Perfect Pitch or Foul Ball?

The development of the Bull Street project

By Sam Morton

Those opposed to Columbia’s new minor league baseball stadium believe its proponents possess a pie-in-the-sky, “if you build it, they will come” perspective. Fans of the venture, including Columbia Mayor Steve Benjamin, say the new team, the Columbia Fireflies, and its facility will serve as the centerpiece and an economic engine for the 165-acre Bull Street development called Columbia Common.

In most cases when a city hosts a pro sports entity, city taxpayers wind up footing the bulk of capital expenditures. Columbia is no exception. In July 2014, city council  voted four to one, with Moe Baddoruah casting the dissenting vote, to issue special obligation bonds requiring Columbia residents to contribute $29 million toward building a baseball stadium, which officials estimate will cost about $35 million in total. Hardball Capital, the Fireflies’ owner, contributed the remaining $6 million. The city will repay the debt over 30 years using revenue generated by the city’s hospitality tax, an idea the mayor rejected in initial discussions about bringing in a new team.

Three other cities in South Carolina — Charleston, Greenville and Myrtle Beach — have minor league baseball franchises. The differences in who bore the costs of construction are significant in comparison to Columbia. Myrtle Beach’s TicketReturn.com Park, home of the Pelicans, was built in 1999 for a total of $12 million. The public sector contributed $10 million, but those were split between the City of Myrtle Beach ($7 million) and Horry County ($3 million). While there is private development surrounding the stadium, it consists primarily of outlet shops. Economists do not attribute their presence to the proximity of the baseball franchise.

Charleston’s stadium, affectionately known as “The Joe” in honor of long-time Mayor Joe Riley, was built in 1997 for $19.5 million. The stadium was developed as a partnership between the city and The Citadel. Both The Citadel Bulldogs and the Charleston RiverDogs share usage and upkeep of the facility. There are government and education buildings close to the stadium, but little, if any, private development existed prior to its construction.

Greenville’s Fluor Field is the glaring exception. Initially, the City of Greenville acquired the land for the stadium — a $4.1 million expenditure — and dedicated $4.4 million in public funds toward streetscaping. Other than that, “We are 100 percent privately funded (by the team’s owners), and it’s been a very successful venture,” says spokesman Cam White. Ironically, the city acquired the Greenville Drive from Columbia. The team used to be the Capital City Bombers before its relocation to the Upstate. The privately funded enterprise in Greenville has resulted in the opening of several new nearby restaurants, retail shops, art galleries and parks.

Why, then, is 83 percent of Columbia’s Spirit Communications Park’s construction costs being borne only by City of Columbia residents? There’s no split with the county. There was only cursory discussion of upgrading and sharing the Carolina Baseball Stadium because the central idea was to use the new baseball stadium as a catalyst for further development within the Bull Street project.

 Jason Freier, Hardball Capital’s CEO, wants to set the record straight. “People tend to look at this as a black-or-white thing, and it’s not. I don’t think you could actually point to a ballpark or football venue in the past 20 to 30 years anywhere in the country that is 100 percent privately funded.” Jason says people have a tendency to dismiss the $6 million his company is putting in for the initial build, an amount that he says, by any stretch, is a hefty sum in up-front dollars.

“We will also be pulling revenues out of the ballpark every year to go into a city account for capital maintenance expenses,” he says. “We have committed for the next 30 years that we will fund all regular operations for this facility, not just for our games. We’re responsible essentially at the end of 30 years for turning this thing over in as good as or better shape than when it was built.” 

Jason estimates that over the course of those 30 years, Hardball Capital, including its initial $6 million, will invest more than $60 million in the city-owned stadium. The taxpayers’ responsibilities begin and end with servicing the debt.

But will the stadium serve as an economic driver for downtown? Jason, relying on similar Hardball ventures in cities comparable to Columbia, absolutely believes it will. “As an example, our ballpark in Fort Wayne, Indiana has seen approximately $250 million in development within just a couple of blocks of the facility. This includes retail, restaurants, offices overlooking the ballpark, apartments and condominiums with ballpark views or a short walk to the ballpark and a hotel in center field. Durham, North Carolina, which built its ballpark just over 20 years ago, has seen well over a billion dollars in development in the immediate area around its ballpark.”

In Columbia, Jason expects something an order of magnitude larger than what he has experienced in Fort Wayne in terms of dollar value of development. “In Fort Wayne, our initial project only had about 14 acres on which to build. In Columbia, the Bull Street site is more than 140 acres, so land availability will not be an issue for a very long time. Beyond that, the ability to control such a large piece of land has enabled the master developers, Hughes Development, out of Greenville to craft a more ideal site plan and coordinate all efforts and uses around the ballpark.”

However, not all economists agree that pro sports are the financial panacea its backers make it out to be. Michael Leeds, a sports economist at Temple University asserts, “There is no impact.”

