Leveraging leisure infrastructure: return on sports subsidies goes beyond consumer spending
[This article first appeared in Ottawa Business Journal]
The role of government in supporting professional sports franchises and funding their facilities is a hot topic.
The owners of the Edmonton Oilers threatened to move the NHL franchise unless the city ponied up millions more dollars to construct a new arena. Here at home, the City of Ottawa just borrowed $154 million to rebuild Lansdowne Park, where the CFL’s newest team, the RedBlacks, will play. It’s a 40-year debenture that will cost $330 million over its life.
If cities are not spending their money on new stadiums, they’re spending similar amounts to update or upgrade existing facilities to retain existing franchises.
This type of public spending drives non-sports fans and fiscal conservatives wild.
One could assemble dozens of economists in a room, give them limitless resources, data and time and still not unequivocally determine whether sports teams are worthy of these subsidies.
Some who look at a franchise’s overall value to the community conclude the economic impact is minimal. The argument goes that if fans don’t spend their money on tickets, parking, merchandise, food and beverages at the Canadian Tire Centre or Lansdowne Park, they’ll spend it somewhere else.
That may be true in cities such as Toronto, Montreal and New York that feature countless world-class entertainment options. It is a bit more complicated in Ottawa-Gatineau, where consumers who see their city as a tier-one town won’t be satisfied with third-tier acts.
But there is more to the debate than just consumer spending. There is also the spark a sporting arena or entertainment complex provides to the surrounding area.
“Leisure is the new infrastructure,” says London-based architect Eric Kuhne, who argues that investing in physical entertainment facilities produces the same economic multiplier as spending on roads, water mains and sewers.
In Kanata, the original West Terrace plan for the lands around the stadium initially named the Palladium included a mix of residential, retail, office, industrial and entertainment development to give an urban context to the new arena and NHL team.
The City of Ottawa took that plan and vastly expanded its reach. It is now called the Kanata West Concept Plan and elements of it are finally starting to be realized. In a few more years, residential developments by Minto and others will settle thousands of people near the arena and Tanger will open a nearby outlet mall with 80 stores and 350,000 square feet of shopping in 2014.
There are still lessons to be learned about sports arena infrastructure, such as its relationship with transportation.
I was recently in Stockholm teaching business to 60 of Sweden’s top young digital data strategists. No one visiting Stockholm need do anything other than visit this vast, clean, fast, efficient, safe 105.7-kilometre underground labyrinth built in a city of 885,000 people to know that the metro is the smart way to get around their archipelago.
The Scandinavian city’s first line opened in 1950. If Ottawa-Gatineau (population 1.24 million) had built anything like that 20 years ago, the Canadian Tire Centre could have been located downtown instead of in Kanata where a 7,000-vehicle surface parking lot sits empty most days, awaiting an influx of stadium-bound spectators.
Cities should leverage the assets they have, whether it is those arena lands in Kanata, inner-city facilities like the Civic Centre and Lansdowne Park or largely unihabitated properties at LeBreton Flats or the Rockcliffe Airbase. These are four of the most important development sites in Ottawa and key economic generators for this city’s future if done right.
Perhaps one day we will see a MLS soccer team playing at Lansdowne or on a heated field near the Canadian Tire Centre. Certainly, the latter needs more restaurants, bars, offices, shops, residences, hotels and possibly a casino attached to it or built on a site nearby to reach its full potential as an entertainment hub and economic generator for Ottawa.
Young people want to live in cities that present them with exciting economic opportunities, but it’s also important today that a city’s brand live up to its wallet. Successful sports franchises can help do that.
Prof Bruce M Firestone is founder of the Ottawa Senators; executive director of Exploriem.org; and a broker at Century 21 Explorer Realty Inc. Follow him on Twitter: @ProfBruce.
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