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Empty stadiums host weddings, concerts as US teams seek cash

BLOOMBERG
Sunday, Jun 22, 2003, Page 12

"When you build these stadiums in an undeveloped area of the city ... it redistributes jobs, housing and wealth."

Andrew Zimbalist, economics professor

Angie Martin is paying US$3,000 to celebrate her wedding in a newly built banquet hall overlooking Lambeau Field, the National Football League stadium that's home to the Green Bay Packers.

"People think I'm crazy, but I've always loved the Packers," said Martin, 26, one of more than 30 brides who have booked the hall starting in September. That's when the Packers are set to complete a US$295 million expansion, adding restaurants, stores and a video game center to the 46-year-old stadium in Green Bay, Wisconsin.

US sports franchises, including the National Football League's (NFL) Detroit Lions, Arizona Cardinals and Dallas Cowboys, are investing to turn stadiums that are rarely used for more than 10 games a season into year-round revenue sources. They are counting on events like rock concerts, science conventions, weddings and bar mitzvahs.

"The sports arena is no longer the end, but rather a means to an end," said Jim Nash, managing director of Banc of America Securities sports finance group, a unit of Bank of America Corp that helped managed the sale of US$350 million in bonds in 2001 and last year for NFL stadium construction.

While new stadiums can boost revenue from luxury-box rentals and advertising sponsorships, teams often ask local governments to help pay for the projects by selling bonds or giving them grants.

The Cardinals under owner Bill Bidwill, the Cowboys owned by Jerry Jones and the Lions owned by Bill Ford Jr., chairman of Ford Motor Co, pitched for aid by arguing that multiple-use stadiums would generate new tax revenue and economic development.

"Political support is tougher to get than ever, and so teams are proposing stadiums as the centerpiece of an overall economic development strategy," said Robert Dunn, a partner at Hammes Company, a Madison, Wisconsin-based business that helped plan construction for the Packers and Lions.

Andrew Zimbalist, an economics professor at Smith College in Massachusetts and author of May the Best Team Win: Baseball Economics and Public Policy (Brookings Institution Press, 2003), said multiuse stadiums can revitalize neighborhoods.

"When you build these stadiums in an undeveloped area of the city, you encourage people to relocate from other areas in the city and it redistributes jobs, housing and wealth," said Zimbalist. "If you're trying to revitalize the downtown core, it's a strategy that can be successful." Packers Chief Operating Officer John Jones declined to say how much revenue the team expected from Lambeau Field's new features or how much the city's tax base would benefit.

The Green Bay-Brown County Professional Football Stadium District sold US$160 million in bonds in May 2001 to help pay for the renovations. About half the bonds sold with a fixed 4.82 percent yield and half had variable rates that have averaged 1.75 percent, according to district Executive Director Pat Webb. The bonds are backed by a 0.5 percent sales tax on consumer items in Brown County.

Season ticket holders paid the next largest amount, US$92 million, through a fee of US$200 a seat per game. The Packers contributed US$20.6 million and borrowed US$13 million from the NFL.

The state of Wisconsin gave the team a US$9.6 million grant.

The Detroit Lions opened a US$500 million arena last August across the street from Comerica Park, a one-year-old stadium occupied by Major League Baseball's Detroit Tigers.

The football complex incorporated an empty 83-year-old department store warehouse. The team remodeled about 37,000m2 of the building to hold luxury boxes, restaurants and banquet halls, and renovated 32,000m2 for offices and residential use.

Local governments helped pay for the stadium with US$90 million in grants from Wayne County and Detroit's Downtown Development Authority and US$15 million derived from the city's sale of general obligation bonds, according to Brian Holdwick, vice president of business development for the Detroit Economic Growth Corporation, a nonprofit development agency.

Members of Bill Ford's family put up US$195 million. The team also secured US$100 million through a loan from the NFL, US$50 million by selling naming rights to the stadium to the Ford, US$20 million from the Tigers for parking rights, US$10 million in corporate sponsorships and US$20 million in "private financing," Holdwick said.

"Ford Field brings 65,000 visitors to Detroit for football and thousands for other events throughout the year," Holdwick said. "It's created incentives for at least 15 bars and restaurants to start up in the area in the past year and that doesn't include the new office space and hotels." In Arizona, the Cardinals are building a US$355 million stadium in the Phoenix suburb of Glendale that will stand beside a US$210 million arena built for the National Hockey League's Phoenix Coyotes. Michael Bidwill, the team's vice president and son of the owner, said the stadium will have a grass field that can be rolled back to expose 15,000m2 of convention space when it opens in 2006.

"I don't know if you can say this is a profit-making venture today or even within the next year or two given the national economy," said Beasley. "But a city has to plan for what's to come. And there's no doubt that it's coming." The Arizona Tourism and Sports Authority helped pay for the stadium by selling in February US$222 million worth of 28-year bonds at 4.9 percent. The bonds are backed by a 1 percent hotel tax and a 3.25 percent rental-car surcharge.

The Cardinals are contributing US$102 million. The rest of the costs are being covered by a tax on material purchased to build the stadium, income from investing bond proceeds, and a portion of the hotel and rental car levies, Beasley said.

Bidwill and Beasley wouldn't project stadium revenue. When the Tourism and Sports Authority sold the bonds, the agency projected revenue of US$2 million from events like conventions, concerts and weddings in 2007.

The Dallas Cowboys said in March that the team wanted to build the biggest multiuse stadium in sports history, a US$650 million, 80,000-seat structure with a retractable roof to be built on a 80- to 120-hectare parcel.

"Most stadiums are designed for spectators, but we want to design an interactive park for people to come and stay and play all year," said Rob Allyn, president of Dallas-based Allyn & Co, a political and public relations consultant that's promoting the stadium project for the Cowboys.
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