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Outside the Lines: Desert Showdown
And who will build it? More often than not, taxpayers.
Two days from now, that issue confronts voters in Arizona, whether to build their Cardinals a new stadium. Last year, voters said no just as Houston voters rejected a new arena for the NBA Rockets. Both clubs on Tuesday return to the electorate for a second and perhaps last chance.
Across North America in the past decade there have been 95 sports facilities constructed or planned at a cost of more than $21 billion, about two-thirds of that paid by taxpayers. Voters in Maricopa County will likely determine the very future of their Cardinals in their community sorting through arguments on civic pride and economic benefits.
If you build it, someone must pay. The people of Seattle realize that. They are still paying down over $120 million in debt on the Kingdome. Earlier this year, that building was blown up.
In greater Phoenix, it is the final hours of a campaign to see if taxpayers are willing to step up for their NFL team.
Ley - Once upon a time, only the Suns inhabited this valLey. Then, in a heady 11-year rush, Phoenix drew a royal flush of pro sports teams- the Cardinals, the Coyotes, the Diamondbacks, a sports bounty that now presents challenges.
The Diamondbacks have lost $60 million the last two seasons. The Coyotes' ownership remains unsettled, the group affiliated with Wayne Gretzky still not in charge. And the Cardinals are in their annual swoon, asking voters again for tax dollars for a new home.
Michael Bidwill, Arizona Cardinals- I think that public policy here in Maricopa County shows that it's important to go to the voters.
Ley- That's something the Diamondbacks did not need to do for a quarter billion dollars to build their showplace ballpark. The political sidestep produced a still simmering resentment. And with four pro teams in town, fan dollars are stretched thin.
Jerry Colangelo, Owner, Arizona Diamondbacks & Phoenix Suns- There's real, real pressure on all of our teams now. And there's a question as to whether to not the marketplace will be able to support all four Major League teams to the degree that we would all like.
Unidentified Male- Watch out. Ley- Colangelo's Suns saw their 10-year streak of opening night sellouts and on Thursday night. He is a major public figure in Arizona.
Cardinals owner Bill Bidwill is not. Bidwill has serious image problems, his team and example of both franchise mobility and futility.
(on camera)- There is some antipathy towards the ownership, isn't there?
Keno Hawker, Mayor of Mesa, Arizona- I'd rather not respond to that question. That's -- I think that probably if you compare Jerry Colangelo to Mike Bidwill or Bill Bidwill, the owner, there is quite a contrast in civic participation over a number of years.
Ley- It has been an uphill battle for the Cardinals here in Arizona. They had but one winning season since arriving in 1988. Last year, a ballot measure for a new stadium, one designed around a sales tax, was roundly defeated.
This year, the Cardinals have lost five of their last six games, fired their head coach, and now have trouble even half filling the stadium. And the team has taken a decidedly lower profile in what is their best and perhaps last chance for public financing for a new stadium.
Unidentified Female- At first, I was skeptical. But then I learned that Proposition 302 is much more than a football stadium.
Ley - The stadium may be the ballot's centerpiece, but it's often not featured or even mentioned in political commercials. The Proposition would use increased hotel and car rental taxes to promote tourism, Cactus League improvements, and youth athletic programs.
David Molina, Valley Business Owners and concerned citizens- What stadium? We don't see a stadium. Do you see a stadium?
That's exactly our point. They're trying to hide the stadium behind youth sports, Cactus League, and tourism. Our approach is, hey, you want a stadium, let's be up front about it.
Ley- Stadium backers are spending several million dollars, much of it on television and radio, portraying the tax increase as a quality of life issue. Molina's group has raised less than $2,000. Their weapons- a web site and flyers.
Colangelo- If you just laid out there football or no football, the answer in at least 50 percent of the cases might be, "I'm not so sure," let alone voting yes or no. It's just hard to get a venue passed with tax dollars.
