Carrie Rengers

Ballpark developments aren’t so promising, economists say. But some cities disagree

Wichita mayor cites several cities as success stories

Wichita Mayor Jeff Longwell regularly points to several cities where he says new Minor League ballparks successfully spurred development. Charlotte, Durham, N.C., and Indianapolis are the three places Longwell touts.
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Wichita Mayor Jeff Longwell regularly points to several cities where he says new Minor League ballparks successfully spurred development. Charlotte, Durham, N.C., and Indianapolis are the three places Longwell touts.

As Mayor Jeff Longwell touts everything a baseball park can do for Wichita, he points to several cities where he says new Minor League ballparks successfully spurred development.

Sports economists say that’s not usually what happens.

“In general, the idea that if you build it they will come — and if you build a sports facility and development will spring up around it — is a myth,” said sports economics journalist Neil deMause.

Yet there’s no question that there’s thriving development around the ballparks that Longwell uses as his top examples.

There is a question, though, if the ballparks can claim credit.

“Politicians have a way of selling what they’re trying to do, and many times they sell that . . . with promises of future benefits,” said Craig Depken, professor of economics at the University of North Carolina at Charlotte.

“It’s not the politicians promising,” Longwell said of Wichita. “It’s the developers that are putting their money in.”

Oklahoma City, Charlotte and Durham, N.C., are some of the top places Longwell cites as development success stories when discussing a deal to lure Lou Schwechheimer and his Baby Cakes team from New Orleans.

The deal includes, in part, a $75 million stadium that the city would build where it has already demolished the longtime Lawrence-Dumont Stadium and several acres that the city would sell for $1 an acre to Schwechheimer and an unnamed investment group to develop. Longwell has previously said that without that part of the deal — which is not finalized — the team won’t come.

The city would pay for the ballpark by borrowing money through issuing bonds. It would use a mix of financing tools such as STAR bonds, tax increment financing and a community improvement district, which would allow the city to direct sales and property tax money generated in the area to help pay off the bonds.

“It doesn’t sound to me like a promising project,” said Andrew Zimbalist, an economist at Smith College in Massachusetts.

He said he would need to know all the details to evaluate the deal more fully, but in general “the more the financing is public, the less likely it’s going to spur development.”

Most of the country’s 30 or so sports economists — and even Longwell — agree that ballparks alone don’t spur development, according to several of those economists.

Zimbalist said all anyone has to do is check the scholarly record.

“The overwhelming economic evidence is that ballparks do not generate sufficient economic development to warrant economic subsidies,” said Victor Matheson, professor of economics at the College of the Holy Cross in Worcester, Mass.

“Our plan is different,” Longwell said.

He said private developers plan a mixed-use development — starting with a guaranteed 250,000 square feet — north of the ballpark and the city’s new baseball team plans a guaranteed few acres of development as well.

He said third-party reviewers have studied the city’s plan for a ballpark and “they’ve all said it’s a good development, it’s a good finance package.”

He said he welcomes any economist to study it.

Last year, Matheson studied a possible move by the Rhode Island-based Pawtucket Red Sox to Worcester, which will happen in 2021.

Schwechheimer was a longtime partner in the Pawtucket team before selling in 2015.

Matheson said that despite more than 70 years in Pawtucket, the team never generated development “anywhere within miles of the stadium.”

“That team was a complete failure in terms of local economic development.”

‘No question’

Charlotte is one of Longwell’s go-to examples of how ballpark development can work.

The Charlotte Knights own BB&T Ballpark, which the team built in 2014 for about $62 million with help from three public entities.

The team leases the park land from Mecklenburg County for $1 a year and also has an economic development grant from the county for $835,000 a year for 20 years to help pay off the stadium.

The city of Charlotte also has a 20-year deal with the team to pay a grant of $635,000 a year, which helped the team move from South Carolina.

Charlotte Center City Partners, an organization that promotes the city’s downtown, has a 20-year deal with the team for a grant of $50,000 a year.

