18 years later, still a debate over success of Oriole Park
Posted: 7:00 pm Sun, September 12, 2010
Eighteen years after Oriole Park at Camden Yards opened to universal praise — and seasons of sold-out games — baseball fans continue to visit the brick-and-steel park that is often credited with rejuvenating ballpark design.
So is it a success? That depends on who’s defining success.
Former state Sen. Julian L. “Jack” Lapides, a Baltimore Democrat, is one of the Marylanders who from the start opposed using taxpayers’ money to build the stadium. He calls the deal with the Baltimore Orioles “lousy.”
But Herbert J. Belgrad, chairman of the Maryland Stadium Authority when the stadium was built, notes that its purpose was never to create revenue for the state.
“This was not a fiscal project,” Belgrad said. “It was to benefit the citizens.”
Some economic studies tout the positive impact of stadium projects here and around the country, but other economists disagree.
Every year, win or lose, the Orioles pay several million dollars in rent to the Maryland Stadium Authority, the state agency that built and owns Oriole Park.
The formula for the 30-year lease is complicated. It was based on a review of ballpark leases from across the country and was intended to produce a rent figure that was a “fair median” among other baseball stadium leases, said Alison Asti, executive director of the stadium authority from 2004 to 2007.
Rent for the park equals 7 percent of net admissions revenues plus a percentage of concessions, parking, advertising and club-level admissions. From 1992 through 2009, the Orioles’ average rent was about $4.5 million.
Because ticket prices have gone up, rent figures have not fluctuated substantially, despite the fact that attendance has plunged, said David Raith, chief financial officer for the stadium authority.
The stadium authority also receives 80 percent of a 10 percent state admissions tax. From 1993 through 2010, this payment averaged about $4.2 million.
These two payment pools from the Orioles amount to about $8.7 million per year.
Most of this money goes toward paying the debt on the state-constructed stadium, which cost about $110 million to build, Asti said. The rest is funneled to park maintenance.
As the stadium ages, maintenance costs increase and repair bills demand a larger portion of the stadium authority’s revenue from the Orioles, Asti said.
$40K for the city
Baltimore gets even less from the Orioles than the state: on average, about $40,000 a year in direct net tax revenue — after subtracting the city’s $1 million annual payment toward the stadium debt, according to a comparison of 18 years of accounting records.
The privately owned Orioles would not release their revenue figures.
To opponents of state spending on the stadium, the deal was always weighted too heavily in the Orioles’ favor.
But in 1987, when the Maryland Legislature approved state money for a new stadium in downtown Baltimore, Gov. William Donald Schaefer and city leaders presented the project as almost an emergency measure.
Late 1980s Baltimore was a city making progress — Harborplace was drawing crowds — but still plagued with drug abuse, unemployment, crime and a declining population.
The city’s football team, the Colts, had fled in the night for Indianapolis in 1984 — leaving fans distraught and City Hall shaken.
Edward Bennett Williams, the Washington lawyer who owned the Orioles, was fighting cancer. He refused to sign anything longer than a one-year lease at Memorial Stadium, where the Orioles played. And he said the team would be sold at his death.
The Colts and the Orioles, like many professional football and baseball teams across the nation in the 1970s and ’80s, shared a field: 35-year-old Memorial Stadium.
“As a result of there being a single stadium, we lost the Colts. It was the city’s inability to accommodate both teams” that caused the Colts to leave, said Belgrad, chairman of the stadium authority from 1986 until 1995 and now a partner at Tydings & Rosenberg in Baltimore.
The emotional response to the loss of the Colts among Baltimore’s citizens, and its elected representatives, was a driving force behind the Camden Yards project.
‘People were apoplectic …’
“People were apoplectic that the Orioles were going to leave. too,” said Lapides, a main opponent of the Camden Yards complex in the Legislature.
Schaefer, who was mayor of Baltimore when the Colts had left three years earlier, was determined not to lose the Orioles as well. Backed by many of Baltimore’s political and business leaders, he decided it was necessary to build the team a new stadium.
The plan was not universally embraced, but despite the debate, the stadium bills passed easily. They authorized the construction of Oriole Park and a future NFL stadium, in addition to creating the Maryland Stadium Authority, which would oversee the construction and management of these stadiums.
The stadium authority entered into a formal agreement with the Orioles for the construction of a new stadium and, once the stadium was complete in 1992, the team signed a 30-year lease on the park.
“One of the purposes was to make [the lease] ironclad that for 30 years we would have a baseball team here [in Baltimore],” Belgrad said. “What happened with the Colts would not happen with the Orioles.”
In 2003, two economics professors at the University of Maryland, Baltimore County, did a review of all the studies about the impact of public spending on stadiums.
