1. 1
CorbinSims
March 13, 2015
Case Study#2
The San DiegoPadreshave shownthe sportsworldthat a stadiumanda teamcan helprevitalize
an entire community.Theyproveditcouldbe done,althoughittooklongerthananticipatedandfaced
obstaclesthatcouldnot be foreseentheyaccomplishedthis.Itisnow the blueprintforall sportsteams
wantingtobuildnewfacilities.Itiswithoutadoubta greatmodel,butsome thingsthathappenedin
San DiegoIdo not thinkcan be replicatedinmanyothercities.The cityof San Diegoshowedthata new
sportsfacilitycanbe a longtermeconomicbenefittothe communityandwell worththisexpensive
investmentinabaseball stadium.Some keyquestionsstillremainthatIwill tryto elaborate onfurther.
These include whetherornotif theycouldredothissituationwouldSanDiegochange theirprocess.Or
if othercitiesshouldinvestlike SanDiegointhese expensive stadiums. Alsowhatisthe most
appropriate wayto funda stadiumthatis the mostbeneficialforthe cityand communityasa whole? I
will discussthisandmanyotherthingsinthe pagesto follow.
If San Diegowas todo thisall overagain and use the same processto developtheircityandball
park I wouldbe infull supportof this.The firstreasonI wouldsupportthisisthe personnel theyhadat
theirdisposal.Intakingona revitalizationof ablighteddistrictlike SanDiego’sEastVillage,one would
wantsomeone withaknowledge of real estate totake the lead.Because ultimatelythe goal of thisisto
create value aroundthe stadiumthat will make businessesandresidentswanttoinvestinbeinginthis
area fora longtime.Itjustso happenedthatthe ownerof the Padresmade hisfortune bystartinghis
ownreal estate firmJMI Reality. He isan expertatthistype of endeavorandindoingsohe knew what
was realisticandwhatwasnot.In knowingthishe wasable to take on mostof the financial riskforthe
project.Thiscappedthe city’sfundingwhichisagood lookto the publiceye. Anotherfactorthatthe
Padreshad goingforthemwas that theirlease atQualcommStadiumwasupin 2000. In 1998 the

2. 2
Padresplayedinthe WorldSeries.The Padressocial capital inSanDiegocouldnothave beenanyhigher
than at thispointintime.Theygave the communityasince of pride andtogethernessthathadbeen
generallymissingforalongtime.People were excitedaboutthe teamandhada general “feel good”
feelingthatconnectedthe communitytogether.Soconsideringthe eventsandtimingof all thisIwould
not change at all the ideato start promotingthe ideaof a new baseball onlyfacilitytothe public.
AnotherreasonIstronglysupporthowthe Padreswentaboutbuildingthisfacilityisthe waythey
utilizedthe structural capital theyhadbuiltintoandaroundthe stadium. Some keyfactorshelped
predicate the successof the ballparkbefore itwasevenbuiltinthe EastVillage.Onone side of the East
Village wasthe MarinaDistrict whichhousedthe city’sconventioncenter,thisgeneratedalotof
visitorsandoutof townpeople comingtostayinthis areafor conferences.The GaslampDistrictwasin
close proximitytothe EastVillage aswell,thiswasarejuvenatedhistoricpartof downtownthathad
recentlybecome ahubof nightclubsandrestaurants.Now these twoareaswere nice,butthere was
nothingtoconnectit all together.Until the ballparkwasdecidedtobe builtthere.Now all three of these
areas formedaregionof cumulative attractionthatontheirownwouldnotbe as successful.Butsince
theywere all locatedclose enoughtoeachotherthispromisedtobe an urbanentertainment
destinationthatmade peoplewanttogo to thisarea.Whichcreatedenoughhumantrafficto convince
