New Arena: A Fantastic Folly
After receiving a mass email from the office of the governor inviting me to a rally in the Capitol Rotunda supporting a waterfront arena (vs. the Water Company site), I'd suggest we take a few steps back from the emotionally charged debate to examine the goals and premises that engendered the idea.
Concurrent with the estimated cost of the new arena project doubling from an initial $225 to $450 million, government leaders have redoubled their efforts trying to convince taxpayers that the project makes good financial sense.
Even if the arena could show a positive return over the next 30 years (which is highly doubtful), that alone doesn't justify the project. Because there may be alternative uses of the money that would bring much higher returns.
Merely investing the same amount of money in a risk-free 6% bond would yield a sum of over $3 billion on maturity. Wide-eyed consultants hired by the governor claim only $1 billion in revenues -- and more than half of that amount consists of government "funny money" (tax incentive financing and Metro guarantees). At best, there is only $400 million of real money coming in from ticket sales, sponsorships, and parking fees.
If the arena was such a great investment, why don't businessmen such as Papa John Schnatter and David Jones simply build the arena instead financing consulting studies favoring the Water Co. site? (Though I appreciate their privately financed efforts to save taxpayers $114 million.)
At risk of pointing out the obvious, let me suggest an even better plan:
Don't build a new arena at all.
We've already got one at the Fairgrounds. One we already remodeled and upgraded, complete with 24 corporate luxury boxes. That can host over 20,000 people for a basketball game.
There's only one problem that needs fixing at Freedom Hall -- the diabolically designed Ring Road. Let's save the $450 million, tear up Ring Road's confining concrete curbs, and open up all 12 gates after a game like the olden days.
When I was a child, Freedom Hall's parking lot emptied in less than 20 minutes as cars scattered like mice from a burning barn along the back streets surrounding the Fairgrounds.
Getting back home after the game is what Louisville sports fans really want, not being trapped downtown for hours, having to gorge themselves on expensive food and drink waiting for traffic to disperse. (Coincidentally, it's tax revenue from those sales that officials use to cost-justify the arena.)
City planners have never liked the chaos theory of evacuation; too many motorists making their own decisions just couldn't be right. Similarly, government planners have never liked letting free markets dictate where investment capital should flow.
Here's my plan: fire the planners. Let each of metro Louisville's families decide how they wish to spend the roughly $1,000/family saved by not building a new arena. Some might prefer a new TV to watch games at home; some might spend more on educating their children; some might choose to save their money for retirement.
Absurdity in the current debate reached its pinnacle with the assertion that UofL's recruiting efforts would be severely hampered by locating on arena at the Water Co. site -- and that UofL won't move into that arena if located there.
I might point out that one certain University plays their games in an 8,800 seat arena built in 1940, yet reaches the final four of the NCAA tourney almost perennially. Is it just coincidence those boys in Durham are also considered a cut above us in the brains department?
Central planners generally don't solve problems; they create them. And it seems every new solution always costs more than the previous one. Ring Road is a good example of what government generally gives us in an attempt to make the world orderly: more expense, more trouble, less freedom. We brought our government into existence to guarantee the rule of law -- not to build fancy sports arenas.
Grand visions of the future bring me telling images of the past. I see the ruins of a massive, crumbling Coliseum where ancient gladiators once fought. I see pompous white robed senators and a local politician declaring himself "dictator for life". I see working class citizens laboring to pay more and heavier taxes as government's reach expanded. I see the fall of the world's first great democracy as the Roman empire grew weak from excess.
Let us not suffer the same fate.
George Conrad Dick
Chairman LPKY
Concurrent with the estimated cost of the new arena project doubling from an initial $225 to $450 million, government leaders have redoubled their efforts trying to convince taxpayers that the project makes good financial sense.
Even if the arena could show a positive return over the next 30 years (which is highly doubtful), that alone doesn't justify the project. Because there may be alternative uses of the money that would bring much higher returns.