Ley- Taxpayers may be skeptical of financial projections. Arizona State Professor Stephen Happel says experts are united in their belief.
Stephen Happel, Arizona State University- It's a situation where economists are in overwhelming agreement. New stadiums do not directly benefit local communities to any significant extent. They rearrange people's spending patterns.
Ley- Now the Cardinals say a new stadium would throw off hundreds of millions locally.
Bidwill- The stadium itself, since it's multipurpose, will not only be the home for the Cardinals and the Fiesta Bowl, but it will also host a Super Bowl about every five years. The annual economic impact of you annualize all those different events, they're expecting to be over $500 million just from the stadium itself. And so this is a pretty tremendous economic impact on the valLey and important to the valLey's economy.
Ley- The Mayor of Mesa, who opposes the stadium plan, says similar claims in other cities have never been proven.
Hawker- I have an MBA, so I love spreadsheets. So I've looked at from construction to demolition on several stadiums. And the economic benefits that I've tried to find are nonexistent.
Ley- No one doubts the Cardinals would reap additional millions of dollars from a new stadium, ready cash the club vows to use in turning around a perennial loser.
Bidwill- That's what this is about. It's about winning. It's about getting good players on the field and getting good players on the team and going out and competing for those in the free agency market and retaining our own quality free agents. And that, as you see, takes big signing bonuses, which are generated by the revenues off of these stadiums.
Molina- We believe that it's a cash cow for them. There's no doubt about that. Now whether or not the Bidwills are willing to expend the money to field the winning team, that remains to be seen. They could have done that two years ago when they had that winning season, which means probably they generated more revenues from that winning season. They did the opposite. They got rid of their marquis players like Larry Centers.
Unidentified Male- Intercepted by .
Ley- Are you willing to say that regardless of the outcome on Tuesday, the future of this franchise is here in this city?
Bidwill- Well, I think it's going to pass. And the polls show us in a position to win Tuesday. And we're going to turn out our vote. And I'm very hopeful that we're going to pass Tuesday and feel strongly about that.
Ley- But with no NFL presence in Los Angeles and San Antonio ripe for a franchise, the importance of Tuesday's vote is clear to the most powerful figure in Arizona sports.
Colangelo- If they don't get a new building this time, I can't see anything in the foreseeable future that would dictate that there would be another opportunity. It's going to be difficult.
And that would be a sad commentary if it happens that way and they do move out of town. Competition or not, I guess I still fall in the camp of saying I would rather see four major league teams here than not.
Ley- Earlier polling on this ballot question showed that stadium opponents had the edge. But a poll released yesterday by the Arizona Republic shows the stadium tax measure now leading 53 percent to 38 percent. And illustrating the importance of a new stadium, should the ballot issue pass, the mayor of Mesa who opposes the proposition intends to be right in the thick of the battle to place the stadium in his city.
When we continue, I will talk with a former NFL player now a sports business consultant, who questions if Phoenix can support new construction; the director of tourism for the state of Arizona, who sees the proposed stadium as the key to future business; and a sports economist who says a new stadium will bring no benefit to the city.
Ley- What is fair in Phoenix? Joining us this morning, Randy Vataha. He played seven years in the National Football League. He has worked as a player agent and now heads his own sports consulting firm. He joins us from Williamstown, Massachusetts.
Mark McDermott, he is the director of the Arizona Office of Tourism. He is in Phoenix.
And Andrew Zimbalist is professor of economics at Smith College, the author of a dozen books on the economics of sports. He joins us from Northampton, Massachusetts.
Randy, let me begin with you. You know football. How important is this issue on Tuesday to the Cardinal franchise?
Randy Vataha, President, Game Plan- Well, it's clearly critical to the financial health of the team. The economics of the NFL now and all professional sports is really revolving around the facilities themselves and the ability of those facilities to generate incremental dollars that can be used to keep the team competitive and sign the players that they need to sign.
