Dallas leaders want to attract a professional sports team to their downtown and recently signaled their willingness to spend public money to bring the team.
The equation sounds simple: Attracting a growing sport like women’s basketball could bring economic benefits to Dallas — after all, high-profile rookies like Caitlin Clark and Angel Reese are filling arenas and the WNBA is posting record merchandise sales.
But opinion is divided over whether public money spent on sports facilities actually delivers on economic expectations.
Municipal investment in professional sports over the past three decades — through subsidies, tax incentives and bonds to build stadiums and arenas — has done little to boost spending that would stimulate city-wide economic growth, said two economists who study such funding.
“The case for economic development from sports stadium subsidies remains weak, with many studies continuing to find little to no economic benefits even in the immediate areas surrounding stadiums,” a 2022 analysis in the Journal of Economic Research said.
Economists from Kennesaw State University, the University of Maryland, Baltimore and West Virginia University reviewed 130 studies produced over a 30-year period and found that despite benefits from professional sports, such as improved quality of life and civic pride, “the welfare gains from hosting a team tend to fall far short of covering public costs.”
It’s been two months since Dallas agreed to pay the WNBA’s Wings $19 million for their relocation from Arlington to downtown.
City officials touted the deal as a significant investment in women’s sports, and Nora Aga, who studies sports financing and women’s sports, noted it was the first major local investment in a WNBA team.
The Wings’ popularity is soaring: In April, the team sold all of its season-ticket memberships for the first time in franchise history, and individual ticket sales revenue increased by 1,200%.
The Wings’ announcement has sparked speculation about whether the NBA’s Dallas Mavericks will remain at the American Airlines Center, find a new home downtown or even settle elsewhere in the Dallas-Fort Worth area.
The discussions come following the sale of the Mavericks to the Adelson and Dumont families, who own Las Vegas Sands.
Some Dallas City Council members have said they would consider using taxpayer money to keep the Mavericks in Dallas, depending on how the financing was structured.
Meanwhile, another sign that city officials are open to this is their recent approval of a $592,000 grant to bring a new professional women’s soccer league franchise, Dallas Trinity FC, to the Cotton Bowl.
Sport as a tool for development
City leaders believe the Wings’ new arena, part of a $3 billion effort to renovate the Kay Bailey Hutchison Convention Center, will spark development.
“Right now there’s a big dead zone between Memorial Auditorium and the (AT&T) Discovery District and the Convention Center area,” said Ray Washburn, a Dallas-based developer who envisions creating a hotel and entertainment district in the area.
Jennifer Scripps, president and CEO of Downtown Dallas Inc., said the redevelopment of the Kay Bailey Hutchison Convention Center is one of the biggest projects in a long quest to transform a neighborhood bisected by Interstate 30, which opened the same year as Memorial Auditorium. The new entertainment district will also force officials to think about transportation, she added.
“If your workplace is nearby, can you walk there? Can you drive there? Is parking easy? Can you use public transportation?”
Current The construction of the convention centre is expected to free up around 30 acres of land. The development will allow for new restaurants, retail, hotels, parks and housing. The city will retain ownership of the auditorium. Which It was built in 1957 and features a WNBA-certified court, scorer’s table and digital displays.
Ray Perryman, CEO of the Perryman Group, a Waco-based research firm, said the league’s popularity could draw people to downtown and boost sales for entertainment businesses. Within the area.
In many cases, public funding makes sense even if there’s no “direct payback beyond the upfront costs,” Perryman said.
More people are living downtown and fewer are working in office buildings. Maintaining a vibrant downtown is an important goal for any urban area, and adding amenities is one way to achieve that, he said.
“The effort to relocate Wings to a downtown venue should provide great benefits to Dallas for decades to come,” Perryman said.
City officials project they will recoup $23.25 million in revenue over 15 years from parking, facility rental, food and beverage sales, ticket fees and in-arena advertising.
Aga, the economist, said that at first glance, the city’s approach appears to be cautious.
“At least in this case, Dallas seems to have done a good job of explaining, ‘So what’s the financial impact? How much revenue are we generating and what can we expense?'” Aga said.