residentialdevelopersandbusinesstolocate inthisareatoo.Finallythe decisiontoputthe ballparkin
the East Village helpedthe cityfulfill it’salmost90yearold masterplanforthe city.The ballparkwasthe
keyto thismajorintegrationthatwouldaffectthe welfareof the whole city. The BallparkDistrictplans
calledfora major streetthatcurvedaround the ballparkandleadoutto the Bay. Thenthere wouldbe a
park on the waterfront.Thiswouldfinallyfulfill the citieslongsoughtafterPark-to-BayLinkthatwasin
the original SanDiegoMaster Plan.The integrationassuredthatthe publicfundingforthe sportfacility
wouldnotbe usedto fattenthe walletof a wealthyowner,butitwoulduse the combinationof public
and private fundstotrulyrejuvenate the community.Another areathatthe San DiegoPadresandthe

3. 3
Cityof SanDiegosucceedtremendouslyinwasusingthe publicside of theirpartnershipinthe zoning
process. The SouthernCaliforniaareausuallyzonesverydescriptivelyusingthe landforretail onlyor
residentialonly.The Padresbythemselveswould’ve hadadifficulttime achievingwhattheydidwithout
the helpof the city inthispartnership.Insteadthisgroupgottheirlandzonedsotheycouldbuildhotels,
residential,office,retail,orwhatevertheywantedprovedto be a keydecisionsince theycouldadjustto
the needsof the communityanddemandsasa whole insteadof beingpigeon-holedintooffice space
only.All inall I believe the SanDiegoPadrescaughtlightninginthe bottle withthe personnel,land,and
resourcestheyhadavailable tothemtomake thisurban rejuvenationsuccessful.
The nexttopicI wouldlike totouchon that thiscase providedwasshouldothercitiesuse this
model tobuildtheirownexpensive stadiums.PetcoParkbyitself in avacuumdoesnotgenerate the
kindof a revenue forthe citythatone wouldexpect.Thiserathe era of “Fully Loaded”withPSL’s,suites,
and all the otheramenitieslocatedinside the stadiumgenerate alotof revenue forthe team.Notthe
citythe team,the average costfor a familyof 4 to attenda sportingeventasgrownto over$300. So
afterbuyingthe $8 hot dog,and $50 seat itis notuncommonfor people thesedaystogo home after
the game.Because the average familydoesnotenoughmoneytogo eatat a local restaurantor go to a
local bar before oraftera game because stadiumsare now all inclusiveandincreasinglyexpensive.With
that saida city shouldinvestinone of these expensive venuesif itispartof a much biggerplantogrow
a downtownareaand create an entertainmenthub.If the stadiumisnotincludedinthisplanitcould
endup like Minute Maidparkwhichaccording to the study“the stadiumissurroundedmostlyby
asphaltparkinglots,anda clusterof turn-of-the-centurybuildingsseveralblocksfromthe ballparkare
waitingfortenants.”Thisisthe kindof situationa citywantsto avoidbecause itbecomesapparentthat
thisfacilitywasbuiltandisnowgoingto be a burdenonthe city as a whole. Anothermoral quandary
that financingasportsfacilitybyitself isthe opportunitycoststhatare lost.By financinga sportsfacility
thiscripplesthe city’sabilitytofinance otherprojectsthatcouldreallyhelpthe community.The cityof

4. 4
Jacksonville foundthisoutwhenthey fundedthe stadiumitdelayedadeal toexpandtheirportthat
wouldof provided10,000 veryhighpayingjobstolongshoremaninsteadtheygota football stadium
that will play8 home gamesa yearand provide seasonal minimalwage jobs(Howardpg.258). Most
people wouldagree thisisnotwhatisbestforthe cityas a whole.More opportunitycoststhatare lost