And a number of NFL teams either have new facilities or have new facilities under construction. So from that standpoint, it's absolutely critical I think to the financial health of the team in the future.
Ley- But, Mark, just putting the football issue on the ballot in Phoenix, it wouldn't win if it was just a football stadium, would it? Mark McDermott, Arizona Office of Tourism- Absolutely not. They had to come to the hospitality and tourism community in the first place with the question, inquire with us as to whether or not we'd be interested. And we had to take a good, hard look at it, study it from all aspects, and decide whether or not we were willing to have our enterprises taxed, our visitors, our guests taxed to be able to provide for a new stadium, and what would work for us in the mix.
Ley- How close a call was that? How close a call was it?
McDermott- It was a very close call. It was deliberated for quite a long time. There was quite a bit of debate among the hotel community in particular, as you can well imagine. And it took some doing to get to a resolve that, yes, in fact we felt that the gains would outweigh the losses in this.
Ley- And Andy Zimbalist, you heard Mike Bidwill promise a half billion dollars of economic manna to flow from a new stadium. I imagine you see it differently.
Andrew Zimbalist, Smith College- There's no evidence, Bob, that new facilities bring economic growth to an area. Most of the spending that goes on in football stadiums is substitution spending. It's people in the area who are spending the money at a football stadium instead of spending it at a bowling alLey or a golf course or a restaurant.
And there are also a lot more leakages because the players generally speaking don't live in the local area. A lot of the money that goes to the football stadium goes to the players and the owners and ends up going to Washington through higher taxes or into the world's money markets.
It doesn't circulate in the local economy as much as it would if it were being spent at a local restaurant. So all of the studies that independent economists have done find no economic benefit whatsoever.
Ley- So, Mark, how does Mike Bidwill make that claim?
McDermott- Well, I think you have to look at a bigger picture than what Andy is referring to. I think you have to look at the total competitive response that this community is trying to construct in terms of not just putting a winning team in a nice, new stadium on the field, but also competing effectively for tourism, conventions, and meetings business as well, and all of the economic impact that goes with that.
Tourism represents about 25 percent of our state's economy, all aspects of it in toto. And the market share that we are challenged to protect in that segment is equal to about $500 billion per tenth of a point. And we're willing to work hard to try to protect that market share by building new products and by enhancing our marketing efforts that are part of the total package here.
Zimbalist- Well, still...
Ley- Well, Randy -- go ahead, Andy.
Zimbalist- ... Well, still, even with tourism and convention centers and so on, those activities might in and of themselves help the local economy. But there's no interactive effect between those activities and professional football that will help the local economy.
Even the notion that a Super Bowl, you might get that every five or 10 years. There's no evidence there that Super Bowls promote the local economy.
The evidence that we have from previous Super Bowls in southern cities is that the hotel occupancy rate basically stays the same because in January when the Super Bowl is played these destinations are destinations for tourism. And the people who are going there to play golf or to swim will decide not to go during the Super Bowl week, and they'll be replaced by the football fans.
Ley- Randy, let me bring Randy in for just a second. Still, you see in city and city, and this is how you make your living, owners making this argument that there is going to be a benefit if you build this new ballpark.
Vataha- Well, I've heard all the arguments. And I think it's a little bit of which perspective you're looking at, or looking from. I mean...
Ley- If you're a taxpayer in Phoenix, how are you looking at it this morning?
Vataha- Well, I think if you're a taxpayer in Phoenix, you have to step back and look at the overall impact that the facility has. Where I think that the danger comes in all of this is that the economics have shifted from the fan to the corporate market.
And what makes all of these teams work are the corporate dollars spent on luxury suites and naming rights and all of that. And the danger here is that if you get four brand new or relatively new facilities in Phoenix and they're all competing for the same corporate dollars, then you have a dilution. At that level, you may not end up with the desired effect that you wanted, which is enough money to keep all of these teams competitive.
Ley- Andy, is Phoenix big enough for four teams like this?