But the incentives Dallas gave the Wings seem like icing on the cake to Victor Matheson, an economist at the College of the Holy Cross who studies sports economics.
“As a fan of women’s sports, I’m happy that (the city) is giving taxpayer money to women’s sports. But as an economist, I’m not happy at all,” he said.
Matheson noted that the incentives subsidize sports franchises that are backed by deep-pocketed developers, donors and corporate sponsors.
“If we have an arena, we can attract these things that make the city more livable and give local residents a fun way to spend their money locally,” Matheson said. “And that begs the question: Given the fact that (the American Airlines Center) is already there, does having a WNBA team there bring something to the local Dallas residents that they couldn’t have before?”
Studies have shown that sports teams don’t generate new local consumer goods. Instead, consumers spend money on game tickets and concessions that they would have spent at theaters and restaurants. Other studies have shown that local spending would still occur even if a city didn’t have a sports team.
Public incentives outside of sports are nothing new in Dallas. City officials Last year, it approved $4 million in grants and tax breaks to build an H Mart supermarket in Koreatown and provided $96.1 million to build a 20-acre neighborhood south of City Hall that will include a 38-story office, residential and hotel tower.
Using public funds to attract sports teams is not a new idea.
The Mavericks and Dallas Stars hockey teams found new homes in 1998 after Dallas voters approved a tax increase to support the construction of the American Airlines Center.
The city borrowed $125 million to cover part of the construction costs, and voters approved using a 5% rental car tax and a 2% hotel tax to pay down the debt.
Dallas subsequently paid off the debt sooner than expected, and the company that runs the center now pays the city $3.4 million a year in rent.
“We’ve seen a 1,000 percent return on that investment, and it continues to grow,” said Rosa Fleming, the city’s director of convention and event services. The area around the center had been brownfield due to years of industrial use. “It wasn’t really a developable site until we decided to invest in it and develop it.”
American Airlines Center General Manager Dave Brown said the AAC books about 200 events a year and expects to break records this year, mainly due to playoff games between the Mavs and Stars, but the arena’s profitability must be evaluated on a case-by-case basis. Foundation.
Brown disagreed with the idea that the arena wouldn’t spur economic growth, but declined to release the results of a study on its internal economic impacts.
“There’s no question that the AAC has had a tremendous economic impact,” he said, adding that the arena creates about 10,000 jobs and averages 2.5 million attendance per year. “To say we don’t contribute to the local economy is a ridiculous statement.”
Experts say men’s professional sports are heavily subsidized in Texas, often based on the emotional connection voters share with their favorite teams.
Arlington voters agreed to pay $500 million to build the Texas Rangers’ Globe Life Field, replacing the existing stadium that was less than 25 years old. The Cowboys got their $1.2 billion stadium after Arlington took on $325 million in debt for AT&T Stadium.
According to HR&A’s analysis, Globe Life Field in Arlington is expected to generate billions of dollars in broader economic benefits through business sales, jobs and wages between 2016 and 2054.
Previous Report Dallas Morning News, but, Economists have expressed skepticism about the impact of billions of dollars.
Economists looked at city tax revenues — money that goes directly into a city fund — and predicted that Arlington wouldn’t get a return on its investment.
HR&A’s analysis estimates that Arlington’s revenues from sales taxes, hotel occupancy taxes, rental car taxes and rent paid to the city will be $134.4 million over 38 years. Part of that money will go towards paying down stadium debt instead of adding more money to the city’s fund.
Sales tax revenue isn’t the only metric to consider when looking at economic impact, said Susan Schrock, a spokeswoman for the city of Arlington, which has also seen private investment and job creation in the area.
Texas Live!, two Loews hotels, the new Arlington Convention Center, expanded professional sporting events at Choctaw Stadium and the One Rangers Way resort-style community. Some of the driving forces behind the economy are She said in the area.
“These investments have resulted in Arlington now being ranked 34th by Cvent as one of North America’s top conference destinations,” Schrock said.
Dallas might now chip away at Arlington’s windfall by moving the Wings east, and other cities may eventually move to pry the team away from Dallas as the franchise explores its options, experts say.
