"D.C.’s New Soccer Stadium Might Look Like A Good Deal, But It Isn’t"
But the fact that this counts as a pretty reasonable stadium deal as far as stadium deals go just goes to show how dumb stadium deals are. The building the city is giving up as part of this deal, the Reeves Center, has an estimated value of $100 million. The D.C. United soccer franchise is worth about $50 million. According to D.C. United, the reason a new stadium is necessary is that they can’t earn profits at RFK stadium but will be able to turn a profit at the new facility. So we’re talking about investing a sum of money that exceeds the present value of the team in order to take an action that will have substantial private benefits for the team’s owner. Now it’s conceivable that keeping the team in D.C. has some public benefits that make it worth doing, but for the price D.C. is paying the city could literally buy the enter soccer team which would be a much better way of obtaining the public benefits.
It’s easy to gloss over the size of the stadium subsidy in this instance since D.C. is covering its cost by swapping land it owns with the land where the new stadium will go. But it estimates that the cost of that land will fall somewhere between $100 million and $150 million, so the District is ultimately picking up about half of the estimated tag. In that context, the United are definitely coming out ahead: they’re getting a stadium worth six times the team’s total value on land that is virtually free even though their attendance probably doesn’t justify a stadium of that cost. United investors argue that low attendance is due largely to the current digs — the outdated RFK Stadium — but I’m skeptical that a new stadium will fix that problem. Meanwhile, there’s a possibility that the investors on the other side of the land swaps could get new, more valuable land at a less-than-market rate.
One way to understand the cost is by looking at what D.C. is giving up. As Field of Schemes’ Neil deMause argued, a D.C. desperate to redevelop the corner of 14th & U Sts. could sell the land to developers and use the money for something else, like bolstering its struggling public schools, helping its sizable homeless population, promoting affordable housing for low-income families that are finding the District an increasingly tough place to live, or promoting real economic development. Instead, we’re using the money for a soccer stadium. That may help make Southwest a nicer place, but we already know that stadiums typically don’t benefit cities as whole, either financially or economically, so don’t expect this to be a panacea for D.C.’s future. This isn’t so much a quality plan for the economic development of Southwest as it is a good way to keep a soccer team from leaving the city.
I and plenty of other District residents would love to see the United in a nice, soccer-specific stadium, but this deal means we’re giving up the chance to make better investments, the type that could continue to transform D.C.’s economy while also helping populations that have been adversely affected by the city’s rapid gentrification over the last decade. Just because this deal looks better than most doesn’t mean it’s a good deal, and if the United’s investors really think new digs are what stands between them and windfall profits, it would seem a good idea to make that investment themselves. As someone who enjoys attending United matches, I’ll help pay for the place by showing up and spending money in the stadium. But I’d prefer my tax dollars go toward investments that will benefit the city and its residents, not a few people who own a soccer team.