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.

Leonard Gilroy is Senior Managing Director of the Pension Integrity Project at Reason Foundation, a nonprofit think tank advancing free minds and free markets. The Pension Integrity Project assists policymakers and other stakeholders in designing, analyzing and implementing public sector pension reforms.

The project aims to promote solvent, sustainable retirement systems that provide retirement security for government workers while reducing taxpayer and pension system exposure to financial risk and reducing long-term costs for employers/taxpayers and employees. The project team provides education, reform policy options, and actuarial analysis for policymakers and stakeholders to help them design reform proposals that are practical and viable.

In 2016 and 2017, Reason's Pension Integrity Project helped design, negotiate and draft pension reforms for the state of Arizona's Public Safety Personnel Retirement System and Corrections Officer Retirement Plan, which both passed with overwhelming bipartisan support in the state legislature and were signed into law by Gov. Doug Ducey.

Gilroy is also the Director of Government Reform at Reason Foundation, researching privatization, public-private partnerships, infrastructure and urban policy issues.

Gilroy has a diversified background in policy research and implementation, with particular emphases on competition, government efficiency, transparency, accountability, and government performance. Gilroy has worked closely with legislators and elected officials in Texas, Arizona, Louisiana, New Jersey, Utah, Virginia, California and several other states and local governments in efforts to design and implement market-based policy approaches, improve government performance, enhance accountability in government programs, and reduce government spending.

In 2010 and 2011, Gilroy served as a gubernatorial appointee to the Arizona Commission on Privatization and Efficiency, and in 2010 he served as an advisor to the New Jersey Privatization Task Force, created by Gov. Chris Christie.

Gilroy is the editor of the widely-read Annual Privatization Report, which examines trends and chronicles the experiences of local, state, and federal governments in bringing competition to public services. Gilroy also edits Reason's Innovators in Action interview series, which profiles public sector innovators in their own words, including former U.S. Transportation Secretary Mary Peters, former Florida Gov. Jeb Bush, former Indiana Gov. Mitch Daniels, former New York City Mayor Rudy Guiliani and more.

Gilroy's articles have been featured in such leading publications as The Wall Street Journal, Los Angeles Times, New York Post, The Weekly Standard, Washington Times, Houston Chronicle, Atlanta Journal-Constitution, Arizona Republic, San Francisco Examiner, San Diego Union-Tribune, Philadelphia Inquirer, Sacramento Bee and The Salt Lake Tribune. He has also appeared on CNN, Fox News Channel, Fox Business, CNBC, National Public Radio and other media outlets.

Prior to joining Reason, Gilroy was a senior planner at a Louisiana-based urban planning consulting firm. He also worked as a research assistant at the Virginia Center for Coal and Energy Research at Virginia Tech. Gilroy earned a B.A. and M.A. in Urban and Regional Planning from Virginia Tech.

Samuel R. Staley, Ph.D. is a senior research fellow at Reason Foundation and managing director of the DeVoe L. Moore Center at Florida State University in Tallahassee where he teaches graduate and undergraduate courses in urban planning, regulation, and urban economics. Prior to joining Florida State, Staley was director of urban growth and land-use policy for Reason Foundation where he helped establish its urban policy program in 1997.

Staley is the author of several books, most recently co-authoring Mobility First: A New Vision for Transportation in a Globally Competitive 21st Century (Rowman & Littlefield, 2008). Texas Gov. Rick Perry aid Staley and Moore "get it right" and world bank urban planner Alain Bartaud called it "a must read for urban managers of large cities in the United States and around the world."

He is also co-author, with Ted Balaker, of The Road More Traveled: Why The Congestion Crisis Matters More Than You Think, and What We Can Do About It (Rowman and Littlefield, September, 2006). Author Joel Kotkin said, "The Road More Traveled should be required reading not only for planners and their students, but anyone who loves cities and wants them to thrive as real places, not merely as museums, in the 21st Century." Former U.S. Secretary of Transportation Mary Peters said, "Balaker and Staley clearly debunk the myth that there is nothing we can do about congestion."

Staley's previous book, Smarter Growth: Market-based Strategies for Land-use Planning in the 21st Century (Greenwood Press, 2001), was called the "most thorough challenge yet to regional land-use plans" by Planning magazine.

In addition to these books, he is the author of Drug Policy and the Decline of American Cities (Transaction Publishers, 1992) and Planning Rules and Urban Economic Performance: The Case of Hong Kong (Chinese University Press, 1994).

His more than 100 professional articles, studies, and reports have appeared in publications such as The Wall Street Journal, The New York Times, Washington Post, Los Angeles Times, Investor's Business Daily, Journal of the American Planning Association, Planning magazine, Reason magazine, National Review and many others.

Staley's approach to urban development, transportation and public policy blends more than 20 years of experience as an economic development consultant, academic researcher, urban policy analyst, and community leader.

Staley is a former chair for his local planning board in his hometown of Bellbrook, Ohio. He is also a former member of its Board of Zoning Appeals and Property Review Commission, vice chair of his local park district's open space master plan committee, and chair of its Charter Review Commission.

Staley received his B.A. in Economics and Public Policy from Colby College, M.S. in Social and Applied Economics from Wright State University, and Ph.D. in Public Administration, with concentrations in urban planning and public finance from Ohio State University.