“The idea here is that the ballpark would spur development around it, and that’s what it did,” said Dan Rajkowski, COO of the Charlotte Knights. “There’s no question there’s a correlation.”

He said the area where the stadium located wasn’t as developed as some other areas. How much the growth can be attributed to the ballpark is “hard for me to say,” Rajkowski said.

It’s not hard for Center City Partners president and CEO Michael Smith.

“This was one of the most . . . apparent opportunities for us in our efforts for urban redevelopment,” he said. “Ballpark-oriented development is transformative.”

Smith said the deal took seven years and a five-party land swap to pair the ballpark with an urban park.

“The two together have just created gravity for development.”

He said the ballpark “has a ton of programming” besides baseball.

Smith said there’s more than a billion dollars in new development adjacent to the ballpark and park.

The team has one acre it can develop, but Rajkowski said it needs some of the space for baseball amenities, not development.

Even without that development, he said, the ballpark has “been a tremendous success for the city.”

Depken, the UNC economist, said that area of town had already begun developing. The center of the city had been dead a long time, he said, but then an influx of some major banks helped spur activity with more workers and residents.

He said it seemed like when anything was built around the stadium, though, people claimed it was because of the stadium.

“Very little evidence suggests that we have developers that say, ‘We are building because of this.’ ”

Resounding approval

The success of Oklahoma City’s Minor League ballpark and the Bricktown entertainment district around it had its roots in rejection.

United Airlines considered the city for a new maintenance facility. At the time, Oklahoma City had been hard hit by a downturn in the oil industry. The airline decided to go to Indianapolis instead, and the Oklahoma City mayor wanted to know why.

What he discovered was Indianapolis had a much more vibrant downtown and a better quality of life.

Oklahoma City then proposed a one-cent sales tax to stimulate development.

“It was very controversial at the time,” said Alex Freedman, director of communications and broadcasting for the Oklahoma City Dodgers. “Barely passed.”

The city collected more than $300 million, and the first thing it did was build a $34 million ballpark, which opened in 1998.

“It was just a smash hit,” Freedman said. “It opened everyone’s eyes to see, OK, this is what’s possible.”

Other tax packages passed with resounding approval, he said, and the area continued to develop with businesses and a new canal.

“It’s like nothing was around it before,” Freedman said of the ballpark, “and now you walk 10 feet, and there’s something else.”

He said it went from “a seedy place that was abandoned to a place that was revitalized and was a place to be.”

Longwell also points to Indianapolis, not for its development but for what he says is a great ballpark in an urban core.

Bruce Schumacher, chairman and CEO of the Indianapolis Indians, said the team’s Victory Field is “certainly a piece of” what’s happening in that downtown, but so is the Indianapolis Colts’ stadium, the Indiana Pacers’ stadium and the city’s convention center, all of which are in a one-mile area.

“There’s so many positive things in downtown Indianapolis,” Schumacher said. “It’s hard to say what exactly has spurred on what.”

Tremendous demand

The city of Durham built Durham Bulls Athletic Park for about $18 million in 1995 when it was a Single-A team, but there have been several updates since then. The first was when the team moved to Triple-A in 1998.

Along with park updates, development around the park began, too, said team vice president Mike Birling.

Team owner Capitol Broadcasting Co., which has NBC and Fox stations, wanted to have a Fox station in a building just off of right field at the ballpark, which Birling said offers “incredible views.”

“The demand for space in that building was just tremendous,” he said. “We never could have imagined how big the development around the ballpark could have gotten.”

Over the course of about 15 years, the company purchased abandoned tobacco warehouses around the park where Lucky Strikes and other cigarettes were made and converted the buildings for a mix of uses.

“You are really on top of the ballpark looking in from all these different buildings,” Birling said.

The area is now known as the American Tobacco Campus and also is home to the Durham Performing Arts Center along with a lot of restaurants, bars and entertainment around the offices.

Birling said there were a couple of keys to development.

One was that the city and county paid for parking garages.

