Issue: the Sports Business Short Article: Stadium Shuffle Dooms "White Elephants"

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Issue: The Sports Business

Short Article: Stadium Shuffle Dooms "White Elephants"

By: Joe Lapointe

Pub. Date: September 4, 2017 Access Date: September 26, 2021 DOI: 10.1177/237455680326.n5 Source URL: http://businessresearcher.sagepub.com/sbr-1863-103855-2837010/20170904/short-article-stadium-shuffle-dooms-white- elephants ©2021 SAGE Publishing, Inc. All Rights Reserved. ©2021 SAGE Publishing, Inc. All Rights Reserved. “These things become economically obsolete” Executive Summary

The relentless pressure from franchise owners to generate maximum revenue from athletic venues by attracting more premium customers is condemning some stadiums and arenas to the wrecking ball well before the end of their useful life. A key takeaway: The perks offered to high-end ticket holders in newer buildings include inside-the-venue parking, special traffic lanes, private elevators and access to coaches and players. Full Article

Atlanta’s new Mercedes-Benz Stadium, foreground, and the soon-to-be-demolished Georgia Dome behind it.

Next to Centennial Olympic Park in downtown Atlanta stand two modern sports stadiums that directly face each other – and also face distinctly different fates. The glittering new structure is Mercedes-Benz Stadium, costing about $1.6 billion, with a retractable roof and a seating capacity of 71,000 for football and more for other events. 1 The new home of the Atlanta Falcons of the National Football League (NFL) in 2017, it will also host the national college football championship game in January 2018, the Super Bowl in 2019 and the men’s college basketball Final Four in 2020. Next door is the Georgia Dome, built in 1992. It seats 71,000 and has hosted many of these events in recent years, including Falcons’ home games. And it will be demolished before the end of the year, according to Bill Hancock, executive director of the College Football Playoff. He said that before his championship game comes to town, he expects “a hole in the ground where the dome was.” 2 When reduced to rubble, the Georgia Dome will be just 25 years old. It is one of many “white elephant” stadiums and arenas across the American sports landscape. The quest for premium-customer revenue deems some of them disposable after just two or three decades. “These things become economically obsolete before they become physically obsolete,” according to Victor Matheson, an economics professor at the College of the Holy Cross in Worcester, Mass. 3 Rodney Fort, a sports economist who heads the sports management program at the University of Michigan, says people mistakenly put modern stadiums in the same category as dams, bridges and other “large-scale things that are built to last” a century.

“They’re not economically functional from an owners’ standpoint anymore,” he says. Abe Madkour, executive editor of SportsBusiness Journal, says teams seek to sell perks and amenities to high-end customers as stadiums become gentrified by spending levels. Madkour says new buildings have more variety in pricing and divide the paying audience into more segments, including the posh places. “They’re continuing to increase pricing at the premium, luxury level,” he says. Owners get the money from these suite dwellers, he says, by offering sweeteners such as parking inside the building, special traffic lanes, private elevators and even access to coaches and players. When angling for new stadiums, teams often cite the lack of such revenue streams at older facilities as leverage in their market or elsewhere. “I hate to say it,” Madkour says, “but it can be an effective argument.” Two NFL teams – the Rams, once based in St. Louis, and the Chargers, formerly located in San Diego – moved last year to Los Angeles, lured by what is touted to be the most expensive stadium in NFL history. Located in Inglewood, Calif., it will cost $2.6 billion and is scheduled to open in the summer of 2020. Meanwhile, the Rams will play in the mammoth old 93,000-seat Los Angeles Memorial Coliseum, which opened in 1923, and the Chargers in Carson, Calif., at the 30,000-seat StubHub Center. 4 The Rams’ move left behind plenty of bitterness in St. Louis, Reuters reported. The story said taxpayers were left with about $144 million in debt and maintenance costs. “The fans are being left holding the bag,” said St. Louis Board of Aldermen President Lewis Reed. 5 The original $280 million agreement to build the Edward Jones Dome for the Rams in St. Louis was controversial because it required that the 67,000-seat building be maintained to a first-tier standard, which was defined as among the top quarter of all NFL franchises. 6 Meeting this standard became more onerous, Reuters reported, as newer and fancier stadiums opened up in places such as the Dallas area and the New Jersey suburbs of New York City. 7 “This was a contract designed to be broken” by the team, said Matheson, the Holy Cross professor. “They had a terrible, terrible contract with the Rams.” 8 The city, county and a regional authority have filed suit against the NFL seeking $1 billion in damages over the Rams’ move. NFL spokesman Brian McCarthy said the lawsuit has “no legitimate basis,” adding that “while we understand the disappointment of the St. Louis fans and the community,” the league “worked diligently with local and state officials in a process that was honest and fair at all times.” 9

The Pontiac Silverdome, now being demolished, was regarded as state-of-the-art when it opened in 1975.

