A new stadium for Ottawa?

2009-04-11

in Economics, Ottawa, Politics

Tangle of small bikes

Ottawa is currently considering two options for a new stadium: one in the middle of town, the other farther out. Personally, I see no value whatsoever in sports facilities. If private companies want to build them, in keeping with zoning and planning laws, I have no real objection. I do disagree with the notion that they provide benefits to the community sufficient to justify government assistance: whether in the form of direct payments, low-interest loans, etc. The Ottawa Citizen estimates that demolishing the existing structure at Landsdowne and building a new one would cost $185 million, while it would cost about $31 million to retain the existing structure for thirty more years.

While there is a weak case that might be made for professional sports encouraging athleticism, it is an awfully roundabout way for a city government to try to do so. They would be much better off giving children and young people grants for participation in sports, building and maintaining bike paths, or running public sports leagues.

In short, I hope the stadium plan never comes to fruition, at least not with any taxpayer backing.

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{ 21 comments… read them below or add one }

Tristan April 11, 2009 at 10:59 am

I think the city should be involved in the construction of sports stadiums only insofar as it should have a coercive role in their placing within the city. I.e. Ottawa should have been able to block the construction of the new hockey stadium at its existing location because of its poor placing from a transportation standpoint, and an alternative location on LeBreton flats should have been secured.

As far as paying for the construction of stadiums whose location is not contested, there is no reason the tax base should be responsible for this at all.

Tristan April 11, 2009 at 11:02 am

One possible benefit of having a sports team in the highest league in one’s city is children who are indoctrinated into thinking professional sports are important will have the impression that their city is in the same league as other cities with sports teams. I.e. it gives some people a reason to be proud to live in Ottawa rather than Toronto because Ottawa’s hockey team is far superi0r. However, this seems like a silly reason to think Ottawa is superior – if anything, doesn’t this take pressure of the City to make substantial improvements? I don’t know how a city can improve itself, this is a level of intentionality that is foreign to me, but if it is possible, acquiring a sports team looks like the false-consciousness way of trying to do it.

AT April 12, 2009 at 12:37 am

Granted, it is absurd for the public to build ten-figure palaces for millionaire owners and athletes. But I think that there is more to the case for professional sports than what is noted above, that professional sports perhaps encourage athleticism or that they foster city spirit. I suggest that should one argue for public funding of sports, she frame the issue in more cultural terms. After all, the beautiful game is not a far cry from the ballet. Public investment in culture is by and large accepted and expected — recall the indignation when Stephen Harper suggested real Canadians aren’t interested in the arts. If Broken Social Scene can receive public funding, I see not why Canadian soccer players ought not.

Tristan April 12, 2009 at 2:44 am

You could fund a lot of public sports programs for 180 million dollars. I wonder how much money is actually spend publicly funding athletics programs, compared to public money spent subsidizing professional sports.

BuddyRich April 12, 2009 at 10:24 am

What about thinking about it in terms of an investment?

The main reason why municipalities get into funding stadiums, either through tax breaks or outright contributing to their construction, is the economic spinoff a sports team brings in. It helps tourism and brings real dollars into the community at large as it spurs economic growth. To use the arts example, every public dollar spent on arts brings 10 back in, with sports I would no doubt think it is similar. I do think its valid to ask if there are better ways to spend the money, but the Corel Centre (er. Scotiabank Place) employes upwards of 1000 people directly and how many hotels, etc. benefit out there from the stadium? How many stores sell Sens merchandise, how many restaurants benefit on game nights? The argument on the location of that particular stadium is separate from the argument for a publicly funded stadium at all mind you.

Still, concerning Landsdowne Park, I really hope the city does the right thing and keeps the stadium as is (or outright demolishes it and retains and redevelops the green space on what is no doubt very valuable land that the developers would be crazy not to want a piece of… but the problem is the civic center arena that is underneath the northside stands is still serviceable as an hockey area (and still has a tenant).

Not to mention the arrangement as presented in the Landsdowne proposal just pushes this problem out. The city would retain ownership of the stadium, Minto et all would just lease it, then in 20 or 30 years it transfers back to the city, just in time for all of the repairs to be done (as is the problem now).

