(c) 2013, Bloomberg News.
(c) 2013, Bloomberg News.
Boosters of Baltimore's Oriole Park at Camden Yards, built at taxpayer cost of $210 million, promised the baseball stadium would lead an urban renaissance, revitalizing blighted neighborhoods and bringing jobs and tax revenue to the city's struggling downtown.
More than two decades later, the pledge stands unfulfilled. Baltimore is burdened with 16,000 vacant properties and some of the highest taxes in Maryland. The neighborhoods around Camden Yards have fewer businesses than they did in 1998. And the ballpark and a National Football League stadium nearby will require state and local debt service of about $24 million in 2014.
Baltimore's lesson is one that Atlanta Mayor Kasim Reed has taken to heart. He said Nov. 11 that Georgia's capital city wouldn't pay to build a new stadium for the Atlanta Braves — regardless of the team's promises to bring thousands of jobs and pump tens of millions of dollars into the local economy. So the franchise said it would relocate to suburban Cobb County, which agreed to pay $300 million of the facility's $672 million cost.
"It's wrong to take money from taxpayers and hand it to millionaires and billionaires," said Arthur Rolnick, a senior fellow at the University of Minnesota who has studied the public cost of professional sports stadiums. "If you try to justify it on economic development, the arguments dissolve pretty fast. The public would be much better off if they invested in things that would improve the quality of life, like roads and bridges, education and lowering crime."
Building or renovating the 30 Major League Baseball parks cost taxpayers a total of $9.7 billion as of 2010, including construction, land acquisition, infrastructure, foregone taxes and other factors, according to Judith Grant Long, a professor of urban planning at Harvard University and author of the 2012 book "Public-Private Partnerships for Major League Sports Facilities." According to Long's data, that ranged from $681 million at Miller Park in Milwaukee, completed in 2001, to $33 million at Angel Stadium of Anaheim, where a 1996 renovation was mostly privately financed.
In major-league cities from Cincinnati and Glendale, Ariz., to minor-league towns such as Ramapo, N.Y., and spring-training facilities in places like Goodyear, Ariz., stadiums funded by taxpayers instead of their millionaire owners have failed to deliver on promises of economic development. Instead of showering communities with benefits, these arenas often end up saddling depressed municipalities with debt, expenses and other costs.
Professional sports teams exercise an emotional grip on their host cities, which becomes a powerful lever in negotiations. The departure of the NFL's Colts from Baltimore in 1984 spurred campaigns to build new football and baseball stadiums there. The Cleveland Browns' move to Baltimore to become the Ravens 12 years later prompted a similar push in Cleveland. In 2008, basketball's Supersonics left Seattle for a new arena in Oklahoma City, prompting an ongoing effort to build a new arena in Seattle to lure another basketball team.
In Baltimore, the public financing of the Camden Yards baseball park helped then-Orioles owner Edward Bennett Williams sell the team in 1989 for $70 million, up from the $12 million he paid in 1979. The next owner, buyout specialist Eli Jacobs, sold the team four years later for $170 million. The current owner, labor lawyer Peter Angelos, has seen the value grow to $625 million, not including a regional television network launched after he bought the team, according to data compiled by Bloomberg.
Stadiums often fail to meet economic development goals because they stand empty except for a few hours on game days and during special events and consume available space nearby for parking, said Victor Matheson, a professor and sports economist with the College of the Holy Cross, in Worcester, Mass. The jobs they create are often temporary, with relatively low wages, he said, and sports venues tend to divert spending on food and recreation from other businesses.
"Money is just shifted around," Matheson said. "There isn't much net gain. You're often just cannibalizing other areas of the city."
Baltimore might be in worse shape than it is today if the Orioles had left the city and a new football stadium hadn't been built to lure the NFL's Ravens, winner of this year's Super Bowl, said Mark Wasserman, who worked as chief of staff for former Maryland Governor and Baltimore Mayor William Donald Schaefer, a principal advocate of the Camden Yards deal.
"Can you imagine what that part of town would be like if they hadn't built the stadiums?" Wasserman said. "We needed to continue to be a major-league city."
In Georgia, the Braves, owned by John Malone's Liberty Media Corp., said their new baseball stadium, scheduled to open in 2017, would create more than 9,200 permanent and temporary jobs, producing almost $300 million in earnings, about $50 million of it in Cobb County.
The city of Atlanta ignored such promises because it couldn't afford the huge cost to subsidize the ballpark, Reed said.
"There was simply no way the team was going to stay in downtown Atlanta without city taxpayers spending hundreds of millions of dollars," Reed said. "Given the needs facing the city, that was something I and many others were unwilling to do."
In Cincinnati, officials approved $540 million to build new football and baseball stadiums downtown that were supposed to lead to redevelopment of the city's waterfront. Instead, the county has cut services and sold a public hospital to pay the stadium debt, as growth failed to meet projections.