“Economists have found no evidence of positive economic impact of professional sports teams and facilities on urban economies,” concluded Dennis Coates and Brad Humphreys (now at the University of Alberta) in a long article in the journal Public Finance and Management.
The professors, who specialize in the economics of sports, reviewed more than two dozen economic papers that studied the impact of sports teams and facilities on cities.
Here were some of their conclusions:
- “Some studies find that professional sports facilities and teams have a net negative economic impact on income and employment. These results suggest that at best, professional sports teams and facilities provide non-pecuniary benefits like civic pride, and a greater sense of community, along with consumption benefits to those attending games and following the local team in the media; at worst, residents of cities with professional sports teams pay a high cost for the privilege, both in terms of large public subsidies and in terms of lost income and employment.”
- “While evidence exists suggesting that narrowly defined occupational groups, like workers employed in the sports industry, benefit from the construction of new sports facilities, building new sports facilities and attracting new professional sports teams did not raise income per capita or total employment in any US city. In fact, some research has found a negative economic impact of professional sports on urban economies.”
- “Impact analysis studies routinely ignore reductions in spending on other forms of entertainment due to substitution in private spending when they compute spending increases from the construction of a stadium or arena and the presence of a professional sports franchise. This systematically overstates the claimed economic benefits from new sports facilities and excludes any potential economic harm done to other businesses in the entertainment sector of the local economy.”
A large part of the funding for Camden Yards came from instant lottery ticket revenue, a politically savvy idea that quelled much opposition to public funding of a stadium complex, said Del. Samuel I. “Sandy” Rosenberg, a Baltimore Democrat who is a season-ticket holder and has attended Orioles pre-season fantasy camps.
Baltimore’s reputation as a major league city was saved. Some economists projected spinoff financial benefits — fans spending money at restaurants, bars and hotels on game days — but other economists say that simply replaces entertainment dollars that would be spent elsewhere. Maryland and Baltimore make little direct income from the Orioles’ presence.
All these years later, some opponents of the state-financed project still object.
“We did get a lousy deal,” said Lapides, who filibustered the bills that allowed for the construction of Oriole Park and thinks Baltimore should receive a larger direct economic benefit from the stadium. “The city really got very little out of it.
“I think it’s great the city has a team,” Lapides said. “I just wish the team paid their full freight.
Baltimore has such a small amount of money coming into city coffers from Orioles’ admissions taxes relative to the city’s other sources of income that the city’s chief of revenue collections, Henry Raymond, said he was not even aware the city made money directly from the Orioles.
However, the city pays out $1 million per year toward the debt on Oriole Park, as required by Maryland law, and will continue to do so through the end of the stadium lease in 2021.
Once the $1 million is subtracted from the admission tax revenue, the city nets an average of $38,681 a year from the Orioles.
In 2007 and 2009, the city paid out more toward the stadium debt than it made in admission tax revenue. This year’s numbers are on track to a loss for Baltimore as well.
Belgrad and Asti agree that new economic development downtown and increased traffic around the stadium — not direct tax revenue — was the financial boost Baltimore received by building Oriole Park in the Inner Harbor. Their position is supported by some academic research, though other academics disagree.
“Ballparks move tax dollars,” said University of Michigan professor Mark Rosentraub, who researches professional sports’ influence on cities.
Rosentraub has no doubt that building Oriole Park downtown has brought significant economic benefit to Baltimore relative to the investment the city made in building the stadium.
Oriole Park was built near Harborplace, which had been opened for more than 10 years, and the National Aquarium in Baltimore, which also was a downtown fixture.
Rosentraub said the stadium gave the area another boost.
“When you look at what Baltimore looked like before [the Camden Yards stadium development] began, you have to make the conclusion that it is a great success,” he said.
According to the Orioles and the stadium authority, the location of the stadium downtown has been a boon to Baltimore’s economy.
“The economic impact the Orioles have on the community is extremely significant and a large percentage of fans come from out of town to spend their dollars in the city at area restaurants, hotels, businesses and attractions,” said Greg Bader, a spokesman for the Orioles. This is particularly noticeable when fans of the Boston Red Sox and New York Yankees swarm into town.
The Orioles’ assertion is supported by a 2006 study published by the stadium authority that estimated Oriole Park at Camden Yards produced approximately $7.5 million in annual taxes — including income, amusement, parking and hotel taxes.
Some still believe the city has been shortchanged.
William Marker, who sued unsuccessfully for a referendum on the stadium bills, would have preferred a renovation of Memorial Stadium. He says that the money spent on the Camden Yards complex could have been put to better use.
“What if that money had been spent on schools and drug treatment?” Marker said. “Who knows what would have been.”