A different sort of stadium shuffle is unfolding in the Detroit area, where the Pontiac Silverdome – considered a state-of-the-art structure with an air-supported roof when it opened in 1975 – is in the later stages of demolition. Nearby, the National Basketball Association’s Detroit Pistons have abandoned their 30-year-old Palace of Auburn Hills to move back to downtown Detroit. The Pistons and the National Hockey League’s Red Wings will occupy the new $862.9 million Little Caesars Arena for the 2017–18 season. 10 The Red Wings formerly played in the riverfront Joe Louis Arena, which opened in 1979 and is slated for demolition. The Palace is scheduled to shut its doors in September after a closing concert by local rocker Bob Seger. 11 When it opened in 1988, it was on the cutting edge of arena gentrification, with suites on three levels, including some near the court.

New owners spent $40 million to refurbish the Palace between 2011 and 2014. But the real estate beneath it may be more valuable with the place torn down. 12 The Pistons’ and Red Wings’ moves will make Detroit unique, with all four major league franchises playing in the same downtown neighborhood. In addition, two NBA team owners – Tom Gores of Detroit and Dan Gilbert of Cleveland – are partnering to bid for a new Major League Soccer franchise in Detroit. 13 They want to build a soccer stadium as part of a $1 billion extended development in the same downtown neighborhood where the other four teams play, part of an ambitious plan to extend housing and retail space in the city’s core. 14 Yet another franchise move took place this year in Atlanta when the Braves of major league baseball left Turner Field, originally built for the 1996 Olympics. But Turner will be spared white-elephant status because it is being refurbished as a football stadium for Georgia State University. The Braves relocated to SunTrust Park in suburban Smyrna, out of reach of Metropolitan Atlanta Rapid Transit Authority (MARTA) public- transit trains. There is a reason for this, according to William Sutton, director of the sports and entertainment management program at the University of South Florida. “White America in Atlanta doesn’t ride MARTA,” he says. The Braves control most of the parking at the new stadium and require fans to pay in advance. Some lots cost $20 and are nearly a half- mile from the stadium. Customers must cross multilane intersections to reach it. The counterintuitive nature of the Braves’ move to the suburbs puzzles Fort, the sports economist at Michigan. “The integration into the downtown space appears to be the vogue,” he says. “Sometimes, stadium things simply don’t make sense.” About the Author

Joe Lapointe is a veteran journalist who spent 20 years in the sports department of The New York Times. He is a graduate of Detroit’s Wayne State University and now teaches journalism at the University of Michigan, Dearborn campus. Notes

[1] Carla Caldwell, “Officials: Mercedez-Benz Stadium cost rises to $1.6 Billion,” Atlanta Business Chronicle, June 17, 2016, http://tinyurl.com/yblbp7aq; “Mercedes-Benz Stadium,” Stadiums of Pro Football, http://tinyurl.com/yc9vdrc7. [2] Tim Tucker, “Dome demolition looms among Mercedes-Benz stadium questions,” Atlanta Journal-Constitution, April 17, 2017, http://tinyurl.com/y92ogz73. [3] Robin Respaut, “With NFL Rams gone, St. Louis still stuck with stadium debt,” Reuters, Feb. 3, 2016, http://tinyurl.com/gqx6xw5. [4] Dan Gartland, “Opening of shared Chargers, Rams stadium delayed until 2020,” Sports Illustrated, May 18, 2017, http://tinyurl.com/lcladb7. [5] Respaut, op.cit. [6] Ibid. [7] Ibid. [8] Ibid. [9] Ben Klayman, “St. Louis sues NFL for more than $1 billion over loss of Rams football team,” Reuters, April 12, 2016, http://tinyurl.com/y75jyxa5. [10] Brandon Champion, “World’s largest Little Caesar taking shape on roof of new arena,” Detroit News, July 11, 2017, http://tinyurl.com/y94sxmks. [11] Brian McCollum, “Confirmed: Palace of Auburn Hills is closing; Bob Seger to be final event,” Detroit Free Press, Aug. 24, 2017, http://tinyurl.com/yab6rd57. [12] Natalie Broda, “Palace of Auburn Hills could be rezoned as tech and research district,” Oakland Press, May 25, 2017, http://tinyurl.com/ya7hlcyb.

[13] Louis Aguilar, “Gilbert/Gores formally bid for Detroit MLS team,” The Detroit News, Jan. 31, 2017, http://tinyurl.com/yc7beaeb. [14] Frank Witsil and George Sipple, “$1B investment in Detroit would include soccer stadium,” Detroit Free Press, April 27, 2016, http://tinyurl.com/ycc4y8km.

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