Marcos Bretón

Marcos Breton: Are arena subsidies good for cities? Let's ask an expert

Marcos Breton
Marcos Breton

Geoffrey Propheter is a budding sports economist whose studies have shown that most public subsidies of sports arenas do not make fiscal sense.

Propheter's article in The Journal of Urban Affairs last year gained notice because it took on the idea that arenas bestow "big league" status on the cities that build them.

But Mayor Kevin Johnson relentlessly invoked such hyperbole while selling Sacramento on the idea of an arena – sales tactics that Propheter describes as "wizardry."

"Though basketball arenas do sometimes seem to add to regional income, more often than not subsidies (to finance the arenas) erase the gains," Richard Florida wrote on The Atlantic Cities website of Propheter's work.

Raised in Sacramento and a graduate of both Jesuit High School and Sacramento State, the 31-year-old Propheter is completing his Ph.D. in public policy at George Washington University – and making a name for himself.

"A compelling new study by (Propheter) sheds new light on precisely the question that should have been addressed before ground was broken: Are basketball arenas catalysts of economic development, or not?" Florida wrote.

In many respects, Propheter's work provides a clear answer to the question: No. Propheter found that either public subsidies were too high and never recouped by cities – or the new arena didn't spur the level of consumer spending that arena proponents promised.

This lends credence to the argument of those who are pushing for a public vote on Sacramento's proposed arena.

Arena opponents often claim that academic research on publicly financed sports facilities shows they are a bad deal in every case.

But as with other academics in the field, Propheter's work is more nuanced and less uniformly conclusive than that.

When Atlantic Cities, a subset of The Atlantic magazine, profiled Propheter's work, it focused on his findings as a cautionary tale for the Barclays Center – a new NBA arena in Brooklyn financed with $500 million or more in city and state funds.

But buried down in the story was a less publicized aspect of Propheter's work: That arenas sometimes can work in some markets.

In Oklahoma City, for example, Propheter found that the relocation of the NBA's Seattle SuperSonics to the Oklahoma capital has sown a positive return.

"In Oklahoma City, the arena and the franchise has had a positive effect on personal income levels," Propheter said in a telephone interview from his residence in Washington, D.C.

He said his studies showed that cities where the NBA was the only game in town fared better financially than cities with multiple sports.

This is because residents of single-team cities were more loyal consumers and did spend the money to buy the tickets and pay for parking – thus helping cities pay down the public subsidies that bankrolled the arenas.

The bottom line is: anti-arena advocates who claim there is no way an arena in Sacramento can work are just as wrong and partisan as those who say it will bring an economic windfall.

In Propheter, you have a voice capable of exposing the flaws of either side of the arena question.

While honing a skeptical eye on his academic work, Propheter is also a Sacramento native with an attachment for his hometown. He is an unabashed Kings fan, an NBA fan and an avid basketball player.

When I emailed him a follow-up question after our interview, he apologized for taking a while to respond. He was playing hoops, you see.

"The first player I ever attached myself to was Bobby Hurley," Propheter said of the star-crossed, 1990s Kings point guard whose basketball potential was curtailed in a violent car crash near Sleep Train Arena. "I loved Mitch Richmond. Spud Webb. Walt Williams."

How would he have felt if the Kings had relocated to Seattle, as many believed the team would earlier this year?

"As a fan, I would have been very disappointed," he said. Single-sports cities such as Sacramento have more to lose financially and emotionally if franchises relocate than other cities do, Propheter said.

Still, Propheter said the numbers show that politicians like Johnson are incorrect when they promise jobs and certifiable economic gains because of a new arena.

The benefits are far more intangible. Arenas are more complementary than they are catalysts, Propheter said.

In Sacramento, for example, the city has a financial interest in building a new arena on the site of a dying urban mall surrounded by blight.

The arena is part of a years-long strategy that has seen the city gain control of empty buildings to prepare them for new development.

Last week, The Sacramento Bee's Tony Bizjak reported that several downtown eyesores – elegant buildings that had fallen into disrepair – are now either in escrow or final negotiations for sale.

"Officials say the potential downtown arena was either the spark for the sale in each case, or a key driver in raising the price," Bizjak wrote.

Despite the potential benefits for Sacramento, Propheter said he would be in favor of a public vote on the arena, considering it will be financed with more than $200 million generated by city parking revenue.

After a series of pratfalls and missteps by arena opponents, it's far from clear whether a public vote will occur.

But Propheter knows how he would vote if he had the chance.

"I would be voting with my heart – voting for the arena," he said.

"The economist voice in me would be squashed completely."

Call The Bee's Marcos Breton, (916) 321-1096.