are justthe abilitytoimprove otheraspectsof the citylike roads,hospitals,schools,jails,andanyother
numberof publicservicesthatcould helpthe populationasa whole insteadof justsportsfans.Another
thingto considerisif youbuilda stadiumthatdoesnot guarantee itwill alwaysbe full thuscreating
more economicimpact.Whena teamis losingfansstopcomingthatis justa fact. Anarticle inThe Argus
Pressshowsthisfact inthe case of the DetroitTigers. “Theballparkwill draw 2.4 million this season and
generateat least $120 million this yearfor downtown….Thatcomparesto just$77 million a year ago
when the teamaveraged 20,000 fansa game.”Most citieswouldnotwantto have to relyonhavinga
winningteamforitto have an impacton the community.Butthe good newsisa citycan investinapark
whentheyknowitispart of a biggerplanto propel downtowntobetterheights. The betterandone of
the firstexamplesof thisisCamdenYardsinBaltimore.Thisbaseball stadiumwasusedasa piece inthe
rejuvenationof the beleaguereddowntownarea.Itwasaccompaniedbythe buildingof CamdenStation
and M&T BankStadium.The article byThe Baltimore Sunstatesitself thatthe ballparkitself onlygivesa
small income tothe city government,butthe communityreceivesmillionsinrentfromthe office space
inthe Warehouse behindthe stadiumand millionsmore onjustparking.Thisdoesn’teveninclude the
boostto businessdue toincreasedtrafficinthe area.Thisisa state of the art stadiumwidelyconsidered
the most beautiful parkinbaseball.Itislocatedina metropolisarea,andasof late the Orioleswintheir
fairshare of ball games.Yetthe city freelyadmitstheyonlyreceiveameagerrevenue fromthe ballpark
itself.Isaythisto prove mystance that a stadiumbyitself willnotreapthe citylotsof money.Itwill
mostlikelybe aburdenthat occasionallyrunsadeficit.But,astadiumpairedwithotherattractionsina
downtownareathatattracts a lotof consumerscanbe as successful asthe SanDiegocase and the

5. 5
Baltimore example.Soinmyopinion,nocitiesshouldnotinvestinanexpensive sportsvenue.They
shoulduse aspart of a large scale entertainmentareathatbenefitsthe communityandmore thenthe
30,000 people anightwhowatch the game.
Resultsare mixedonwhethersportsfacilitiesactuallybringlongtermeconomicbenefitstothe
areas theyare builtin.The fieldof economicimpactishardto take at face value one examplefromthe
textbookcitesthe foureconomicstudiesthatwere done forthe DallasCowboysandtheirnew stadium.
The range of annual income to the countythat was reportedwasbetween$51 millionayearall the way
to $346 millionayear(Howardpg.187). Thisis a verybig discrepancyandjustone example of how
measuringthe economicimpactof a stadiumisnotan exactscience.Thisisbecause of the agency
conflictbetweenthe teampayingforthe studyandthe team whoprovidesit.The teamisnot paying
the firmto give thema grimeconomicstudytheywantthe firmto tell themhow greatthiswill be for
the countyso theycan use it and tell the public.The consulting firmsprotectthemselvesfromthese
absurdeconomicimpactnumbersbyincludingcaveatslikethis. “Itshould benoted thatouranalysis
utilizes assumptionsthatweredeveloped based on ourmarketanalysis,surveyswith comparablearenas,
hypotheticalleaseterms,and conditionsand assumptionsprovided by theCity and the developer
(Howard pg.189)”. So withthisacknowledgelet’sdive intothe areasastadiumcan reallyimpact.The
firstand easiesttomeasure isthe trendof sportsstadiumsreallyincreasingpropertyvaluesaroundit.
