Tuesday, March 14, 2017

Not Another Downtown Sports Stadium? How Many White Elephants do we Need?  

More Monumentalism
I’ve said it before but it looks like it needs saying again: Auckland does not need a new downtown stadium. (Actually,the  last time I said it I was talking about convention centres.  But the principles, and the downsides, are much the same).
Somewhat surprisingly, then, new Auckland Mayor Phil Goff, who is clearly concerned about the risk to the city's fiscal position in the face of a ballooning transport and infrastructure spend, has revived the idea of a waterfront stadium.  This by one of the steadier, more rational, and experienced members of the last Labour Government: what was he thinking? 

Through Council Controlled Organisation, Regional Facilities Auckland (RFA), Mr Goff has commissioned a pre-feasibility study from Price Waterhouse Coopers of a stadium with capacity for 25,000 to 50,000 people. The consultants will consider potential CBD sites, the benefits (and presumably costs) to the city, demand, development of a stadium precinct, building and running costs, and planning issues.
The answer in four
I’m not sure much work is required to demonstrate:
(1) Stadiums do not pay their way and, it might be added, the economic impact studies that suggest that they justify the subsidies dished out to get them up and keep them running are usually spurious;

(2)  Through expensive stadiums ratepayers end up subsidising professional sports teams;

(3) Where downtown and waterside locations are growing new stadiums are an uneconomic use of valuable land;

(4) Auckland’s waterfront does not need a big area to be sterilised and effectively privatised – or confined to the use of the few people who can afford the eye-watering cost of tickets to get in.
In short, a quick review of the existing evidence would save ratepayers' money even on a pre-feasibility report.

How to pay?
The evidence suggests that we can't.

The 2016 RFA annual report does not separate out the performance of individual facilities (indoor and outdoor sports stadiums, Auckland Museum, Zoo, and Art Gallery). But we can guess that excess capacity (or limited demand) in the outdoor stadiums contributed to the relatively poor aggregate figures: total income (before revaluations) of $131.5m included a capital subsidy of close to $26m and an operating subsidy of almost $31m from the Council, and just $44m in revenue across all facilities. 

In fact, total entrance and admission fees amounted to under $11m, with venue hire just over $13m, this based on land, buildings and plant (excluding art works) assets of around $800m.
Given this record, it’s hard to see a new $1bn sports and concert facility making any financial headway, especially when all the evidence suggests stable if not declining attendance. A few hallmark events and concerts aren't going to boost revenue ahead of what is being dragged in at the three other signifcant stadiums in the city. 
It’s also hard to see sponsorships making any dent in the public funding that would be needed for a new stadium. Sponsorships of all RFA venues apparently generated under $620,000 in 2016.

And, despite any enthusiasm they might show for the project, Auckland’s major sports franchises, the Rugby Super 18 Blues and the NRL Warriors, are in no position to provide financial support.  The experience in the US, the apex of professional sports, is quite compelling; the major leagues free ride on local government funded stadiums. 
Little surprise, then, that the New Zealand Government is not interested in contributing to the guesstimated $1bn price tag.

So what are the benefits???
We do not need reports telling us about wonderful spin off effects, or me-too claims about how a global city needs a landmark stadium, or to have appointed advisors spraying ratepayers’ money about building monuments to civic stupidity when we can’t even begin to get a return on our existing facilities investments.

The bulk of research in the United States finds the economic contribution from major sports leagues or the construction of stadiums for them (or of convention centres) is negligible if not negative. This is  despite the benefits touted by the beneficiaries: the sports codes, the development sector, the city boosters and, dare I say it, the consultants (see, for example,  Sanders H, 2002, “Convention Myths and Realities: a Critical Review of Convention Center Feasibility Studies”, Economic Development Quarterly).

Transforming downtown?
The urban transformation effects are more often than not illusory.  Even if there were to be benefits from developing major civic projects in rundown precincts they would be irrelevant in central Auckland, with the CBD already straining under the weight of tourism, mushrooming apartment building, office development, and the construction of another mayoral monument, the Central Rail Link. 
It is a mistake to think that there will be benefits from opening waterfront spaces up to the public by building what is effectively a large enclosure that is empty most of the time. Instead, we will end up with a temple to elitism, excluding the general public, and surrounded by draughty voids where there might otherwise be more street activity, more people, and more income earning opportunities.

(And quite apart from any operating disadvantages, the rectangular stadium structure favoured by Mr Goff will exacerbate the creation of dead spaces around it).

Seeking a better city? Do better with what we’ve got
Certainly, there is a need to rationalise our existing stadiums, to focus on getting costs down and revenue up. RFA has been looking at the options for some time now.

The ideal strategy at this time in the city's development might be to rationalise existing investment, intensify returns from sunk capital, and realise any land value uplift that might come, for example, from shrinking Eden Park, consolidating and diversifying other facilities, creating local specialisations, and maintaining a presence close to the wider communities of Auckland.   

Throwing a downtown stadium into the mix is simply going to hinder progress.
Why the distraction?
It’s not just the capital outlay that would contribute to the City’s indebtedness and put more pressure on the city’s credit rating. Long-term operating, maintenance and depreciation costs will be substantial.  The risks this raises are enough to say don't even think about going there.

There are also the foregone opportunities, both for more intensive and continuous use of downtown land, and for investment in physical or social infrastructure that might contribute  more meaningfully to community wellbeing. 

If we are going to throw money at things that make a difference, let's start by cleaning up the city’s sewage overflows, sorting out stormwater network problems, or by lifting our commitment to resolving ever-increasing transport and housing issues.

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