skeptical of Malik’s request, but this isn’t one of them.
The bigger problem I see is that Malik basically straight-up said in the interview in that the non-soccer portion of this proposed development should be nicely profitable without any local taxpayer subsides because of the big federal tax subsidies. And I personally would love to see this area get developed and hopefully kick off a domino effect of other positive changes in the area. But he’s saying he’s not going to do this cool, profitable thing unless the city pays him $330 million to fund the construction of his shiny new toy soccer stadium (which would definitely not be profitable without taxpayer subsidies). And as much as I would like to see this development happen, that feels really, really icky to me.
If it’s profitable without local taxpayer subsidies, then why should the city kick in any money? Let the funds go to things like museums, and places that actually need it.
Like Marbles. My kids have mostly grown out of it this point . But it was actually a family affordable place ($5 per person) to take the kids to and have an afternoon of fun, and then still be able to afford to go out to eat afterwards at a local joint.
Contrast to me taking my son to a Canes game about a month ago, where we paid $20 per ticket, plus parking (another $20) . So we ate a sandwich at the house before we left (Not paying $6 for a half-assed hot dog).
I love this question. You hit the nail on the head, because the studies on sport stadiums show that they don’t really GENERATE any revenue, instead they just shift spending from one to another. You and your family probably have a monthly entertainment budget (even if you don’t keep close tabs on it). You will probably spend about the same amount of money on entertainment regardless of how many options there are, because you aren’t going to spend more on entertainment unless you can afford to. So, when we see stadiums (or concert venues or whatever) get built, they don’t typically draw huge numbers of people from out of town, but they do cause lots of people who live in that town to shift their spending from one entertainment activity to another.
Of course, if you build enough entertainment attractions, then you do start to attract outsiders on a larger scale. If Vegas only had one casino, it wouldn’t be a big attraction, but it has a critical mass of entertainment options that draws people from all over. One attraction doesn’t make a difference, however.
Totally agreed. @Brian tracked down all the 2018-2019 responses to RFIs and they’re pretty interesting. The proposal to expand Marbles Kids’ Museum looks really awesome, and if the city/county denied funds to the kids’ museum because they need the money to pay for a soccer stadium, that would be both a really terrible decision on the merits and also a horrible choice politically. I’m very excited to see that museum expansion come to fruition, and that should be the No. 1 priority, IMO.
Fun things I learned by reading the documents: The city/county currently pays $5.2 million a year in PNC Arena debt service. (That’s on top of $2.5 million annually in maintenance costs. The Centennial Authority gets another $3.2 million for reasons that aren’t made clear in the RFI.) That debt service ends in 2020. So basically the Centennial Authority is saying, “We’re just about to finish paying off our loans. Time to take out some more loans!” They’re envisioning borrowing “$200 million to $300 million,” which is an awfully imprecise cost estimate, and taking out a 25-year loan with “an annual debt service in the range of $13.5 million to $20.2 million.” Ugh.
It looks like once you take out funds that are already committed, and $27.8 million per year being used to prop up the convention center, the city/county only has $4.6 million to allocate this year, which is less than what it would take to fully fund either the PNC Arena request or the soccer stadium request, let alone anything else.
The Soccer staudium doesn’t need the money this year as the request states that this would go into effect beginning in fiscal year 2022. I would think this is a request for the promise of the money from these funds beginning in 2022.
In practice, very, very few people are going to book a hotel room in Raleigh to come see a two-hour soccer game, regardless of whether it’s an MLS team or a USL team. PNC Arena really does host some events that generate some hotel stays, but the portion of those generated by Carolina Hurricanes games is probably really small as well.
@rgmedd The revenue from the hotel and meal tax is not magical, though; if you spend those revenues to build a soccer stadium or refurbish a hockey arena, that’s money you then don’t have to spend on museums and cultural arts and the like. If building a sports arena is not the highest and best use of those funds, then the city/county should spend the money on something else rather than say, “Well, it’s money that comes from hotel taxes, so it’s basically free money anyways.”
@R-Dub It appears from the PowerPoint presentation available online that the city/county would have up to $4.6 million in uncommitted funds for FY 2018. (If I’m understanding the flow chart correctly; it’s not particularly easy to interpret.)
@John@OberlinSouth Yeah, I agree, the vastly more interesting aspect of the new Malik proposal is everything except the soccer stadium. The thing that makes me a little queasy is that it’s possible that the value generated by all the other new development could be such that it becomes economically rational, or at least politically attractive, to just pay the ransom request. But that would require much, much more detail from Malik and Kane. It’s not the sort of thing where them saying “Yeah, we’re going to develop it, and it’s going to be great, don’t worry,” is enough to go on. So realistically, I think that’s going to push any request for hotel tax money for that project into the next fiscal year.
The stadium and development according to the projections of the document would in fact bring in more per year into the pot than the $11mil it would take out between 2022-2052
“The multi-use development is currently planned to include up to 750,000 sf of office space; 100,000 sf of retail and service space; two 150-room hotels; 1,200 multi-family housing units; and 1,300 parking spaces; a total of over $735 million in new construction; all to be privately financed.”