If anything I’d like to see the city get market value for the land there if they do sell it, and let the private developers use their own money to build a stadium and have them retain ownership so the maintenance albatross is around their necks in the future, not just take the profit and run as they are proposing.

Milan April 12, 2009 at 3:11 pm

To me, it seems entirely possible that the ‘spin off benefits’ justification is a fallacy. The city subsidy comes from taxes, that would have stimulated different economic activities if they had just been left with the people who paid them.

While some of those citizens might have spent the extra income attending sports events, the majority would probably have spent it on other things, stimulating jobs elsewhere. As Bastiat would have said, the jobs created when you build a stadium are easily seen. Less easily seen are the jobs destroyed as the result of doing so.

BuddyRich April 12, 2009 at 3:29 pm

But that is true for every public dollar taken. Everything has an opportunity cost. There is always the road not taken… that said I don’t think its a fallacy to argue the spin off benefits, since the government is going to take the taxes anyway, just spend it on different priorities. It would be different if that weren’t the case, but I think the reality is taxes are still going to get collected with a new stadium or not, and probably right around the same amount. And for whatever reason I would bet the majority of people would like a new stadium over a new museum for example (though I haven’t seen any polls done on public opinion on the stadium proposals vs. other stuff).

This is when you should do a proper CBA (which would account for spin off benefits) and determine if the expected benefits are higher than the opportunity costs of other projects that the money could be used for. Which I think that report was trying to do, though it confined the analysis to the two stadium proposals and do nothing rather than comparing it to other city projects at large (in which any stadium might not come out so favourably against other infrastructure projects).

Milan April 12, 2009 at 3:53 pm

Is the city thinking of issuing bonds to help finance the new stadium? If so, it really would be a new tax (though probably on taxpayers a few years down the road), rather than just an allocation of tax money that would have been collected anyhow.

Even if the funds are from general revenue, rather than building a stadium, they could be used for a contingency fund to deal with future unexpected shortfalls.

oleh April 13, 2009 at 7:29 am

Basically I do not agree with public funding for professional sports facilities.

I totally agree with public funding for encouraging physical well-being.

I question whether professional sports serve as model for people to become more active. Most of the activity surrounding professional sports (watching or reading about it), including my own, is inactive. For myself following professional sports, which I do enjoy has probably made me less, rather than more active.

I live in the Vancouver area. We have embarked on massive public funding of that event. I had hoped that the Olympics would motivate our general population to become more active. Although I have not reviewed studies to determine if that has occurred, my observation is that it has not occurred. Certainly not to the degree of the funds we are expending on the Olympics.

During Vancouver’s participation in the NHL play-off mania, I expect there will be a marked increased of people following sports from their couch and a decrease in active participation.

BuddyRich April 13, 2009 at 9:38 am

Would you support a municipal levy of 1 to 3% on Sens tickets to fund the new stadium? (As some other muncipalities have done to get their new stadiums) That way it takes the tax burden from non-participants and is a tax of sorts directed at people that actually attend the games? Of course Ottawa can’t use this example, as the new stadium is for a soccer and/or CFL franchise, and fans of the NHL might not care for soccer or the CFL, but if Scotiabank ever needed replacing, perhaps this would be a fairer way to fund it (disregarding that SBP is private). One can argue that is already done by private enterprise and is accounted for in the ticket price… but not so when its a public stadium that leases itself to teams (as it isn’t the stadium operators setting ticket prices). A levy on the ticket price is the only way they could raise extra capital without renegotiating leases, etc…

Oleh does raise a good point about the Olympics… though he was talking about participation rates, the only Olympics to make money in the last 40 years is the ’88 Winter Games in Calgary… the rest have all lost money. (No idea about Beijing’s balance sheet yet)

Tristan April 13, 2009 at 11:48 am

I think it misses the point to concentrate on whether the Olympics “makes” or “looses” money. In either case, the Olympics are a way to transfer a lot of money from taxpayers to private investors.

