We don’t know yet what Virginia state legislators will think of Gov. Glenn Youngkin’s proposed deal to bring the NBA’s Washington Wizards and NHL’s Washington Capitals to Alexandria, but we can bet on one thing: Ford Frick would have approved.
Frick was a former sports writer-turned-baseball executive who became commissioner of Major League Baseball in 1951 and promptly upended the sports world by declaring that cities should help pay for the stadiums where teams played.
Until then, baseball stadiums were typically owned by the teams. Since then, we’ve generally seen cities and sometimes states help fund (or sometimes entirely fund) stadiums and arenas.
Whether Youngkin’s arena plan constitutes public funding is a matter of some political dispute. He points out that the state’s not paying any money for developing the proposed arena. Critics counter that the state would have to pay for roads around the facility and that tax revenues would be diverted to pay off the bonds for the project. Of course, the state has to build roads for the traffic generated at lots of private development — Roanokers are well familiar with the overpasses around Valley View Mall — and Youngkin points out that the tax revenues used to pay off the bonds are ones that would be generated at the arena. “This is the quintessential public-private partnership that takes revenues that otherwise would not exist and uses those as the underpinning to support the project,” he told The Washington Post.
However, it is fair to say the state would at least be involved in this project, and for that we can trace things back to Frick in 1951.
Or perhaps even further, to Milwaukee.
Throughout the early part of the 1900s, Milwaukee felt left out of what was then the nation’s most popular sport — baseball. From the 1910s onward, Milwaukee officials mused about fixing that. In the late 1940s, with World War II behind them, they decided to do something about it: They built their own stadium. This was the first publicly financed baseball stadium in the country, and it didn’t even have a team. This might be the original case of “build it and they will come.” And come they did. In 1953, the Boston Braves — tired of being an afterthought in a two-team town — moved west.
The Milwaukee Braves didn’t last; after 1965, the team moved to Atlanta. However, between Frick’s declaration — and Milwaukee’s determination to land a team — publicly financed stadiums caught on. The Brookings Institution reports that 27 of the 30 stadiums built between 1953 and 1970 were publicly financed. Also during those years, we saw a lot of franchise relocations as teams picked up and moved to cities with publicly financed stadiums.
Here’s how prevalent taxpayer involvement in stadiums is today:
In Major League Baseball, 27 of 30 stadiums have had some kind of government involvement. (The Boston Red Sox with Fenway Park, the Chicago Cubs with Wrigley Field and the Toronto Blue Jays with the Rogers Centre are the exceptions. The San Francisco Giants paid for their stadium but also got a tax abatement from the city, so that’s why they don’t count as purely privately-financed.)
In the National Football League, 30 of 32 teams play in taxpayer-backed stadiums, and those remaining two teams — the New York Giants and New York Jets — share the same stadium.
In the National Basketball Association, 28 of 30 teams are in publicly financed arenas — the Golden State Warriors and the Toronto Raptors are the exceptions.
In the National Hockey League, the figure is 25 of 32 teams — the exceptions are the Columbus Blue Jackets, the Los Angeles Kings, the Montreal Canadiens, the Ottawa Senators, the Seattle Kraken, the Vancouver Canucks and the Vegas Golden Knights.
The exact nature of the government role in these stadiums and arenas varies. For instance, Madison Square Garden, home of the NBA’s New York Knicks and the NHL’s New York Rangers, is privately owned but gets a tax waiver of $42 million. Meanwhile, Oklahoma City taxpayers paid the full cost of the Thunder’s city-owned basketball arena.
I looked at the financing behind every arena built for either an NBA or NHL team since 2010. That covers four NHL arenas, six NBA arenas, one joint arena (for the Detroit Pistons and Red Wings) and one arena built for an NHL team that has never materialized (in Quebec City). That’s 12 different facilities. Out of those, two were privately financed (the ones for the NBA’s Golden State Warriors and the NHL’s Vegas Golden Knights), which leaves 10 with some kind of public financing. Out of those 10, I found 10 different arrangements, but none that looked like the one Youngkin is proposing, which he says protects taxpayers by using tax revenues generated at the arena that don’t exist now.
The presentation being circulated by the company that owns the Wizards and the Capitals, Monumental Sports and Entertainment, says “the financing structure for this project is unlike any sports financing structure ever put together before.” However, it is similar to others talked about elsewhere. The proposed deal in Las Vegas to relocate baseball’s Oakland Athletics would use taxes generated in the “sports and entertainment district” in Las Vegas to pay off the bonds that would be sold to build the stadium. Nashville also just approved a deal to build a new stadium for the NFL’s Tennessee Titans that would also use stadium tax revenues to pay the bonds, although it would also raise hotel taxes throughout Davidson County, something the Alexandria plan doesn’t call for. However, the politics are much the same. “You are not spending Nashville general taxpayer dollars,” Nashville Mayor John Cooper told the Tennessean newspaper. “You are a conduit for hotel tax dollars, cleverly. You are using tourism revenue to build a better city. Great job. It is future hotel guests and users of the stadium who are funding the bonds, not the general taxpayers.”
Still, the novelty of that approach in Virginia has raised questions. Earlier this week, Senate Majority Leader Scott Surovell, D-Fairfax County, used a committee appearance by Virginia Economic Development Partnership President Jason El Koubi to question him about whether, if the state uses its bonding authority to support sports franchises, we’re likely to see other economic development prospects ask to access the state’s bonding power. “I do not anticipate bringing you a project with that kind of financing,” El Koubi said.