Glendale built a $180 million hockey arena and a $200 million spring-training complex. Both failed to deliver on promised development nearby, and the city had to raise sales taxes and eliminate almost 50 government jobs and had its bond rating cut.
Development around Baltimore's Camden Yards has disappointed, said State Sen. Paul Pinsky, a Democrat from Prince George's County who was in the legislature when lawmakers approved subsidies for the baseball and football stadium, starting in 1987.
"There were lots of guarantees that this would revitalize the city," Pinsky said. "Everyone stood up and said it would help the city's economic development. They promised the moon, but I don't think it revitalized the city."
The 2 million fans per year who attend Orioles games spend money in the city, producing revenue for hotels, restaurants and other local businesses, said Greg Bader, vice president of communications and marketing for the Baltimore Orioles.
"It does generate economic activity," Bader said. "There's a lot to say for what baseball has done for this city and state."
The stadium has drawn hundreds of thousands of fans over the years from surrounding cities, attracting followers of such teams as the Boston Red Sox, the New York Yankees and the Philadelphia Phillies to Baltimore, where they spend money and contribute to the local economy, said David Raith, chief financial officer of the Maryland Stadium Authority.
Angelos, the Orioles owner, had no comment on how much he benefited from public financing of Camden Yards, Bader said. Jacobs, who sold the team to Angelos in 1993 during bankruptcy proceedings stemming from Jacobs' other business interests, said in an interview that the team's value increased after the new stadium opened. Williams is deceased.
The price to build Camden Yards totaled $210 million, including $110 million for stadium construction and $100 million for land acquisition and relocation, said Jan Hardesty, spokeswoman for the stadium authority.
The ballpark actually cost taxpayers a total of $282 million, including such items as foregone taxes and capital expenditures over time, according to Long's data.
Long said sports venues such as Camden Yards routinely eclipse initial estimates of their public cost by tens of millions of dollars. Tax breaks, operating expenses, land and infrastructure costs for 121 public stadiums and arenas in operation in 2010 raised the average public cost to $259 million from initial estimates of $170 million, according to Long's research.
The story of Camden Yards, built in the aftermath of the loss of a Baltimore icon, the NFL's Colts, demonstrates the power teams wield over cities and public officials — and the failure of expensive new sports facilities to spur promised benefits, said Raymond Burke, a Baltimore attorney who specializes in construction and real estate development.
"Citizens are held hostage to the situation because if they don't pay for it they lose the team," Burke said. "The teams always have the upper hand."
Camden Yards also launched a trend of placing stadiums in the middle of cities in an attempt at redevelopment, as public officials nationwide mistook its appeal as a sports venue for success as a development catalyst, said Tim Chapin, chairman of the Department of Urban and Regional Planning at Florida State University. In fact, he said, the widespread belief that Camden Yards launched a rebirth in downtown Baltimore isn't true.
"While it expanded the tourist bubble to the west, it didn't wholesale save the downtown economy or prop up very poor neighborhoods not too far from downtown," Chapin said.
In the late 1980s, when the Maryland legislature approved financing for Camden Yards, the Baltimore stadium area housed businesses including Parks Sausage Co., then one of the nation's largest black-owned companies.
The stadium authority paid companies to relocate out of the areas where the ballpark was to be built.
"Some of it was boarded-up buildings," said Herbert Belgrad, who was chairman of the authority from 1986 to 1995. "Some were still operating businesses that wanted to keep operating, and we had to go to court to determine what was a market price." Camden Yards now borders neighborhoods where the number of employers is lower than in 1998, six years after it opened, according to the latest U.S. Census Bureau data. Unemployment is rising in these areas, as are their rankings against other neighborhoods for violent crime and the percentage of properties in foreclosure.
By 2011, the stadium area was home to fewer businesses than in 1998, according to census data. The zip codes around Baltimore's stadiums saw a 7.8 percent drop in the number of businesses from 1998 to 2011. This decrease even holds true in the zip codes that encompass Baltimore's celebrated Inner Harbor and Fells Point neighborhoods, where the number of businesses fell 6.3 percent over the same period.
"They're still struggling in areas in the shadow of the stadiums," said William Marker, a resident of the nearby neighborhood of Pigtown, who tried unsuccessfully to force a vote on public funding of Camden Yards.
Pigtown ranked fifth for the highest percentage of properties under mortgage foreclosure in 2000 out 53 communities, according to data collected by the Baltimore Neighborhood Indicators Alliance. In 2011, those same areas ranked second highest. Crime, as ranked against other Baltimore areas, remained third both in 2000 and 2011. The violent crime ranking rose to third place in 2011 from sixth in 2000. Unemployment rose from 10.8 percent in 2000 to 11.7 percent in 2011, according to the most recent data.
"Except on game days, the whole area is vacant," said Julian Lapides, a former state legislator who opposed public funding. "It's a big hole in the center of the city."