I entirely agree with Oleh that professional sports does not seem to increase active participation. I think things like the NHL playoffs fills the nationalistic enthusiasm gap in the same way as the World Cup soccer tournament does in other states. I don’t think this fervour is something we should be proud of, but it certainly exists and whether or not it’s better to have an outlet for it or not is something that could be discussed.

Maybe the city could finance sports stadiums by printing currency which would be valid for all debts people have with the company benefiting from the sports stadium, but no one else. So, the city could sell “Sens dollars” for less than a dollar each, and people could spend those dollars on sporting events, food, etc.. at the stadium. These dollars, once redeemed for goods and services, would not be redeemable again.

The city could agree as part of the lease negotiations to print only some number of these dollars per year, and over time the city would be able to recoup its loss. The contract could also include a clause such that if the private party failed to live up to some aspect of the contract, the city could punish them by printing more “Sens dollars”.

Magictofu April 13, 2009 at 8:39 pm

Milan, are you also against public funding for the arts? For some reason I tend to associate the two.

Milan April 13, 2009 at 10:23 pm

There is some validity to the arts-sports linkage.

Perhaps the fact that cultural institutions have a harder time being profitable means they are more deserving of support? Perhaps their educational value is significant?

Personally, I think it would be great to have more Smithsonian-style free museums.

Milan April 13, 2009 at 10:24 pm

There is a Yes, Minister episode about subsidizing art galleries versus subsidizing sports teams.

. April 13, 2009 at 10:27 pm

The Middle-Class Rip-Off
From Wikipedia, the free encyclopedia

“The Middle-Class Rip-Off” is the twenty-first episode of the BBC comedy series Yes Minister and was first broadcast 23 December 1982.

. April 13, 2009 at 11:01 pm

How’s the environment? – Yes Minister – BBC comedy

Tristan April 14, 2009 at 12:15 am

The middle class rip-off:

http://www.youtube.com/watch?v=zvNw0P5ZMbA

oleh April 14, 2009 at 1:53 am

The arts – sports debate would be interesting.

If we adopted a democratic way of resolving it, I suspect more people would vote for subsidizing the sports stadium.

If we look to a need basis, I expect the arts would need more support as the arts do not have the additional revenue stream of television advertising revenue.

I would encourage curators of publicly funded museums to broaden the appeal of their exhibits to reflect that it is the wide spectrum of taxpayer who supports them. I expect this would also result in greater participation and attendance. Governments could also use broad appeal as one measure of whether to support an arts facility.

In general I would support greater funding of amateur and community sports and arts over professional sports and elitist arts.

AT April 14, 2009 at 3:53 am

For what it’s worth, the CFL has a hard time being profitable, as has professional soccer on this continent since the 70s.

Tristan April 14, 2009 at 10:15 am

Sports teams are even less profitable when you consider other subsidies. For example, the B.C. lions rely heavily on the Skytrain to get fans to games – which is heavily subsidized. Ditto for the roads if they chose to drive.

. April 23, 2009 at 10:17 am

Stadium will suit Glebe, partners insist

Lansdowne Live developers relieved after day-long debate

By Patrick Dare and Jake Rupert, The Ottawa Citizen

The businessmen behind Lansdowne Live say they will shape their development project so that it fits into the Glebe neighbourhood and wins the support of Ottawa city council.

Roger Greenberg and Jeff Hunt, partners in the proposed project to redevelop Lansdowne Park, said after city council’s vote Wednesday that their partnership will not be building a big-box store and does not have to include housing for the project to proceed.

Franchise holders get nod from council

DAVID NAYLOR

April 23, 2009

The potential return of the CFL to Ottawa got a big boost yesterday when Ottawa city council voted 14-9 to enter 60 days of negotiation on the redevelopment of Lansdowne Park – including the reconstruction of Frank Clair Stadium – with a group that owns a conditional CFL franchise.

McGuinty hints at funds for stadium

Premier wants ‘sitdown’ with city to discuss proposals; Melnyk ‘confident’ in his plan

By Ken Gray and Patrick Dare, The Ottawa Citizen

The premier’s office left the door open Tuesday to provincial government assistance on a stadium development project.

“I look to the city to give me a good sense as to where they want to go,” Jane Almeida, an aide to Dalton McGuinty, quoted the premier as saying.

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