Chattanooga and Hamilton County leaders will soon be asked to create a new sports authority in order to approve one of the biggest local government bond issues to finance the construction of a $79.5 million stadium on the city's Southside.
The stadium could be critical in keeping the Chattanooga Lookouts, one of America's oldest minor league baseball teams, in the city. But Hamilton County Mayor Jim Coppinger says a new stadium, while beneficial, will comprise a relatively small share of the total development projected for the Southside in coming years. Spurred by the stadium and the entertainment, dining and recreational boost it will give to the area, Coppinger and other supporters of a new publicly-financed stadium on the Southside believe the site should generate at least $350 million of new commercial businesses and housing and could eventually spark over $1 billion of new private investment.
"The stadium is great, but this is about so much more than a stadium," Coppinger told the Chattanooga Times Free Press. "It's the taxes we get, from the investments the developers are willing to build that help supports the schools. Everything we do is about public safety, it's about education, it's about economic development, and this fits in all of what we're trying to accomplish."
But economists who have studied the impact of publicly-funded stadiums suggest that they often don't pay off, at least in generating enough new development and tax revenue to repay the public costs of building the structures. Much of the development around stadiums steals away from other parts of town or isn't enough to pay for the taxpayer assistance needed for the sports facilities.
"Just about every researcher and economist that has looked at this issue, both for major and minor league sports, agree that stadiums for a particular sport rarely create enough new economic development and activity to offset the public subsidies that they receive," said Mandy Pellegrin, policy director for The Sycamore Institute, a nonpartisan research group in Nashville that studies state policy issues including proposed stadium subsidies for projects in Chattanooga, East Ridge, Knoxville and Nashville. "Many cite the new investments made around these stadiums, but they don't take into account the costs associated with creating and operating a new stadium or the fact that you are often redistributing economic activity from other places or other activities."
In a telephone interview last week, Pellegrin said entertainment spending is generally finite for most people, so unless a project is drawing new visitors or residents to an area, the new stadium often comes at the expense of spending and development somewhere else. Critics of taxpayer-funded stadiums argue there are not enough net community gains from a new stadium to justify the taxpayer investment.
But each community and project has unique characteristics and potential benefits. Chattanooga Mayor Tim Kelly - a former car dealer, entrepreneur and professional soccer team investor before being elected as mayor last year - insists a new stadium on the Southside of Chattanooga will help to revitalize a long-vacant brownfield site. Kelly also argues that a new stadium will help create a better gateway to the city for those entering Chattanooga from the west along Interstate 24 compared to what he says is now "an eyesore" at the former foundry property.
Southside stadium benefits
Relocation of AT&T Field to the former Wheland site is projected to help generate $150 million of development in its initial phase by 2025 with:— 660 housing units.— 100,000 square feet new offices.— 79,500 square feet of retail and restaurant development.— 1,540 parking spaces for rent.Source: Conventions, Sports and Leisure International study on stadiums
"The planned stadium will host Lookouts games 20% of the year," Kelly said in a Tweet about the new stadium. "The rest of the time, the stadium will be available to reserve for community events. And when the stadium is not occupied, it will be open to the public as a park where residents and workers can enjoy the public space."
Studies of the site and a potential stadium in both 2018 and again this year indicate that relocating the Lookouts to a new stadium on the former Wheland and U.S. Pipe foundry site should bring commercial, housing and entertainment investment to the Southside.
In Chattanooga, the new stadium would be financed with 30-year bonds issued by a newly created sports authority, if city and county commissioners approve of the proposal. The bonds would be repaid largely through the increase in property and sales taxes generated within a tax increment district created on the brownfield site that once housed the city's biggest foundries.
Gary Chazen, president of Perimeter Properties, said his investment group bought Wheland Foundry after it shut down in 2003 and purchased the adjacent U.S. Pipe & Foundry property three years later. Even after cleaning up the site, the Southside property along Interstate 24 has remained vacant for nearly two decades.
"You need an iconic gateway catalyst like the stadium to make something like this happen," Chazen said.
THE WHELAND SITE
An analysis of the former Wheland site in 2018 by the Chattanooga Design Studio - which built upon previous studies in 2017 by the Lyndhurst Foundation, the Regional Transportation Plan update in 2015 and a 2010 Regional Planning Agency study of the area - said a new stadium "can serve as a catalyst" for the vacant former Wheland and U.S. Pipe foundry site and "serve as an anchor to new investment." The study said such investment could eventually reach more than $1 billion if Chattanooga follows the example of some other minor league stadiums.
In January, the Chattanooga Area Chamber of Commerce commissioned a study by Conventions, Sports and Leisure International, which projects that a new stadium should bring $150 million of new housing, retail and office development to the Wheland site by 2025, generating an additional $305.1 million in spending and at least another 340 jobs in the initial phase.
"It is envisioned that the surrounding mixed-use district could, over 10 to 15 years, incorporate over $1 billion in total development," CSL said in a 55-page report delivered to the chamber in May.
Sybil Topel, a vice president for the chamber, said the $50,000 study was designed to assess the potential for future economic development.
"Redevelopment for this gateway to Chattanooga and Hamilton County is a once-in-a-generation opportunity to spur revitalization of the entire South Broad District," Topel said. "This will become a neighborhood with housing and retail, providing many benefits for residents of our region for decades."
Core Development of Nashville is already mulling $150 million worth of new residential and commercial development near the proposed stadium on the Southside.
Jim Irwin, co-founder of New City Properties - which has worked on nearly $2 billion of brownfield redevelopments in Atlanta, Nashville, Fort Wayne and other cities - said a stadium-led redevelopment of the Wheland site "is very exciting" and "offers tremendous potential" to bring new offices, retail, restaurant and housing development to the area. Irwin said the more he examines the opportunity in Chattanooga, "the more excited I get when I think about what it can become."