Zimbalist- I think that Phoenix is -- you know, it's the seventeenth largest media market. And it's a wealthy area economically.
I think nonetheless, Randy is correct. If you're talking about four new arenas, the corporate base is not as deep as it is in places like Los Angeles and New York.
You need corporations to buy sponsorships and naming rights at the facilities. And I think there's a real question about that.
The other thing about the Phoenix population is that a large share of it, or a larger share of it than is typical in other places, is displaced northerners. They're down there because -- they didn't go down there because they wanted to root for the Arizona Cardinals. They went down there because they wanted to have an active outdoor life, to play golf.
And many of the ones who do go down there are fans of northern teams. They're not going to immediately adjust and become fans of the Arizona teams. So I think that's a real question.
The other question I think that's being put out here that needs to be looked at more carefully is whether or not having the extra $30 million or $40 million in revenue for the Arizona Cardinals is going to change the team on the playing field.
Football has a salary cap. All of the teams in football with one or two exceptions spend that salary cap. Now through signing bonuses you can spend a little bit more some years and less in other years. But the notion that the team is going to become more competitive to me just doesn't make sense. If...
Zimbalist- ... go ahead.
Ley- ... I was going to say we'll step aside for just a moment and pick up on that point the unique nature of the Cardinals. They have been now in three different cities. And they vow to spend more money, if they get it, on free agents.
We'll look at the Cardinals and their quest for a new stadium. More with Randy Vataha, Mark McDermott, and Andrew Zimbalist as we continue.
Ley- This is an editorial cartoon that ran three weeks ago in the "Arizona Republic," a very unflattering portrayal of Cardinal owner Bill Bidwill, who admittedly would seem to be perceived as having an image problem in that market.
And this coming up now, a commercial produced by Cardinal Charities talking about Mr. Bidwill's good works.
Unidentified Female- When the St. Peter Indian Mission School on the Hila River Reservation (ph) needed a roof, Sister Martha turned to the Arizona Cardinals.
Unidentified Female- I called Mr. Bidwill and told him of our roof problem. The next day, he drove down with a check, and the roof was repaired.
Unidentified Female- From repairing homes to supporting Boys and Girls Clubs, Cardinals Charities and the team distribute millions of dollars to children, women, and minorities in Arizona.
Bidwill- Winning on the field is important. But making a different off the field and helping our community means even more.
Ley- So, Randy Vataha, is it necessary for an owner like this to repair his image, to refurbish his image, to sell this to voters?
Vataha- Well, that gets a little bit out of my expertise into the political arena. But I would just take a little bit of exception I think with the NFL salary cap.
The way it works, you have a fair amount of latitude in any one year to spend money on signing bonuses. And players, since there are no guaranteed contracts in the NFL, or virtually no guaranteed contracts, the idea of a signing bonus is sort of the pivotal decision maker on a lot of players whether they stay with a team or change teams.
So having those incremental dollars to be able to throw it on the table on signing bonuses is a major factor in either keeping or getting new players to come to your team.
Zimbalist- The signing bonus is you spend one year and you give it back next year, Randy. It's not a matter of the income of the team. It might be a matter of cash flow. It's not a matter of the revenue of the team.
Vataha- Well, it's prorated over the life of the contract.
Zimbalist- That's right.
Vataha- A five-year signing bonus has a one-fifth impact each year. But the other thing that's going on is you also have, because of the national television structure, you've got the national television revenues going up about $8 million to $10 million a year, which also gives you that extra room on the cap for new signing bonuses. So it takes about...
Ley- Mark, Mark, let me...
Vataha- ... go ahead.
Ley- ... Let me bring Mark in just for a second, ask you how the marketing of this issue is complicated by the fact the Cardinals are not a winning team, one winning season in 13, and the image of the ownership. How does that complicate selling this issue?
McDermott- I think it complicates it a little bit. But I think the marketing of it is focused on who's paying this tax. It's not residents that are paying this tax.