After the Colts left in March 1984, the Orioles demanded a new ballpark, and Schaefer, first the mayor of Baltimore and later the Maryland governor, pushed to build that stadium and another to lure a football team.
Schaefer settled on a former downtown rail yard and argued that it would drive development to the west from the city's already revived Inner Harbor waterfront.
Studies back to the 1970s promoted the site, finding easy access to parking and transportation, as well as the room to build other stadiums.
"There are vast opportunities for more redevelopment or higher density development in the Camden Stadium area," said a January 1986 memo from the city's economic development staff.
One of tools Schaefer used to press for stadium financing was a report by the Maryland Department of Business and Economic Development that said the state's economy would lose $104 million if the Orioles left.
At the time, Harvard's Long said, many people in Baltimore were so determined to keep the Orioles they were willing to pay money out of their own pockets to do it.
"My husband lived in Baltimore during the period in which Camden Yards was built — he was a teenager," she said. "He says if it was $20 a head for every person in Baltimore to build Camden Yards, everybody in Baltimore would have happily paid that $20 because Camden Yards gave them something to brag about at a time when Baltimore had nothing to brag about."
From the day it opened on April 6, 1992, with the Orioles beating the Cleveland Indians 2-0, the red-brick façade and the bleachers' city views made it an architectural model. Playoff runs by the Orioles of the Cal Ripken Jr. era and popularity of the new facility among residents of both Baltimore, its suburbs and nearby Washington, D.C., raised attendance in its earliest years.
That helped Camden Yards become regarded as something more: a model of how a ballpark could remake the economy of an economically challenged city.
Former Maryland Governor Schaefer "blazed a trail for future redevelopment around the country" by pushing to build the stadiums in Camden Yards, said Wasserman, Schaefer's former chief of staff, now senior vice president at the University of Maryland Medical System in Baltimore.
Camden Yards was used to promote stadiums in other cities, sometimes with disastrous results, such as in Cincinnati.
"There is a widely held perception that the Baltimore experience breaks the mold, and indeed holds out the possibility that if only other cities can replicate Camden Yards' magic, they too can get rich from professional sports," wrote the economists Bruce Hamilton and Peter Kahn in a 1996 study of the ballpark's economics. "Even at Camden Yards, public expenditure on the baseball stadium cannot be justified on grounds of local economic development."
Attendance at the Baltimore park also fell after its initial surge. Since 2006, attendance has just once reached the 2.3 million a year that was projected in a 1988 study for the authority.
That places the team in the bottom half of the 30-team league. Attendance in 2012, a year the team made the playoffs, totaled 2.1 million people, up from 1.8 million in 2011. It rose to 2.3 million this year.
"We thought it would help hotels, bars and restaurants and strengthen that part of downtown," Belgrad said. "At first we had sellouts and it lived up to the projections. But attendance dropped after that."
In 1998, the authority opened what's now M&T Bank Stadium at the site, after talking the NFL's Browns into leaving Cleveland. The team, renamed the Ravens, won Super Bowls after the 2000 and 2012 seasons.
The authority often operates at a loss. It lost $12.3 million in 2012 and $5 million in 2011, even after state and local subsidies of $18.2 million and $22 million, respectively.
Those losses are attributable to expenses at other facilities, such as the Baltimore City Convention Center and the Ocean City Convention Center, Raith said. From time to time, such as in the strong attendance years of 2012 and 2013, Camden Yards generates a surplus. In some lower attendance years, the authority has lost money on the ballpark, Raith said.
The state's payment for debt service at Camden Yards will be $23 million in 2014, Raith said. The city pays $1 million a year.
The Orioles pay rent based on a percent of revenue and the Ravens pay all operating and maintenance expenses, according to a 2012 financial statement. Revenue from admission taxes totaled about $9.8 million in 2012.
The authority also pays for maintenance and upgrades, such as a renovated center field rooftop deck in 2012 to the baseball stadium.
Michael Frenz, executive director of the stadium authority, attributed the losses to depreciation of assets and said the baseball and football stadiums are collectively generating positive cash flow. Frenz acknowledged that the area west of the stadiums hasn't developed as hoped. He blamed that on the slowdown in the national economy.
Baltimore's mayor, Stephanie Rawlings-Blake, said the stadiums are sources of civic pride that attract tourists and visitors.
"We have received a strong return on investment by the City and State," she said in an e-mailed statement.
Business development in the areas around the stadium is reserved to bars and restaurants that are busy mainly on game days, Burke said. Those jobs don't compensate for higher-paying manufacturing positions the city once featured in abundance, he said.
"It doesn't solve the problems of the city and it doesn't create the revenue the city needs," said Burke, the Baltimore real estate attorney. "The neighborhoods that were strong are still strong; the ones that were poor are still poor. Having a team doesn't change that."
_ With assistance from William Selway, Michael Novatkoski, Michael Weiss, Seth Myers and Peter Schwartz.