From the Padrescase studywe can see thattheyacquiredlandina 12 acre radiusaroundthe stadium
for $39 per square foot.In2007 afterthe stadiumwasbuiltandoperational thislandhadvaluesof
$450-$500 per square foot.Itincreasedinvalue by1000%, thisphenomenoncanbe seeninmanyother
places.A studyby CarlinoandCoulsonin2004 studied53 metropolitanareasfrom1993-1999. This
studyshowedthatcitiesthatgainedor hadan NFL franchise hada higherqualityratingof life thenother
citiesandthe presence of a NFL franchise raisedhousingrentsby8% in metropolitanareas.Thisisa
veryreal economicimpactandit may notmake up for the price tag of stadiumitcan leadto other

6. 6
benefitsthatcreate aripple effectinthe city.Whenthe stadiumisbuiltitisa provenscience thatthe
propertyvaluesarounditwill rise.Thiswilldrive outthe low wage residentandinfluence the higher
earningaffluentcityresidenttomove here instead.Now thatthere isabase of residentsthatare higher
income earnersall livinginone areathere are some benefitstothe citythat can be seized.Thisisknown
as clusteringona smallerscale.ClusteringaccordingtoHowardiswhenbusinessesinanyindustry
clusterina regional areabecause of the complementaryrelationshipsamongthem.Anexample of this
isthe IndianaMotor Speedwaywhichstimulatedthe growthof 400 motor sportsrelatedindustriesin
the area because somany autoteamsthat needthese servicesare basedhere.Well the sportsfacility
createsthison a small scale,itcreatesa concentratedareaof highincome earnersthathave the means
to spend.Sothisstimulatesretail andrestaurantgrowthinthisareato provide the servicesthatthe
residentsof thatareaneed.Creatingjobsthatdidnot existbefore,rentbeingpaidtothe citybystores,
and manyotherfinancial benefits.The Padrescase showshow thisworks,Petcowasbuiltincreasing
propertyvalues,thisstimulatedGaslamparea’srestaurantsandnightlife. Anotherknownimpacttothe
cityis the revenue fromthe stadium.Moststadiumspaya rentlike the Padrespay$500,000 everyyear
to the city.Theyalso geta cut of the profitsforthe Padre’sduringthe seasontheyreceived70% of the
income while the cityreceived30%.Howeverinthe offseasonthiswasreversedandthe cityreceived
70% of the revenues.Thisisguaranteeddollarseveryyear,butsometimesacitycan be sodesperate for
a team that theysquanderthe opportunitytoearnthese dollars.Thisdrivesupthe value of the
franchise,butcutsthe city out of dollars.The cityof Baltimore wasdesperateforanNFL franchise soto
entice ateam to come theyofferedthema “sweetheart”lease.Sothe Baltimore Ravensmovedintothe
stadiumandpaidabsolutelynorent,andreceived100% of the stadiumrevenues(Howardpg.124). So
the city got cut outof possiblyamilliondollarsayearbecause theywere toodesperate forafranchise.
The economicimpactto a city can be hard to define,butwe doknow withcertaintythatbuildinga

7. 7
facilityinadowntownmetropolitanareawill increase propertyvaluestremendously,andgive the city
stadiumrevenuesif theydonot getto desperate forateam.
Perhapsthe mostcontroversial partof buildinganew sportsfacilityishow the fundingforitwill
be acquired.One wayit can be done isthrough the implementationof general taxes.The mostbasicone
isan increase onpropertytax forall residentsof the city.Ido not believethishow a stadiumshouldbe
fundedKingCountyhasabout2.2 millionresidents.CenturyLinkFieldcanhold67,000 fanson anygiven
Sunday.Itis not fairfor 2.2 millionresidentstopaytaxessothat possibly3% of itspopulationcanattend
a game.Anothermaintax usedto helpfundfacilitiesisaTouristTax.This isleviedonhotel/motel room
and car rental purchases.Thisisseenas a much more popularwayto helpfunda facilitybecause the
cost istransferredontopeople whodonotevenreside inthe city.Alsomoststatesdonotrequire voter
approval to implementthesetaxessotheyare putintoplace and excisedwithoutthe touristeven
realizingit.Anothertax thatI believe asnoplace infundinganew stadiumistaxingplayer’ssalariesto
helppayfor the stadium.The playersare the workforce,theydidnotchoose tobuilda new stadiumthe
ownerdid.Thiswouldbe like the CEOof Toyota decidingtoopenanew auto facilitythenloweringhis
workers’salariestopayforit. Thiswouldnotbe receivedwellbyhisworkforce soathletesshouldnotbe
any different.The average age of retirementforanNFL Playeris30 yearsoldaccordingto ESPN.This is
because theyare riskingtheirbodiesandfuture qualityof lifetowinandproduce profitsforthe owner.
