Yes, we admit, San Francisco is ceding its streets to public defecators and urban campers. Yes, its city council is creating absurd euphemisms such as “justice-involved person” and “formerly incarcerated person” to avoid offending criminals. And yes, the city government, with its refusal to cooperate with federal immigration authorities, is responsible for at least one murder that never would have happened otherwise.
But you have to give San Francisco this much: They just showed the country exactly how to build a sports facility. Namely, just stand back and let the private owners do the lifting.
The Golden State Warriors have finished a beautiful 18,000-seat arena in the city’s Mission Bay neighborhood, and guess what? It is privately funded. There were no bond issues. Aside from a modest cost overrun on a related public infrastructure improvement, there will hardly be any public expenditure. There don’t appear to have been any special tax breaks, either.
The arena, constructed at a cost of $1 billion, will open next week with a Metallica concert, to be followed soon thereafter by the Warriors’ season. It is the closest thing to a completely privately funded stadium that you’ll see nowadays in a big city.
It was no easy feat to build. As often happens in NIMBY San Francisco, a city where activists spend their days causing housing shortages and their nights complaining about them, people vigorously resisted the project. The developers had to change their planned location at one point. They also faced two ballot referendums, each attempting in some manner to block or at least discourage the project’s completion.
But in the end, the developers built their arena. Taxpayers were not forced to finance it. Now the owners will enjoy the fruits of their investment, and taxpayers will enjoy a modest benefit alongside them in the form of more revenue to clean up their filthy streets.
Other municipalities should learn from this.
Countless cities and towns have found out the hard way that it doesn’t pay to subsidize sports stadiums and arenas. Citizens of Oakland, who will be losing the Raiders again after this coming season, will be paying extra taxes until 2025 to finance renovations to the stadium the team is abandoning in the spring. And that’s just one example. Studies show that expected economic benefits inevitably fail to materialize. As long ago as 1997, this was the conclusion of Andrew Zimbalist and Roger Noll, who wrote for the Brookings Institution that “[a] new sports facility has an extremely small (perhaps even negative) effect on overall economic activity and employment. No recent facility appears to have earned anything approaching a reasonable return on investment.” This has not changed in the time since.
Typically, stadium transactions result in a handful of city insiders lining their pockets by making strategic speculative real estate investments. And of course, the team owners are given an effective license to print money. The costs are socialized, and the profits privatized.
San Francisco just proved that even under challenging conditions, a city doesn’t have to sell its soul or sell out its taxpayers in order to broaden its tax base. If it’s meant to be, then the sports team will come. If it isn’t, then your city just looks pitiful standing there with that huge chip on its shoulder, feeling inadequate without fancy projects.
Besides, judging by the way some cities look for new and expensive white elephants to subsidize (giant new libraries, public WiFi systems, and sports facilities), you’d almost think they already solved all of their real problems. This isn’t so in any city we know of. City governments should just focus on providing the basic services that citizens depend on. Take care of the potholes and the park benches, the garbage service and the homeless shelters, and let private business take care of itself.