Another was landing a few big tenants — Duke University and a big pharmaceutical company among them — in the beginning.

“You have to have champions of the project,” Birling said. “You have to have other companies that are willing to take this on.”

Other developers then came in, too, he said.

“It was very important that we weren’t just doing this,” he said. “It had to be something the community wanted.”

Initially, the community didn’t want a new ballpark, said Peter Anlyan, who was the general manager of the Bulls as the team transitioned to the new ballpark.

Its previous park became popular through the movie “Bull Durham” with Kevin Costner and Susan Sarandon, who played Crash Davis and Annie Savoy.

“There was a lot of romanticism surrounding it,” Anlyan said. “Here’s where Crash played, where Annie sat.”

He said a lot of older people didn’t think the city should spend money on a new stadium, which the City Council put up for a bond referendum vote in 1989. It failed.

“Subsequently they all got voted out of office, by the way,” Anlyan said.

When Capitol Broadcasting owner Jim Goodmon bought the team in 1991, he wanted to move the ballpark out of downtown to near the airport to help make it more of a regional draw, but the city was against it.

At the new park that was built downtown, Anlyan said that “Jim saw that nothing was happening” with development, so he decided to do it himself.

“This guy is a real visionary, and he takes chances, and they’re calculated.”

Anlyan also was the general manager of the American Tobacco Campus for its first four years.

In addition to the city and county parking structures, Anlyan said historic tax credits helped with development, too.

For a time, he said, you couldn’t find anyone in Durham who voted for a new ballpark.

“A couple of years later, you couldn’t find anybody who didn’t think it was a good idea.”

‘A little cynical’

Despite whatever success Charlotte, Durham and Oklahoma City have had, sports economics journalist deMause said there are “way more examples” where ballparks spurred no more development than what would have happened without them.

Also, he said, ballparks often locate in areas that are already ripe for taking off, which makes measuring their success complicated.

“It’s difficult to kind of extricate it all,” Depken said. “We admit to that as economists.”

Concrete measurement is crucial, he said.

“They can promise whatever they want,” Depken said of politicians and teams. “We can only measure what we can measure.”

He said that means calculating a city’s costs versus how much is generated in sales tax, hotel reservations and other measurable variables.

“It appears that the cities are spending more than those benefits.”

Matheson, the Holy Cross economist, said when sports economists study new ballparks and franchises there’s “literally no evidence whatsoever” that they “have any effect on any sort of citywide tax receipts, income, tourism (or) employment.”

He said an average Minor League ballpark draws about 600,000 people a year — just like studies show a 16-screen movie theater does.

“No one in their right mind would ever consider telling a big movie company . . . ‘Oh, by the way, why don’t we build your movie theater for you.’ ”

Zimbalist, the Smith College economist, said he sees an issue that Wichita’s new team would be a farm team for the Miami Marlins instead of, say, the nearby Kansas City Royals.

“I don’t think too many people in Kansas and surrounding areas are going to get too excited about watching their team.”

Teams and cities often contend that ballparks will have a lot more than simply games. The city has said Wichita’s new ballpark will have more than 200 events a year, including about 70 games.

“That will not mean 10,000 people,” deMause said of each event. “That will mean, like, a party in a luxury suite. I guarantee that. Everything counts as an event, even if it’s only five people. So it’s a big problem.”

Matheson said that “it’s hard to use the facilities year-round, and it’s hard to use them for anything but baseball.”

“Baseball facilities are very, very specifically designed to be very good at watching baseball and not good for doing anything else.”

He said there is “occasionally evidence of neighborhood effects” with new ballparks, such as an increase in property values.

For the most part, Matheson said, ballparks simply move money from one part of the city to another.

That’s despite what politicians say, Depken said.

“We kind of get a little cynical about it. It’s all great political talk.”

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Carrie Rengers has been a reporter for almost three decades, including 16 years at The Wichita Eagle. Her Have You Heard? column of business scoops runs five days a week in The Eagle. If you have a tip, please e-mail or tweet her or call 316-268-6340.
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