We can argue all we want that billionaire team owners ought to pay for their stadiums and arenas, and that’s a fine philosophical point to make. That’s just not how the real world works, because there is always some city out there that is willing to build a sports facility in hopes of luring a team — and a fan base somewhere that will clamor for their home city to pony up because they don’t want to lose their team. No mayor wants to be known as the one who lost the home team. That’s one reason why sports leagues are often reluctant to expand — it’s useful to have some city out there desperately wanting a team because that provides good leverage for the existing franchises to get their facilities upgraded.
The best example I know of is north of the border in Quebec City. The city and province paid the entire cost — about $275 million in American greenbacks — to build the 18,259-seat Vidéotron Centre in 2015 in hopes of landing an NHL franchise. Nine years later, there’s still no NHL franchise in Quebec City and none in sight. It’s the third-largest arena in North America without an NHL team, and those other two — in Cleveland and Portland — at least have NBA tenants. The Vidéotron Centre has neither, but every time an NHL team wants a new arena, all it has to do is point to Quebec City as a possible destination.
The case of the proposed Alexandria arena is different in that this wouldn’t be a formal franchise relocation in the sense of the old Washington Senators becoming the Texas Rangers; it’s merely a move within an existing metro market, no different than the Atlanta Braves moving from their downtown stadium to Truist Park. What’s unusual here is that this would be a move across a state line that cuts through that metro market — into a state that doesn’t have a top-level pro franchise playing on its soil. (It’s also unusual in another way: Pro sports has also never seen two franchises in two different sports move together as part of the same relocation plan.)
How big a deal is it to have pro sports in Virginia as opposed to across the Potomac? Some feel that sense of prestige more than others. I notice some of the legislators from Northern Virginia — Democrats who would normally be against something the Republican governor does — seem potentially receptive. That doesn’t surprise me; they’re in the D.C. market and can go to these games more easily. It’s their home team.
Sitting down here in the Blue Ridge Mountains, the world looks very different to me. I was recently contacted by a Washington journalist who wanted to know what the feeling was in this part of the state. I told him I couldn’t really speak to what the public here is thinking, but pointed out that, based on radio networks, the Lynchburg-Roanoke area is where interest in Washington-based sports franchises seems to run out. West of Roanoke and south of Lynchburg, you often start finding interest in other sports teams. In all my years in Roanoke, I’ve never heard anyone mention the Wizards; there seems far more interest in college basketball in the Atlantic Coast Conference than in the NBA. I’ve never heard anyone here say they’re going to a Capitals game; I have heard people say they’re going to Raleigh to see the Carolina Hurricanes.
That lack of interest would seem to give legislators from Southwest and Southside some leverage. State Sen. Louise Lucas, D-Portsmouth and chair of the Senate Finance Committee, has made it clear that the price for her vote begins with removing or reducing the tolls on the tunnels that connect her city with Norfolk — and might go up from there to include legalization of retail cannabis. What might legislators from this part of the state want? The more that Youngkin wants this deal, the more the legislative price goes up.
That this involves a sports franchise — not just one, but two! — gives this project both a certain glamour, as well as a certain controversy. That whole “why should we subsidize billionaires” thing. Youngkin would like to frame this instead as an economic development deal. I can’t speak to the finances of this project — we haven’t actually seen a bill to create a stadium authority yet, much less the details of the deal itself. However, El Koubi told Surovell that the arena project is “an uncommonly revenue-positive deal for the commonwealth.” Monumental says the project would generate $12 billion in investment over the life of the project versus $2.8 billion if the Potomac Yard site were developed some other way. Monumental also estimates the project would over the years generate $4.7 billion in new state revenues.
We should not accept any projections on face value without doing some due diligence. However, if the arena and its related development do generate some amount of new taxes beyond what would pay off the bonds, then the parts of the state farthest from the proposed arena — Southwest and Southside — do have an interest in this project. That’s because schools throughout both regions (and rural Virginia generally) are mostly subsidized by the state. If we want more state funding for those schools (and we do), then at some point we have to hope for more state revenues. If we don’t want those increased revenues to come through higher taxes, then we need a bigger economy — and while we’d love to have a bigger economy everywhere, the reality is that Northern Virginia is the state’s economic engine.
The 2023 State of the Commonwealth Report produced by Old Dominion University’s Dragas Center for Economic Analysis and Policy and the Strome College of Business computed that Northern Virginia accounts for 42.7% of the state’s gross domestic product. If the arena deal creates the potential for what El Koubi calls “a very distinct asset in the Washington area” that could grow Northern Virginia’s economy further, then that’s something that ought to get our attention downstate — especially at a time when we’re seeing Fairfax County’s population start to decline for the first time since the 1820s.
I’m not saying the arena deal is a good one — that requires a higher form of math than I’ve ever learned. However, I am saying that ultimately a bigger economy in Northern Virginia is good for the rest of Virginia, especially those of us who depend the most on state funding. Conversely, if this turned out to be a bad deal that cost the state money, that would also have an impact on the rest of the state. What happens in Vegas may stay in Vegas, but what happens in Alexandria might have some bearing on what happens in Alleghany and Appomattox.
