Youngkin's arena flop is hardly a loss for VA

Times-Dispatch Editorial Board

The dream dome disappeared in a few hours.

On Wednesday, Gov. Glenn Youngkins' proposal to use tax dollars to develop a $2.2 billion arena in Northern Virginia died: Billionaire Ted Leonsis, owner of the NBA's Washington Wizards and the NHL's Washington Capitals. and the City of Alexandria both reported: Yonkin, they were retreating.

By evening, Mr. Leonsis and D.C. Mayor Muriel Bowser stood on center court at downtown's Capital One Arena to announce a new $515 million Remain deal.

Former Alexandria Mayor Alexandria Allison Silverberg spoke at the Capitol bell tower in Richmond on February 8 during a rally against the Potomac Yard Arena project.

Margo Wagner, Times-Dispatch

Leonsis and the mayor of Alexandria, along with a growing chorus of Youngkin allies and business leaders, blamed Richmond's political nastiness, led by hardline Democratic Sen. Louise Lucas of Portsmouth, as the culprit.

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An unparalleled project that brought world-class athletes and entertainment, created 30,000 jobs and $12 billion in economic activity has just gone up in smoke, Yonkin said in a statement, adding that Democratic leaders at the General Assembly They blamed us. And political considerations led to the termination of an agreement that neither prefunded the General Fund nor raised taxes, creating tens of thousands of new jobs and billions of dollars in revenue for Virginia.

But that's wrong. Yes, political maneuvering played a starring role, but due to flawed economics and poor salesmen, Arena's proposal failed.

Since the 1980s, publicly funded sports facilities have been touted as economic saviors for cities suffering from suburban flight and declining tax revenues. And in the more than 30 years since then, economic research on these claims has yielded overwhelming verdicts. In other words, using tax dollars to finance sports stadiums and arenas has little, if any, payoff.

Editorial: Yongkin needs your money to make it rain in Alexandria. do you trust him?

Dennis Coates, a sports economist at the University of Maryland, Baltimore County, said the numbers don't make any sense when it comes to the Alexandria Arena proposal. As with most things, there are many promises and claims about all the benefits flowing into the community, but little support or strong evidence for the claims they are making.

It's easy to get caught up in the details, but no amount of smoke and mirrors can hide the fundamental truth. Billionaire Sports He is the team owner who must fund the building with tax dollars because it doesn't generate the revenue needed to cover the costs.

Whether it's a $1 billion arena in Richmond or a $110 million baseball stadium, the ticket, concession, and merchandise sales generated by these facilities simply aren't enough. They try all sorts of clever fundraising schemes. Similar to projects in Alexandria and Richmond, the latest plan incorporates sports facilities into mixed-use developments and calls for a special tax district, with most or all of the tax revenue within that district diverted to debt service.

Claims that publicly funded sports facilities encourage new spending have also been widely proven to be false. reason? When people drop their hard-earned money on sporting events, it means they're not spending that money elsewhere.

It's called the displacement effect. Most fans don't have unlimited money to spend on entertainment and eating out. They might go to the game or go to the movies, but not both. And if they eat dinner at a restaurant near a ballpark or special tax district, meal, admission, and sales taxes go to that district to pay for schools, roads, police, fire, and other public facilities. It means never. service. Instead, those taxes are used to repay government-financed stadium loans.

OPINION: Richmond stadium proposal raises more questions than answers

This is not a partisan issue. Republicans and Democrats alike routinely fall under the spell of this big, shiny project. That doesn't mean some projects are better than others. Perhaps both Mr. Youngkin, the supposed financial guru, and Richmond Mayor Levar Stoney are number-crunching wizards who have cracked codes. Perhaps both sides have figured out a way to generate new spending that ultimately provides a net benefit to taxpayers.

If so, they are certainly not showing their work. Youngkins' office never released documents supporting how the $1.5 billion bond would be repaid. Richmond officials have yet to create a funding mechanism, create a community development authority, or fully explain how they will repay the bond for the $110 million baseball stadium on the city's North Side. The people were left in the dark.

Of course, there are reasons why politicians continue to promote violence in stadiums. it works. Visit any major American city and you're likely to find multi-million or multi-billion dollar arenas, ballparks, or football stadiums baptized under the taxpayers' roof. Everyone wants to win the prize. That's why Mayor Bowser rushed to meet Leonsis at midcourt on Wednesday.

At least Virginia refused to bite. The resistance of Alexandria's community ultimately proved too much for the city's leaders. One of Richmond's biggest secrets is that it has always been politically difficult to build new homes for the Lys people.

why? That's because politicians truly believe they can magically create something for free.

After announcing the arena deal with Leonsis last December, Youngkin's political profile and experience as a private equity genius convinced lawmakers, and ultimately voters, to participate in a big, shiny gift to the state of Virginia. I thought this was enough to convince me.

Fortunately, he was wrong. When a billionaire politician and a billionaire sports mogul team up, it's usually not a big deal. But this time, DC's gain cannot be called Virginius' loss.

See photos of the 2023 season of the Richmond flying squirrel

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