If you thinkan NFLplayersalaryislarge at an average of $1.9 milliondollarsthenyoushouldknowthat
accordingto Forbesthe average NFL Franchise isworth$1.7 billiondollars.SoIdonot believeitisfair
for the playertoget taxedtohelppayfor a facilitywhentheymake alotless thanthe ownerdoes. The
bestwayfor a stadiumto be financedinmyopinionismakingthe ownertake asubstantial partand risk
init; alsoto use revenue bonds.The ownerisultimatelythe one pursuingthe stadiumanditwill benefit
hiswalletthe mostanda basicprinciple of finance isthe greaterthe returnthe greaterthe risk.Noone
will getmore returnthenthe ownersohe shouldbe accountable forthe riskof the project.The Padres

8. 8
didthisin some respectbyensuringthatanyoveragesinthe initial facilityestimate wouldbe coveredby
them.Thisshowsthe publicthattheycare not to dumpthisfacilityonthemandthat theyare a
responsible businessthatwantsto dothe rightthing.The mostappropriate wayto helpfundthe facility
isa revenue bond. The revenue bondtransferthe costof buildingastadiumtothe revenuesthatthe
stadiumwill provide.Thisresultsinanincrease mostlikelyinusingthe stadiumthatispaidforby the
people comingtothe stadiumbutinmy opinionthatisfair.A new stadiumshouldnotbe financedby
people whodon’tcare aboutit,it shouldbe financedbythe oneswhodo.One of the majordownsides
to these bondsthoughisthe highinterestrate attachedtothem. The NFL especiallyisaprime targetto
use these bonds.The facilityhastomake revenue tofulfill theirdebtobligationandnoleague insports
israking inthe dollarslike the NFLis.
In conclusionIbelieve the SanDiegoPadrescase isthe ultimate how toinfinancingasports
facility.Itincludedall the ingredientsneeded,acompetentownerandstaff,acooperative local
government,demandforthisfacility,perfectlandtobuildonand manymore factors. Theyturneda
$474 milliondollarsports facilityintoalmost$4.25 billiondollarstowardsthe downtownrevitalization
project.Almostall of thatmoneywasprivate too,theyuseda ball park to helprebuildaforgottenpart
of the city. Afterstudyingthiscase andall the readingmaterial available tome Icame to one conclusion.
Everysportsfacilityisdifferent,youcannottake a case like the SanDiegoone and use itfor everynew
facility.Because foreverysmartlocal governmentthatgetsa new franchise tocommittotheircity,
there isa local governmentsodesperate togeta teamthat theydo notholdthe team accountable for
any of the money.To finance astadiumthe rightway the publicandprivate sectorshave to work
togethertoensure thatthisdoesnot become aburdenfor all citizensof the city.Thisisultimatelywhat
the San DiegoPadresdidrightand shouldbe the lessonforall citieswantingtobuildnew stadiums.

9. 9
Bibliography
APPress"Game daysat ComericaPark perkingupdowntown Detroit.”TheArgusPress [Detroit] 09 July
2000 Published:Page 9.Print.
Carlino,G.A.andCoulson,N.E.(2004), CompensatingDeferentialandthe Social Benefitsof
The NFL" Journalof Urban Economics 56(1): pp.25-50. Print.
Crompton, JohnL. and DennisR.Howard. Financing SportThird Edition.WestVirginia:FiTPublishing,
2014. Print.
Schmuck,Peter“CamdenYards,the stadiumthat changedbaseball andBaltimore,turns20.” The
Baltimore Sun [Baltimore] 31March 2012 PublishedPages 1-3.Web.