After years of asking Santa for shiny new stadiums, the Phillies and Eagles may finally fulfill that Christmas wish courtesy of Philadelphia Mayor John Street and his merry band of elves on City Council. But most of the estimated $1 billion that’s about to be stuffed into the teams’ stockings came from the wallets of city and state taxpayers—whose own stockings will have a lump of coal this holiday season.
The bottom line is that in putting together the funding package, Philadelphia’s stadium Santas repeated the mistakes of other cities. City taxpayers will pay $394 million ($90 million of that for facility operations and maintenance) and state taxpayers $170 million, meaning that together they will pay more than half of the cost of the new stadiums. That figure is almost certain to rise due to the as-yet-unfilled $54 million gap in the financing scheme and the inevitable cost overruns that have plagued other stadium projects around the country. Mayor Street has already signaled that while city taxpayers will not be forced to make up the difference, he will ask the state to come up with at least a portion of the $54 million.
Building, operating and maintaining the stadiums should be the sole responsibility of the teams, because they will reap virtually all of the economic benefits that they generate. For that reason, the Phillies and Eagles should have been required to shoulder far more of the financing burden. But in their haste to get the stadium package wrapped and under the tree, Philadelphia officials failed to heed the positive lessons that other communities have taught about how taxpayer-funded goodies in stadium deals can be limited to the building of access roads, water and sewer facilities, and other site preparation, while the facilities themselves are constructed privately. Successful privately financed stadiums, such as the San Francisco Giants’ Pacific Bell Park and the Carolina Panthers’ Ericsson Stadium, have been financed in such a manner. But in Philadelphia, city and state taxpayers will probably end up paying for both stadium construction and infrastructure.
The final deal will also ensure that as in other cities, the Phillies and Eagles will get bigger and better presents in the years to come. The teams will likely get to keep all revenues that the stadiums generate, while taxpayers get the nebulous promises that the new facilities will generate new, surrounding economic development and increased city tax revenues—promises that have been largely unfulfilled elsewhere. And while the terms of the state’s funding participation do require that each stadium generate $2.5 million annually in new state tax revenues for 30 years after it is built (with the tenant team to make up the difference if it does not), the lack of a clear “baseline” against which to measure such growth makes it difficult to determine whether or not the standard has been met. Therefore, it’s easier to circumvent.
Finally, Philadelphia’s leaders gave city and state taxpayers a big lump of coal by agreeing to buy the Eagles’ practice facility and renovate Veterans Stadium if a deal wasn’t struck by year’s end. The “deadline” created a false sense of urgency for city officials to put a package together now—basically allowing the teams to hold an empty gun to their heads—even though the pool of available cities to which the Phillies could move is virtually dry, and the National Football League would likely not have looked kindly upon an attempt by the Eagles to leave one of the country’s largest television markets.
In announcing preliminary approval of the deal, Mayor Street called it “a giant step forward in producing something that really is for all of us.” After all, it’s easy for the mayor and other stadium deal supporters to play Santa Claus by spending other people’s money on an expensive “gift.” But forgive city and state taxpayers for feeling like they’ve been visited by the Grinch.
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Grant R. Gulibon is senior policy analyst at the Commonwealth Foundation, an independent, non-profit public policy research and educational institute based in Harrisburg, Pa.