The Mackinac Center for Public Policy analyzes the proposed Kalamazoo Arena.
K-zoo Taxpayers May Ante Up for New Sports Arena
On Nov. 11, 2009, the Lansing State Journal reported that the Kalamazoo County Board of Commissioners was exploring the possibility of creating a hotel and restaurant tax to finance construction of a 6,800-seat sports arena to be built in the city of Kalamazoo for an estimated cost of $81.2 million. Five days later, the Pontiac Silverdome — also constructed with taxpayer subsidies — was auctioned off to a Canadian firm for just $583,000. Despite having almost 12 times the seating capacity and still being in good condition, the Silverdome was sold for less than 1 percent of the proposed cost for building the Kalamazoo arena.
The taxes proposed to finance the Kalamazoo facility were made possible by a new state law approved at the end of last year and signed by the governor. The assumption behind this expanded taxing power, and the impetus that also led to the Silverdome being built with public dollars, is that publicly subsidized sports facilities create economic growth. However, both economic research and the real-world experiences of the Silverdome and other similar venues cast this assumption into considerable doubt.
The consensus of economists regarding taxpayer-subsidized sports stadium construction was summed up in 2006 by College of the Holy Cross economist Victor A. Matheson, who noted that, "...academic economists are nearly universal in their criticism that specialized sports infrastructure does little to promote economic growth..."
Similarly, in a July 2007 article, Reason Public Policy Institute researchers Samuel Staley and Leonard Gilroy wrote that, "More than 20 years of academic research has failed to find a significant relationship between an investment in a sports stadium and significant job or income growth." The authors also mentioned researchers from Smith College and Vanderbilt University who produced a 2000 report which noted that, "independent work on the economic impact of stadiums and arenas has uniformly found that there is no correlation between sports facility construction and economic development."
Even if there were significant economic benefits from taxpayer-subsidized stadiums, the impact would often wear out fast as teams have a habit of quickly discarding the buildings and moving on. In 1975, the Silverdome was completed for $55.7 million, or more than $220 million at 2009 prices. So the "investment" in the Silverdome — when benchmarked against inflation — depreciated by 99.7 percent in less than 35 years. This happened despite the building still being in good enough condition that the new owner plans to use it for a soccer stadium.
Compared to similar venues paid for and owned by taxpayers, it is perhaps remarkable that the Silverdome is still standing at all. The Kingdome in Seattle was finished one year after the Silverdome, yet never even made it to its 24th anniversary and was demolished in 2000.
The Metrodome in Minneapolis, home of the NFL's Minnesota Vikings and Major League Baseball's Minnesota Twins, is already the NFL's ninth oldest home field, despite being just 27 years of age. This year, the University of Minnesota's Big Ten football team moved out, and the Vikings and Twins are making plans to pack their bags very soon.
The University of Minnesota Golden Gophers football team is on its third home since 1981. The school abandoned an on-campus stadium and moved to the brand new Metrodome for the 1982 football season, partially due to an assumption that the indoor facility would boost attendance because it offered protection from the weather. However, removed from the on-campus atmosphere, the much larger crowds barely materialized. Gopher football's latest home, TCF Bank Stadium, is again on campus — and open-air. It cost $288 million to build, nearly half of which is being subsidized by Minnesota taxpayers due to a vote of the Minnesota Legislature to approve construction of the building.
Like the Metrodome, the proposed arena for Kalamazoo is intended to initially house a mixture of professional and college teams. It was announced that the Western Michigan University basketball and hockey teams will share the space with the Kalamazoo Wings, a minor league professional hockey team. The Wings currently play in Wings Stadium, constructed in 1974, one year before the Silverdome. The WMU Broncos hockey team now plays home games at the on-campus Lawson Ice Arena, also completed in 1974; and the WMU basketball team plays at University Arena, which was built in 1957 and renovated in 1994.
As with the new stadium for the University of Minnesota, a taxpayer subsidy for the new Kalamazoo arena was facilitated by a vote of the Michigan Legislature. According to MichiganVotes.org, 2008 House Bill 6515 expanded "the scope of the law that authorizes local hotel, restaurant and rental car excise taxes to pay for municipal stadiums." Furthermore, it also lowers "a certain population standard, allowing Kalamazoo County and Kalamazoo to levy these taxes."
Thirty-six of 38 members of the Michigan Senate voted to approve this enhanced taxing power on Dec. 18, 2008. That same day, 54 Democrats were joined by 14 Republicans in the House of Representatives to approve the bill. It became Public Act 532 of 2008 when Gov. Jennifer Granholm signed it on Jan. 12, 2009.
Kenneth M. Braun is a policy analyst and managing editor of Michigan Capitol Confidential at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.