Why Salt Lake City is weighing a decision that other ‘big four’ sports cities are facing
Jul 2, 2024, 10:07 AM | Updated: 10:11 am
(Smith Entertainment Group)
SALT LAKE CITY — The Salt Lake City Council is expected to vote soon on whether to partner with Smith Entertainment Group and advance plans to remodel the Delta Center and create a “sports, entertainment, culture and convention district” surrounding it.
City leaders offered a slight update to negotiations on Friday, noting that talks between all sides will carry through the Fourth of July with a “possible vote” on July 9. The council has until September to vote on an agreement, per the state law approved this year that set up the process. That’s also about when an associated 0.5% sales tax increase needs to be voted on.
Both votes would come after a pair of public hearings on the matter that produced dozens of comments split into all sorts of directions, ranging from outright opposition to spending public money on the project to supporting efforts to improve downtown Salt Lake City.
But Salt Lake City certainly isn’t alone in these types of decisions. At least three similar stadium votes were handed down among cities with “big four” sports leagues within the past month alone.
Recent stadium votes in the US
- The Jacksonville, Florida, City Council voted 14-1 on June 25 to approve a $1.45 billion funding package to modernize EverBank Stadium, the home of the Jacksonville Jaguars, the Jacksonville Daily Record reported.
- The Charlotte, North Carolina, City Council voted 7-3 on June 24 to commit $650 million toward renovating Bank of America Stadium, the home of the Carolina Panthers, according to the Charlotte Observer.
- Kansas Gov. Laura Kelly signed a bill on June 21 that could finance up to 70% of the cost should the Kansas City Chiefs and/or Kansas City Royals relocate across the border from Missouri, according to the Missouri Independent. Jackson County, Missouri, voters rejected a stadium tax measure that would have funded renovations or new stadiums back in April.
- Gov. Spencer Cox signed two bills in March that set up the framework for public financing that can be used for stadiums in Salt Lake City. One centers around the Utah Jazz and Hockey Club; the other focuses on a possible Major League Baseball stadium near the Utah State Fairpark.
- Tempe, Arizona, residents rejected a $2.3 billion sports-entertainment district proposal for the Arizona Coyotes in May 2023.
So, why is it that state and local governments are faced with having to vote on whether to offer public funds for massive projects?
Governments and stadiums
Experts say there are various reasons as to why public financing has become so prevalent in sports, and why Salt Lake City is now in the middle of this debate.
On one hand, stadiums are expensive, especially if a project tries to incorporate more than just a stadium.
Smith Entertainment Group’s arena vision calls for it to be remodeled so it can accommodate both the Utah Jazz and Utah Hockey Club. It would also completely reimagine downtown Salt Lake City by cutting into the Salt Palace Convention Center and creating a connection between a remodeled Delta Center and entertainment, culture and convention spaces east of it.
In return, it’s asking for a 99-year lease for the Delta Center land and for Salt Lake City to approve a 0.5% sales tax increase with a cap of $900 million that it could collect over the next 30 years.
A project could bring a type of community value worthy of public funding, says Keven Rowe, a shareholder of the business law firm Buchalter. In this case, he believes the plan could liven up a section of the city that struggles because the convention center essentially divides downtown in half by covering up 100 South.
“There’s a pretty compelling story that it adds to the economic prosperity of the city or an area — and there’s a justification for asking for public participation,” he told KSL.com. “I think that’s why there’s a partnership, and it’s got the momentum to happen because it’s a win-win for both the city and SEG (Smith Entertainment Group).”
On the other hand, there are only a finite number of “big four” professional sports teams — NFL, NBA, MLB and NHL — in North America, and the number of markets that could support a franchise outnumbers the number of teams.
That makes it easier for a team owner to find another city willing to offer incentives. David Berri, a professor of economics at Southern Utah University and former president of the North American Association of Sports Economists, explains that most relocations ultimately boil down to this.
That includes the Utah Hockey Club, although with a bit of a twist. The NHL stepped in to help facilitate the sale and relocation of the Arizona Coyotes when its ownership failed to provide a viable stadium after Tempe, Arizona’s 2023 vote.
If a franchise is valuable to the city or state, Berri says those communities often have to pony up the money to keep it from relocating when stadium requests emerge.
“A team can go to cities and say, ‘If you don’t build me a stadium, I’ll bounce to another city,'” he said.
What is the public benefit of stadiums?
Berri, Rowe and many other experts agree that sports provide benefits to communities, but there’s no consensus as to what those benefits are.
Rowe points to developmental success in places like San Francisco and Seattle, which turned around dead warehouse-centric areas in each city with stadiums that ultimately spurred development around them. Blending more than just sports into a stadium is a model that he believes “works for everybody” because it can fuel growth. That’s something he sees in the Salt Lake City plan.
“Creating a corridor between the Delta Center and Main Street would be great for the city,” he said, adding that it could eliminate a “dead spot” created by the Salt Palace’s size.
University of Utah’s Kem C. Gardner Institute projects that the Delta Center will generate an annual economic impact of over $600 million with the Jazz, Hockey Club and other events. Natalie Gochnour, the institute’s director, told members of the Salt Lake City Council on June 11 that sports, entertainment, culture and conventions are also key influencers in a strong downtown, drawing people into the region.
However, Gochnour said the bigger impact could be the downtown investments surrounding the arena.
“We’ve still got a chance of holding onto a great American city because of investment,” she said, noting that downtown Salt Lake City’s population declined in 1960 and only turned around in the 1990s when public investments were made to improve its layout and infrastructure.
Berri isn’t as confident about the economic impacts. He sums up several studies that found the same thing: There’s little evidence that stadiums significantly boost an economy. For instance, a study published in the Journal of Urban Affairs two years ago found that Truist Park near Atlanta offered “limited economic impact” to Cobb County, Georgia, despite its “favorable location and ancillary mixed-use development.”
That’s because most people don’t have an infinite budget with unlimited money they can spend on entertainment, Berri explains. If people spend money on the Utah Hockey Club, they might go to fewer Jazz games, movies or restaurants to compensate. That’s where the benefit is curbed.
So what do economists with this viewpoint believe stadiums are good for? Well, sports can build communities and make residents happy — especially when a team is winning. Berri says that’s a benefit that could be worth the public investment.
“Cities do fund things that make people happy; sports do make people happy. We build public parks; they make people happy,” he said. “It’s not necessarily a bad thing. In this case, a billionaire is getting something that they could pay for themselves … and that can make people unhappy.”
The Salt Lake City Council will have to consider all of these different thoughts as it votes next week. And barring an unforeseen change in the North American sports structure, these are the types of considerations that U.S. cities with a “big four” sports franchise may have to consider every time there’s a stadium situation.