Victor Matheson, a sports economist at College of the Holy Cross, says, “A good rule of thumb that economists use is to take what stadium boosters are telling you and move that one decimal place to the left, and that’s usually a good estimate of what you’re going to get.”

Michael, who has studied Chicago’s five major league pro franchises, says if every sports team in Chicago were to suddenly disappear, the impact on the Chicago economy would be a fraction of one percent. “A baseball team has about the same impact on a community as a midsize department store.”

Economists say the biggest reason sports teams don’t have much impact is that they don’t tend to spur new spending. Brad Humphreys, a professor of sports and entertainment at the University of Illinois Urbana-Champaign, and Dennis Coates, an associate economics professor at the University of Maryland, completed a 30-year study of 37 pro sports franchises. Their report indicates they found: “no single instance in which the presence of a professional sports team has been linked to a boost in the local economy.” Further they determined that the teams result in a statistically negative impact on the retail and service sectors and a reduction in wages for bar and restaurant workers.

Dr. Tom Regan, associate professor and director of graduate studies in the University of South Carolina’s College of Hospitality, Retail and Sport Management, focuses on the economic impact of sport and entertainment events on regional economies and the financing and feasibility of live entertainment events. He has completed more than 80 economic impact and related feasibility studies on professional, collegiate and touring sports, working with the Denver Broncos, the University of South Carolina, NASCAR, golf in South Carolina, USTA and WTA professional tennis and other studies involving live entertainment. He was invited to the Brookings Institute to discuss the impact of professional sport facilities on regional economies. He recently completed feasibility and economic impact studies for the Carolina Panthers, Charlotte Hornets, Charlotte Motor Speedway and the University of South Carolina Athletics. He was, however, not consulted on the feasibility of bringing in a new baseball team to Columbia.

Tom believes the baseball stadium is a good jumpstart to develop Bull Street. “The impact is going to be in the assessed tax value of the property around Bull Street and what I call indirect business taxes — sales, use, excise, property and increased business taxes from the retail side in the area.”

Unfortunately, he explains, a lot of this will be displaced money, and not new money, if the area is to grow proportionally. People’s entertainment budgets are finite. Whatever money gets spent at the ballpark are dollars not spent in the Vista or Five Points. It’s money not spent at a restaurant, a concert venue or a movie theater. “It’s the displacement of private funds within an economy,” Tom says. 

Because the stadium is publicly funded, regardless of the assessed value of the property on which it sits, it will not be taxed as is the case with a bulk of the city’s governmental and educational buildings. “That’s a significant aspect of it,” Tom says. “As far as revenues generated by attendance, we’ll see a honeymoon effect where a lot of people go at first, but as with most minor league teams, very few people come from outside the metropolitan area.”

As for the jobs created by the Fireflies, Tom says for construction, it could reach more than 1,000. “But that’s really a one-time thing.” He says the 35 full-time jobs is a little above other Single-A teams he has seen. 

Every job helps, but can all of them be counted as new? There are a lot of seasonal jobs, and Jason predicts up to 550. But Tom points out these are the same people who have similar positions at Carolina venues — people who staff retail spaces, ushers or people who clean up after the event. “Some of these will be intern positions,” Tom says. “The kicker will be how many events they will host besides baseball.”

According to Jason, those events could number into the hundreds. “At our ballpark in Fort Wayne, we have averaged about 650 events per year over the past few years,” he says.

These include major concerts such as Florida Georgia Line, Zac Brown Band, Martina McBride, Dierks Bentley, Bob Dylan, Nelly and Big & Rich. The Fort Wayne ballpark also hosts community and public events, private meetings, conferences and corporate events. 

When the season begins each year, up to 30 players will reside in Columbia. “But, whenever the team is in town, there are another 25 to 30 players plus a half-dozen or so coaches in with the visiting team. There are also a couple of umpires who come into town for the games. All of these people are staying at hotels and having their meals in town,” Jason says.

Beyond the players, there is also a full staff and player development system that will live in or spend a considerable amount of time in Columbia during the season. This includes a full time staff of about a half-dozen.

Each major league team has a set of roving instructors and scouts who rotate among each of the minor league teams in their system who will spend a meaningful amount of time with the Fireflies. The team will also receive regular visits from the player development staff of the major league team as well as scouts from virtually every other major league organization. 

Jason says this is indeed “new” money because the major league teams with which all these employees are associated pay the salaries, signing bonuses and expenses. The money they spend goes into Columbia’s economy without coming from fans or taxpayers.

A few questions remain. What are the results of the cost/benefit analysis the city conducted for the ballpark? Why weren’t more substantive discussions held with USC about sharing its stadium? Who is responsible for managing cost overruns? What happens if hospitality taxes do not remain at the same level as they are now? How, then, does the city service the debt to which council committed taxpayers? Will council raid the water and sewer funds as it famously has for years, especially in the wake of the sewer system failures in the October flooding? Or will money have to be taken from the general fund? 

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