Category: Transparency

Nature abhors a vacuum. The so-called “independent studies” of the impact of the Sixers’ proposal to build a basketball arena atop Jefferson Station are months overdue. So in recent weeks, the Philadelphia 76ers and their landlord, Comcast Spectacor, have released studies touting the economic benefits – or lack thereof – of a new arena.

Bisnow reports:

The Philadelphia Industrial Development Corp. is eight months overdue in releasing an economic and community impact report likely to decide whether city officials hop aboard the 76ers’ pitch to build a $1.5B arena in Center City.

Now the main stakeholders in the decision are getting antsy. Over the past several weeks, two consultant-led studies have dropped, yielding radically different potential economic and commercial real estate outcomes to building a second major arena.

Who should CRE believe? Neither, several economists told Bisnow, adding that the impact of two stadiums on the industry would be more nuanced. But the most likely result is that instead of doubling opportunity, hosting two major stadiums would merely redistribute where activity is happening, spreading a finite number of dollars over a wider canvas.

“All they need to do is convince some people that this number is objective when it’s not,” Dennis Coates, a professor of economics at the University of Maryland, Baltimore, said of rival reports from the 76ers organization and Comcast Spectacor, whose Wells Fargo Center in South Philly would compete with a new arena.

One promises boom times ahead for city coffers, schools and real estate developers operating in and around a new 76ers arena. The other claims dueling arenas would split the market, draining potential attendance and revenue from both.

Economists say such studies are built upon different benchmarks that serve a specific purpose, and they aren’t a good guide for local developers, politicians or other stakeholders to use for decision-making, especially this year or at any prebuilding stage.

Coates said the real estate players poised to benefit from arena development are naturally those in close proximity that could see “greater demand, charge my tenant higher or even sell the land,” especially when a stadium first opens, he said.

But those near venues that lose a regular team, even to a stadium a few miles away, are set up for a corresponding amount of business going out the door, he said.

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The billionaire owners of the Philadelphia 76ers have pushed an endless supply of factoids in their quest to win approval of their proposal to build a basketball arena in Center City. Their latest bankrolled study claims that the only thing better than having one arena in America’s poorest big city is having two arenas:

Today, 76 Place released findings from the study done by live entertainment expert CAA-ICON that confirm a second Philadelphia arena will address the unmet need for live entertainment options in the city. The newly released findings confirm what leading entertainment professionals have repeatedly said: Philadelphia not only can handle a second arena, but has been losing out on entertainment options because it doesn’t have one.

[…]

In its report examining unmet demand in Philadelphia, CAA-ICON estimated that two venues, one in South Philadelphia and a second in Center City, would each host between 125 and 150 ticketed events annually, inclusive of tenant events, Pollstar-reported events, and other ticketed events. Importantly, its estimates do not include other non-ticketed events such as community events, meetings or banquets, which will drive usage higher.

CAA-ICON also noted that major cities with just one arena are at a major disadvantage, with more limited date options because of professional sports season schedules that can eat up weekends which are key for successful tours and routing.

The billionaires’ factoids were published in PR Newswire.

Meanwhile, the region’s newspaper of record reported a second arena would “split the market.” From the Philadelphia Inquirer:

Comcast Spectacor, concerned about the Sixers’ plan to leave the Wells Fargo Center and build a new arena downtown, hired a national real estate adviser to study the implications of having two big, competing venues in Philadelphia.

The consultant concluded the rivalry would split the market, starving both places of attendance and revenue.

There aren’t enough additional games, concerts and shows to financially support two major Philadelphia arenas of roughly the same capacity, said the report by Chicago-based Hunden Partners. It predicted taxpayers would eventually be asked to provide millions of dollars for renovations that neither arena could afford on its own.

[…]

“It’s not totally unprecedented [for a city to have two arenas],” said Dave Brooks, senior director of live music and touring at Billboard, the music-and-entertainment magazine, “but there’s only so many arena touring shows each year. Definitely Philly is a must-play city, but there’s not really any evidence that another arena is going to attract more concerts to a market. They’re probably going to be going after a lot of the same stuff.”

[…]

“Philadelphia performs below its weight class,” Hunden said, attributing that at least partially to lower household incomes in what is one of the nation’s poorest big cities.

[…]

However, the study said, the venues would roughly divide the total number of ticketed events, with 105 going to the Wells Fargo Center and 92 to the Sixers arena.

The “unmet demand in Philadelphia” is the billionaires’ pursuit of a second arena.