Stadium Doesn’t Guarantee Economic Gains

Oceanside taxpayers should ask serious questions about proposed Chargers stadium

If the coin toss goes Oceanside’s way, voters may be faced with the difficult decision on whether or not to welcome a new San Diego Chargers stadium on the 70-plus-acre site of the Center City Golf Course. While the Chargers’ pitch for a privately financed stadium and office development may sound seductive, the devil is always in the details, and taxpayers need to ask some important questions before signing off.

Even if the stadium proposal would not involve direct public expenditures, tax hikes or bond issues, taxpayers need to be on the lookout for other sneaky subsidies. Would the golf course land be sold to the stadium developer at fair market value, or would the city sell it at a discount as an incentive? Would the private sector also finance the major road, water and other urban services needed to support the stadium development, or would these costs be subsidized by taxpayers? So far, the Chargers have indicated they and a private partner will pony up the capital to make it happen and they should be held to those commitments.

But this is only one element of the deal, particularly in an area of the county experiencing sky-high housing prices and economic growth. Public officials owe it to taxpayers to make clear the big-picture trade-offs involved with a stadium deal. What potential uses of that land would the city be giving up in exchange for the Chargers stadium, and what’s the best use for the city’s longer-term economic development?

At first glance, a sports stadium seems like an economic boon. In truth, they are, at best, minor economic players in a city’s economic health. More than 20 years of academic research has failed to find a significant relationship between an investment in a sports stadium and significant job or income growth. In a 2000 article in the Journal of Economic Perspectives, researchers from Smith College and Vanderbilt University found that “independent work on the economic impact of stadiums and arenas has uniformly found that there is no correlation between sports facility construction and economic development.”

In fact, stadiums can actually divert spending away from local businesses and increase expenditures on public safety and other city services. Other research has shown that stadiums inject very little new money into a city’s economy; rather, they reshuffle the jobs and money already there.

Perhaps a more important issue concerns alternative uses for the land. A large tract of prime urban land a mile from the ocean represents a tremendous development opportunity. Housing, office and retail uses may be a much better long-term investment for the city since they are better integrated into the existing urban fabric. Housing and office space has a much longer economic “shelf life,” and is easier to renovate than sports stadiums.

Even though the Chargers’ proposal may sound appealing today, the track record of fickle sports teams hungry for newer, more modern facilities isn’t something to bank on. Pro sports teams have gotten particularly adept at holding cities hostage if projected stadium revenues don’t pan out, threatening to set up shop elsewhere unless they receive public subsidies. It’s entirely possible that Oceanside could face this five or 10 years down the road when another city, like Los Angeles, for example, offers a better deal. Worse, if the Chargers were to leave in a decade or two, Oceanside would be left with an urban dinosaur that would be costly and difficult to redevelop. Oceanside should consider carefully the economic impact of the soon-to-be-empty Qualcomm stadium.

Mark Fabiani, the Chargers’ special counsel and lead negotiator, has said the team wants to “put responsibility on the private sector for the stadium, infrastructure and everything else that is needed to make the stadium work.” Oceanside and San Diego County should take him on his word, and help make it happen, without public subsidy.