Friday, July 26, 2013

Controversial Arenas

The economic conditions in many states have caused government officials to seriously evaluate budgets and how taxpayer dollars are being spent. The ultimate goal is to come up with a spending plan that will dispense funds to areas that need them the most, while also helping to stimulate economic growth and make a profit through investments and new business opportunities. However, there is not always agreement over how or what will accomplish that goal. For some, education, public defense, infrastructure and healthcare, are considered the most important investments, as they are beneficial to locals. For others, tourism, hospitality, athletics and entertainment, qualify as the most worthy of state money, as they bring in lots of foot traffic and profits.

Detroit plans to spend more than $400 million in taxpayer funds to build a new hockey arena for the Red Wings. In addition, the developer committed another $200 million to build retail, office, residential and hotel spaces. Advocates say it is the kind of development needed to attract people and private investment  dollars in Detroit, which is in the midst of a financial crisis. In fact, just last week the city filed for bankruptcy, becoming the country's largest public sector to do so. The move could cut pension benefits to city employees and retirees, a big concern for many residents. Even with the bankruptcy, Detroit still plans to build the arena. Opponents of the idea say the project won't have enough economic impact to make it worth the cost, and argue that it is the wrong spending priority for the city, which has a number of other areas that trump a sports stadium.
Detroit's current hockey stadium. Source: CNN

But the governor and city planners believe a stadium is the right move, as it will create an estimated 8,000 construction jobs, a big boon for a city with high unemployment. Not only that, but the stadium is estimated to create more than $1 billion in direct spending in Detroit over the next 30 years, according to a university study. This is due to the fact that it will be in the middle of a depressed city and in a good location next to a baseball and football stadium, which will encourage private investment in other infrastructure.

While a new stadium in Detroit might be the answer, it may not be the best move for other cities. More often than not, stadium and arena projects have little economical impact because a city may already be thriving or they are in a poor location.

Chicago recently announced plans to build a $173 million basketball arena for DePaul University next to its convention center, McCormick Place. The stadium is part of a larger plan, called "Elevate Chicago," to revamp the center, as well as Navy Pier--considered one of the top attractions in the city. While the arena is ultimately to serve as the home of the Blue Demons (DePaul will fund a portion of the construction cost), it will be used more as an event center for McCormick Place, hosting trade shows and conventions.
Digital rendering of DePaul Arena. Source: Huffington Post

The amount of money from taxpayers to pay for the DePaul stadium is about $55 million--considerably less than Detroit--but there are a few people who do not agree with using that money for an arena. There are many people who think Chicago already has plenty of arenas that can be used for games, events, shows, etc., and the money could be put towards other things--such as education.

Advocates for the project argue that the arena, along with a new hotel, will bring in more private investments for retail, dining and other attractions around the convention center. In fact, one of the goals of the project is to beautify the two blocks north of the center, which are pretty vacant and boring. Building up the area will make it more of a destination for not only tourists, but for locals, too.

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