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Stadiums’ economic fault line

At the Dallas Cowboys stadium that will open for the next NFL season, what catches your eye -- no, what makes your jaw drop -- might be the 60-yard-long video screen that hangs from the translucent, movable roof.

At the New York Mets ballpark that will open April 13, it might be the soaring open-air rotunda that honors Jackie Robinson.

Yet for sports fans caught in the grip of an increasingly ugly recession, the most stunning feature of the newest generation of sports venues might be the price tag.

A quick tally of sports facilities being proposed or already under construction coast to coast easily adds up to a cumulative $10 billion -- a figure equal to a fourth of California’s budget deficit for the coming fiscal year. And most of those buildings in the construction pipeline are on a grand scale.

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The $1.3-billion Yankee Stadium that will open April 6, for example, will have 56 luxury suites, 410 party suites, a martini bar, a sports bar, 1,100 flat-panel high-definition video monitors in addition to the monster big screen parked in center field. It will boast a high-end steakhouse and a Hard Rock Cafe decorated with such attractions as the sequined Dodgers uniform that Elton John wore during his sold-out 1975 performance at Chavez Ravine.

Jerry Jones’ $1.2-billion Cowboys Stadium, the Taj Y’All of the sports world, comes with 200 luxury suites and -- though they probably won’t be enough in a stadium that can squeeze in 100,000 fans -- an unprecedented 1,600 toilets.

But the construction flurry evident in such places as Minneapolis, Miami and Kansas City masks the hard reality created when the global financial markets’ meltdown ended an era of easily obtainable financing.

“Everyone, including bond investors, are reading the same headlines,” said Tom Doe, whose Concord, Mass.-based Municipal Market Advisors offers consulting services to municipalities. “They see the Yankees spending $400 million on three players, and then wonder, given the economy, are they going to fill all those seats, will anyone pay for the luxury suites and will there still be a naming rights deal.”

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Stadium and arena construction is a cyclical business, and many big league franchises managed to open facilities or complete expensive renovations before the credit crunch occurred, according to Bill Squires, a New Jersey-based consultant and past president of the Stadium Managers Assn.

But for some projects, it’s now a waiting game.

The stalled bond market could, for example, affect NFL stadium proposals, including the $800-million facility proposed by developer Ed Roski in the City of Industry, where voters recently approved $500 million in bonds to finance infrastructure improvements on the land where the privately financed stadium would rise.

“All we can do as real estate developers is get this project ready to go,” said John Semcken, a vice president at Roski’s Majestic Realty Co. “It’s tough, yes, but we’ve got it all figured out. But if there are circumstances beyond our control, we would just have to wait.”

The NBA’s New Jersey Nets appear stalled in their bid to play in a proposed $950-million, Frank Gehry-designed arena in Brooklyn, N.Y.

“It’s tough, very tough right now to get financing,” said Owen Buckley, president of Lane4 Property Group, which wants to build a new stadium for Major League Soccer’s Kansas City Wizards -- a project that would be in addition to the $600 million in public and private financing already approved for the ongoing renovation of aging stadiums occupied by Major League Baseball’s Royals and the NFL’s Chiefs.

“Right now, we’re kind of hanging in there, holding on to the fact that the markets eventually will return back to where they were.”

Even projects that seemed to be on a fast track conceivably are at risk. Elected officials in Miami-Dade County, for example, were supposed to cast deciding votes early this month on public financing for the Florida Marlins’ proposed $515-million ballpark in Miami’s Little Havana, but the vote was delayed until Friday.

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The delay won’t change the minds of such opponents as Miami County Commissioner Carlos Gimenez: “I like baseball, and my dad is a die-hard Marlins fan . . . but I wasn’t in favor of financing a stadium a year ago when times weren’t as hard as they are now.”

Despite the bleak outlook, some sports economists predict that franchise owners will keep seeking -- and elected officials will continue granting -- public money to fund new sports facilities.

“A year or so ago, [proponents] were talking about how these sports projects are good because they’ll keep the economic boom going, but now that the economy has turned around, they say ‘no problem, it’s just what we need to give the local economy a boost,” said Rick Eckstein, co-author of “Public Dollars, Private Stadiums: The Battle Over Building Sports Stadiums.”

That appears to be the case in Chester, Pa., where city, county and state officials have agreed to use public funding for a $115-million Major League Soccer stadium for a franchise awarded to Philadelphia.

Meanwhile, New York Assemblyman Richard Brodsky continues to press the IRS to revisit the Yankees and Mets deals, which won government support for $1.3 billion and $800 million, respectively, in primarily tax-free bonds.

“The Yankee deal is the poster child for a society that is unable to provide healthcare, mass transportation or education but can find money to build a solid-gold stadium for one of the richest corporations in the world,” Brodsky said. “At least the federal bailouts deal with companies that are going broke.”

The Minnesota Vikings also are looking for public support for an $825-million renovation of the 27-year-old Metrodome -- no matter, it seems, that public financing accounts for a hefty percentage of the soon-to-open, $412-million Twins ballpark and the University of Minnesota’s $290-million football stadium.

In 2010, Orlando’s NBA Magic will move into a $480-million arena with 56 suites, 1,428 club seats, 327 loge seats, a full-service restaurant and a children’s fun zone.

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Leagues and franchise owners are simply following the money, according to Andrew Zimbalist, a Smith College economist who has written extensively about the economics of sports. And, in recent decades, wealth has generally been accumulating in upper-income households capable of buying luxury suites, club seats and season-ticket packages that can generate fatter profit margins.

So far, franchises generally say that they’ve had little trouble filling seats and luxury boxes. “We’re doing very well and are actually ahead of where we were last year,” said David Howard, the executive vice president of business operations for the Mets, who in April will begin playing in their Citi Field ballpark. “Demand has been strong.”

Jones, the Cowboys owner, declined to comment on ticket sales at the new stadium in Arlington, Texas, but a spokesman confirmed that, as of November, the franchise had sold all but 9,500 of 61,000 season-ticket packages.

That doesn’t surprise John Moag, a Baltimore-based sports investment banker.

“The fundamentals of the sports business are pretty damn strong,” he said. “It has a long history of being resilient in the economy. People simply don’t want to give up their sports.”

But it remains to be seen whether the hard-hit New York City economy will be able to handle the influx of costly ticket packages, Moag and Zimbalist said. In addition to the Yankees and Mets, the NFL Giants and Jets will open a $1.6-billion, 82,500-seat stadium, and soccer’s New York Red Bulls franchise is building an arena.

The ever-increasing complexity of stadium and arena financing is in stark contrast to the funding mechanism that the Cowboys benefited from in 1968. Texas Stadium cost a then-staggering $35 million, none of which came from city coffers.

Instead, Irving, Texas, raised the bulk of the funding by selling $250 bonds that were, in effect, precursors to modern-day seat licenses. The bonds promised to return $50 each to fans who purchased them -- 41 years later.

“I never expected to live long enough to get my money back,” said 80-year-old Cowboys fan Eugene W. Campbell, who bought a pair of bonds for $500 and recently was told that a check for $600 would soon be in the mail.

Campbell, who held Cowboys season tickets for years, chuckled when asked about the financing: “Back then it was ‘Star Wars’ financing. Today, it’s simply quaint.”

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greg.johnson@latimes.com


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