“it is projected that the DESC will host 75 or more events annually that will further grow
Wake County’s tourism economy”
A no brainer for me. It will grow Raleigh, increase density in much needed south of Raleigh, and help us with the marquee of our lovely city. If it is in fact at least cost neutral then where is the problem?
It’s not a problem. It’s a potential. Again the request for money does not initiate until fiscal year 2022. I think the funds will not have to be paid if the stadium is not built.
@niko This request was written for the proposed 22,000-seat stadium on Halifax Mall, on 13 acres of land, with what would likely be a different mix of surrounding development, and was explicitly premised on attracting an MLS franchise. The latest proposal is very different in several key respects from the one described in this request, so it seems reasonable to ask the team to submit a new and updated request to reflect those changes.
Look, it’s possible that the surrounding development really will be sufficient to make the numbers pencil out. But we definitely shouldn’t just uncritically accept whatever numbers the club throws out at us. Every claim the team makes about financial returns should be carefully scrutinized to see what kind of evidence backs up those numbers, because oftentimes these projections don’t stand up to scrutiny. It would not be prudent stewardship of taxpayer money to just say, “Well, the guy asking for all this money promised us that the project is going to pay for itself; so that’s good enough for us.”
So to answer the last question, the potential problem is that the long and sorry history of public subsidies for sports stadiums in the United States gives reason to be concerned that this proposal may in fact not actually be cost neutral, and so we should definitely kick the tires on this car pretty thoroughly before we even start to think about buying it.
My understanding is that instead of ~700mil private investment we are looking now at 1-1.5 billions. This does not necessarily reflect more Wake County room occupancy and prepared food and beverage taxes and sales tax but likely it will be. Plus property taxes for that massive development
I am sure an updated document will have to be submitted and can be scrutinized all we want
NCFC is already a club and would be moved. NC Courage is also already established, and I suppose they would be moved as well.
A facility like this would also have the potential to host NCAA, H.S. state championships, and other soccer special events. It would also provide a venue for outdoor concerts when RedHat eventually gets redeveloped into expansion for the convention center. Don’t think for a moment that this stadium would only be considered for a small number of home soccer games by a future MLS franchise.
This is now being marketed as a Downtown Entertainment Complex. Not, as a means to an end regarding MLS. In fact, Malik admitted in the media that MLS would not happen anytime soon, if at all. However, NCFC is already established, as is the Courage in their respective leagues and would immediately move their games here. Additionally, they state the complex would support mid to large concerts, college athletics regionals/championships, large outdoor religious services, even local level league play and state championships (high school). It seems prudent we no longer view this as MLS driven project. Clearly, they are changing tactics to have something much more entertainment driven by which the desire to grow a MLS team is icing rather than the main ingredient. (my thoughts).
I’m still digesting the NCFC ask, but my early thought is that I think favorably of the Marbles ask. Marbles is a non-profit that is already a top 10 attraction in the state of NC and is already often over capacity. Their response talks about improving and expanding Marbles and also about taking the lead in connecting other downtown museums (NC Museum of Natural Science and NC Museum of History).
i briefly reviewed the proposals and I agree that Marbles should probably be first in line for this money, in my opinion it’s the best children’s museum in the country (and I travel with my kids so I’ve been to more than a few). I think the PNC Arena renovations, NCFC Stadium, and Convention Center expansion are in the next tier. The other proposals seem to be non-starters that don’t move the needle.
This isn’t new. Malik has stated all along that any stadium would be multi-purpose, albeit it would be named “NCFC soccer stadium”…or whatever corporate name would go there.
The soccer stadium has by far, the biggest economic impact for the City. Marbles, the History museum (why isn’t the State paying for their own museum by the way?), etc are great projects but won’t come close to delivering an ROI similar. At over $1Billion in construction projects, no other financial request has the potential to create an actual ROI the stadium will, not to mention tangential construction projects. $1Billion is just a construction cost. The end ‘value’ will most likely resemble North Hills mean 3, 4, 5X that number.
Calculate what that means in terms of property tax revenue, sales tax revenue from the new shops, stores, property value increases of adjacent land and Marbles, the History Museum, etc, while worthy don’t come anywhere close to an ROI…Combined!!
Wikipedia says" WakeMed Soccer Park opened in May 2002 as State Capital Soccer Park. The park is on 150 acres (0.61 km2) that the state of North Carolina has leased to Wake County. Money to build the soccer park came from $14.5 million in county-wide hotel room and prepared food and beverage taxes. The Town of Cary assumed responsibility for operations and maintenance in 2004 from Capital Area Soccer League. On January 26, 2006, the Town of Cary council amended its lease to allow it to sublet the property to Triangle Professional Soccer through the year 2011 for the exclusive promotion of professional soccer and lacrosse events at the complex."