Stepping up to bat
Among the Double-A baseball stadiums built or planned in the past decade, most are totally publicly funded:— Tennessee Smokies in Knoxville, an $80 million stadium that is 93% publicly funded will open in 2025.— Wichita Wind Surge in Kansas, a $75 million stadium that will be 48% publicly funded opened last year.— Rocket City Trash Pandas outside Huntsville, Alabama, a $46 million stadium was totally publicly funded and opened in 2021.— Amarillo Sodpoodies in Texas, a $46 million stadium was totally publicly funded and opened in 2019.— Harford Yard Goats in Connecticut, a $56 million stadium was totally publicly funded and opened in 2017.— Biloxi Shuckers in Mississippi, a $36 million stadium was totally publicly funded and opened in 2015.— Birmingham Bartons in Alabama, a $64 million stadium was totally publicly funded and opened in 2013.Source: Conventions, Sports and Leisure International study on stadiums
GROWING THE PIE
Building a new stadium for the Lookouts will vacate the existing AT&T Field atop Hawk Hill downtown. River City Co., the nonprofit agency that owns the property beneath AT&T Field, is planning a study of new alternatives for that 13-acre site.
Some complain that building a new stadium on the Southside in Chattanooga will only relocate rather than grow business, especially since Chattanooga already has seven other arenas that seat at least 2,000 fans for sports or entertainment events.
The Beacon Center, a Nashville-based conservative think tank, called plans to publicly finance most of the new stadium a boondoggle that will benefit wealthy owners of the Lookouts at the expense of taxpayers.
"The owners of the Lookouts would rather focus on trying to get a new stadium on the tab of taxpayers than the fact that 60% of the stadium sat empty in 2021," said Mark Cunningham, a spokesman for the center.
Victor Matheson, an economist at College of the Holy Cross who has studied the economic impact of stadium construction for decades, discounts most of the economic projections used to promote taxpayer-funded stadiums. He suggests a simple rule for determining the actual return on public investments in stadiums and arenas.
"Take whatever number the sports promoter says, take it and move the decimal one place to the left. Divide it by 10, and that's a pretty good estimate of the actual economic impact," he said in an article in The Atlantic.
Matheson and others note that if stadiums prove more expensive to build than they are originally forecast, taxpayers are often liable for the extra expenses.
Despite concerns over such taxpayer support for privately owned sports teams, most of the new stadiums being built for professional teams are financed in large measure with public funds, either directly or through a share of the property and sales tax revenues they generate.
A study by the Global Sport Institute at Arizona State University calculates that since 1960 governments have committed nearly $38 billion to construct stadiums for major sports league teams – $27 billion of that since 1990. Of the 29 stadiums built for Double-A minor league baseball teams like the Lookouts, 73% of the cost of building or renovating the facilities has come from the public sector, according to the study done for the chamber.
"As stadium construction costs have escalated since 2015 (average cost of $57 million), public participation in facility funding has increased with an average of 90% of stadium costs covered by the public sector," the Conventions, Sports and Leisure International study said.
Local stadium seating capacity
Among the biggest venues in Chattanooga, the Lookouts’ AT&T Field currently ranks third in capacity. A new stadium proposed for the Southside envisions capacity of 8,000.— Finley stadium: 20,412.— McKenzie Arena: 10,995.— AT&T Field: 6,400.— Engle Stadium: 6,000.— CHI Memorial Stadium: 5,000.— Frost Stadium: 3,500.— David Stanton Field: 3,500.— Maclellan Gym: 2,000.— Tivoli Theatre: 1,762.Source: CSL study
HOME RUN HITTERS
New stadiums also can attract more fans and surrounding development into cities to pay for such public investments.
Jason Freier, president of Hardball Capital - which owns the Lookouts and minor league baseball teams in Fort Wayne, Indiana, and Columbia, South Carolina - insists that new stadiums are major draws for new business.
"These ballparks (in Fort Wayne and Columbia) are in use constantly with a variety of events and that makes them a major attraction for visitors, residents and businesses," Freier said.
In Fort Wayne, the Harrison Square development around Parkview Field where the Tincaps play baseball has helped attract more than $1 billion of new retail, office, hotel, restaurant and recreation development downtown since Hardball Capital built the new downtown stadium in 2009, officials say.
In Columbia, South Carolina, $650 million in development has sprung up around the Segra Park baseball stadium that opened in 2016, officials say. Among those investments was the opening in 2018 of a technology and development center for the international consulting firm Capgemini along the first base wall of the stadium, known as Spirit Communications Park, which has grown to more than 500 employees.
"Their creation of new jobs in application and cloud development in the quickly-developing First Base Building confirms that Spirit Communications Park complex isn't just a ballpark, but a true 'live, work, play' destination for a new generation of talented and educated I.T. leaders," Columbia Mayor Steve Benjamin said in an announcement of Capgemini's move to Columbia.
Freier said a new stadium can broaden the appeal of an area for prospective businesses while also helping lure more visitors and residents to the community.
Conventions, Sports and Leisure projects that a new stadium on the Southside should host 126 events a year, or nearly double the 69 home games for the Lookouts.
Freier said a new stadium is critical to retaining the Lookouts baseball franchise and should significantly boost the number of visitors coming downtown to see the Lookouts play. He projects that a new and better stadium would boost attendance at Lookouts games, which has averaged 3,606 in the first 41 games so far in 2022, up to around 5,800 to 6,000 a game in a new stadium.
Contact Dave Flessner at email@example.com or at 423-757-6340. Follow him on Twitter @dflessner1.