Merely investing the same amount of money in a risk-free 6% bond would yield a sum of over $3 billion on maturity. Wide-eyed consultants hired by the governor claim only $1 billion in revenues -- and more than half of that amount consists of government "funny money" (tax incentive financing and Metro guarantees). At best, there is only $400 million of real money coming in from ticket sales, sponsorships, and parking fees.
If the arena was such a great investment, why don't businessmen such as Papa John Schnatter and David Jones simply build the arena instead financing consulting studies favoring the Water Co. site? (Though I appreciate their privately financed efforts to save taxpayers $114 million.)
At risk of pointing out the obvious, let me suggest an even better plan:
Don't build a new arena at all.
We've already got one at the Fairgrounds. One we already remodeled and upgraded, complete with 24 corporate luxury boxes. That can host over 20,000 people for a basketball game.
There's only one problem that needs fixing at Freedom Hall -- the diabolically designed Ring Road. Let's save the $450 million, tear up Ring Road's confining concrete curbs, and open up all 12 gates after a game like the olden days.
When I was a child, Freedom Hall's parking lot emptied in less than 20 minutes as cars scattered like mice from a burning barn along the back streets surrounding the Fairgrounds.
Getting back home after the game is what Louisville sports fans really want, not being trapped downtown for hours, having to gorge themselves on expensive food and drink waiting for traffic to disperse. (Coincidentally, it's tax revenue from those sales that officials use to cost-justify the arena.)
City planners have never liked the chaos theory of evacuation; too many motorists making their own decisions just couldn't be right. Similarly, government planners have never liked letting free markets dictate where investment capital should flow.
Here's my plan: fire the planners. Let each of metro Louisville's families decide how they wish to spend the roughly $1,000/family saved by not building a new arena. Some might prefer a new TV to watch games at home; some might spend more on educating their children; some might choose to save their money for retirement.
Absurdity in the current debate reached its pinnacle with the assertion that UofL's recruiting efforts would be severely hampered by locating on arena at the Water Co. site -- and that UofL won't move into that arena if located there.
I might point out that one certain University plays their games in an 8,800 seat arena built in 1940, yet reaches the final four of the NCAA tourney almost perennially. Is it just coincidence those boys in Durham are also considered a cut above us in the brains department?
Central planners generally don't solve problems; they create them. And it seems every new solution always costs more than the previous one. Ring Road is a good example of what government generally gives us in an attempt to make the world orderly: more expense, more trouble, less freedom. We brought our government into existence to guarantee the rule of law -- not to build fancy sports arenas.
Grand visions of the future bring me telling images of the past. I see the ruins of a massive, crumbling Coliseum where ancient gladiators once fought. I see pompous white robed senators and a local politician declaring himself "dictator for life". I see working class citizens laboring to pay more and heavier taxes as government's reach expanded. I see the fall of the world's first great democracy as the Roman empire grew weak from excess.
Let us not suffer the same fate.
George Conrad Dick
Chairman LPKY
posted by George Conrad Dick at 7:37 AM
3 Comments:
Please see my response at www.cashbeechcroft.blogspot.com
Learn from Cincinnati - They built not one, but 2 brand new stadiums. The old ones were fine. They weren't state-of-the-art, but weren't crumbling by any means. It was left to voters, who voted to increase the sales tax by 0.5% to help pay for the stadiums.
"It'll generate new business."
"It'll generate new interest in Cincinnati."
These were the cries of the politicians and supporters.
Paul Brown Stadium, home of the Cincinnati Bengals, opened in 2000.
Great American Ballpark, home of the Cincinnati Reds, opened in 2003.
Now that several years have passed, is Cincinnati a better city than before they built the new stadiums?
I can tell you from personal experience, downtown Cincinnati continues to decline.
The longest running 5-star restaurant, The Maisonette, closed its doors last year. Other businesses continue to move out of downtown Cincinnati. And Cincinnati gives tax breaks to companies who already have offices in Cincinnati, so that they don't move out. Just to stop the bleeding.
Building 2 new stadiums in Cincinnati hasn't helped to resolve their economic issues. I seriously doubt a new one in Louisville will give that city the "expected" boost, either.
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