Thursday, September 9, 2010

Old Stadium Debt Lives On

Once again, Gary Welsh of Advance Indiana beat me to the punch reporting on a fine article in Tuesday's New York Times entitled "As Stadiums Vanish, Their Debt Lives On."

Here is part of the article:
It’s the gift that keeps on taking. The old Giants Stadium, demolished to make way for New Meadowlands Stadium, still carries about $110 million in debt, or nearly $13 for every New Jersey resident, even though it is now a parking lot.

The financial hole was dug over decades by politicians who passed along the cost of building and fixing the stadium, and it is getting deeper. With the razing of the old stadium and the Giantsand the Jets moving into their splashy new home next door, a big source of revenue to pay down the debt has shriveled.

New Jerseyans are hardly alone in paying for stadiums that no longer exist. Residents of Seattle’s King County owe more than $80 million for the Kingdome, which was razed in 2000. The story has been similar in Indianapolis and Philadelphia. In Houston, Kansas City, Mo., Memphis and Pittsburgh, residents are paying for stadiums and arenas that were abandoned by the teams they were built for.

But befitting its name, Giants Stadium is the granddaddy of phantom facilities. Taxpayers in New Jersey, already under pressure from declining local government revenues, this year will pay $35.8 million in principal and interest on the $266 million in remaining bonds for the Meadowlands Sports Complex, which opened in 1976 and includes the Izod Center and a horse racing track. Those bonds will not be paid until 2025.

For its first decade, the complex was a success. But its fortunes faded as horse racing declined, the Nets and the Devils left for Newark, and the Jets and the Giants built their own $1.6 billion stadium next door, which will host its first National Football League regular-season game Sunday.

To offset its declining revenue, the New Jersey Sports and Exposition Authority, which runs the sports complex but not the New Meadowlands Stadium, expanded instead of contracting: building aquariums, convention centers and other facilities, issuing hundreds of millions of dollars in additional bonds.

How municipalities acquire so much debt on buildings that have been torn down or are underused illustrates the excesses of publicly financed stadiums and the almost mystical sway professional sports teams have over politicians, voters and fans.

Rather than confront teams, they have often buckled when owners —usually threatening to move — have demanded that the public pay for new suites, parking or arenas and stadiums.

With state and local budgets stretched by the recession, politicians are only now starting to look askance at privately held teams trying to tap the public till.

“The Meadowlands wasn’t a bad idea, but rather than pay it off, they let it ride,” said Steven Malanga, a senior fellow at the Manhattan Institute, who has written about the perils of publicly financed stadiums. “Politicians essentially turned a good thing into a money loser for taxpayers at exactly the wrong time.”

Paying for arenas and stadiums that are now gone or empty is a result of a trend that stretches back decades. Until the 1960s, public works were often defined as bridges, roads, sewers and so on: basic infrastructure that was used by all and was unlikely to be built by the private sector. With few exceptions, like County Stadium in Milwaukee, teams constructed their own stadiums.

As pro sports expanded into cities from coast to coast, politicians and business leaders pushed for taxpayer-financed stadiums to lure teams. To name a few, New York built Shea Stadium for the expansion Mets, Atlanta put up Fulton County Stadium to lure the Braves from Milwaukee, and Oakland built a stadium to entice the Athletics to move from Kansas City, Mo.

Soon after, Philadelphia, Pittsburgh and Cincinnati built stadiums for teams already there. In some cases, cities justified the expense as a way to keep owners from moving their teams. In other cases, politicians argued that the stadiums would generate enough revenue to cover the construction cost.
The article goes on to mention Indianapolis RCA Dome debt that was rolled into the Lucas Oil Stadium debt.
The finances of public authorities are often murky. To determine that the RCA Dome in Indianapolis, which was demolished in 2008, has $61 million in debt remaining and will not be paid off until 2021, one must sift through 700 pages of bond documents.
Trust me...that was intentional. I know how Indianapolis insiders love to cover their screwing over of taxpayers in tons of paper and complicated legalese.

The article also could have brought up the debt on the Conseco Fieldhouse which, for reasons I don't understand, has actually gone up over the past ten years as reported by I believe Mary Milz.


Gary R. Welsh said...

I was actually interviewed for the story by one of their reporters, Jo Craven McGinty, last week. There was second part of the story that got axed due to space limitations that discussed Indianapolis in more detail.

Paul K. Ogden said...


It's too bad we have to go all the way to New York to get good newspaper coverage of what's going on in Indianapolis.

Downtown Indy said...

The numbers I recall are Conseco going from $183 Million to $212 Million owed.