The last issue was rejected by residents who were rejecting a tax on themselves. This is a tax on visitors. And it's kind of leveling the playing field for us here in Arizona.
When we as Arizonans travel to other states, we're paying an average of 13 percent hotel tax in other communities. And those taxes that we're paying there are being used to build stadiums, convention centers, and to augment tourism budgets in other communities that are competing against us.
So we see this as an opportunity to level the playing field, provide those resources for us, and those facilities for us to be able to compete effectively in response.
Zimbalist- Bob, I find that argument puzzling. I think that if it's possible to raise the hotel tax and to raise the car rental tax, why not just do that? Don't build the new stadium, raise those other taxes, and then you can lower income taxes and sales taxes...
McDermott- The stadium is part of our tourism product. It's an important part of our tourism product.
Zimbalist- That's correct.
McDermott- The Cardinals tell us last year that 120,000 out-of-towners attended their games. And there was an economic impact related to those 120,000 players of about $70 million. That's significant in and of itself, as is the television broadcasts of the games while they're here, as it augments our tourism promotional activities.
Today, for example, we're playing the Redskins...
Ley- But out-of-towners attended those games, you could make the argument, Mark, they sell it for the Cowboys because Cardinal fans are not buying tickets.
McDermott- Well, I think if we had a winner on the field and they had the revenue that is generated by a stadium that is more theirs to work with than certainly ASU Sun Devil Stadium is to work with as it stands right now, if they had the revenue stream that equaled or began to approach even those of other NFL teams they could put a winner on the field. And that's what we're all looking for.
I'm one of those displaced northerners. Sure, I still root for the Bills. But I very much root for the Cardinals. And we're looking for the Cardinals to put a winner on the field. And I go there, and I support them, and I look forward to their winning.
Ley- All right, let me quickly as Andy Zimbalist in 15 seconds, when is the last time a sports arena was built in North America close to being on budget?
Zimbalist- I'd need more than 15 seconds to think back...
Ley- Has anyone done it?
Zimbalist- I think typical overrun is 20 or 30 percent. Sometimes it's a lot larger than that.
Ley- All right, gentlemen, thank you very much. The issue is on the ballot on Tuesday in Phoenix. Thank you to Randy Vataha, to Mark McDermott, and to Andrew Zimbalist.
And as we continue on ESPN, we'll look back at last week's program and your thoughts as we continue.
Ley- Our program last week on four Detroit area high school football players allowed to play while facing rape charges sparked a large amount of e-mail, most of which criticized the decision to allow the young men to play.
A viewer in Dearborn, Michigan, believing that this is a legal issue, one of innocent until proven guilty. "It is not about football. It would set an extremely dangerous precedent to punish someone legally, educationally, or athletically without due process. While I find rape to be one of the most heinous crimes known to man, even these children deserve due process."
From Valdosta, Georgia, quote, "We too recently had a star running back on the local team suspended from school and charged with child molestation for sex with another classmate. After four weeks, the school board not only allowed the student back in school, they allowed him to play football. I agree that schools and parents should not let these students that break the law back in public schools or on sports teams. Teach them now, or visit them later in prison for bigger and worse crimes."
To be part of the interactive OUTSIDE THE LINES, type the keyword otlweekly on the ESPN home page. Our site includes transcripts and video on demand of all our Sunday morning programs, as well as links to learn more about today's topic, and a place to register your e-mail input. Our e-mail address, firstname.lastname@example.org.
Ley- If you joined us along the way, OUTSIDE THE LINES will be re-airing today at 2-00 p.m. Eastern, 11-00 a.m. Pacific, over on ESPN2.
"SportsCenter" is back in 30 minutes, "NFL Countdown" in 60 minutes. Chris Berman and company have an Election Day look at an increasingly bitter quarterback controversy in the city of Buffalo.
Now to the ESPN Zone in Times Square, Dick Schaap and "The Sports Reporters."
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