If a city spends money on sports stadiums and arenas and doesn’t look after its economy it might just wind up so broke that it has to sell off the sports complexes it built. . . for a minuscule fraction of what it spent to build them. That appears to the lesson of the Pontiac Silverdome stadium, former home of the Detroit Lions, which was just auctioned off for an embarrassingly low price.
The city of Pontiac spent $55.7 million to build its Silverdome in 1975 and it just auctioned the thing off for $583,000. That’s about 1% of what it cost to build it. Even allowing for a little wear and tear over the 34 years since the year One Flew Over the Cuckoo's Nest won five Oscars, that is a steep discount: You also have to think in terms of the worth of the $220.52 million that $55.7 million would be would be in today’s 2008/2009 dollars (2008 is the last year you can presently calculate for). Or think in terms of what simply investing the cash would have brought: $711.36 million (That’s $55.7 million x 7.5% compounded annually for 34 years- Interest rates were actually very high for many of those years.)
If nothing else just look at all those parking spaces in the photo above and wonder what they are worth? Or what the parking spaces would be worth if they surrounded something valuable?
For more on the story see the following, the last of which are, respectively, links to a Field of Schemes post and to a Jon Stewart Daily Show clip, each of which point out that the stadium has been sold for less than the price of a one-bedroom apartment:
Winner of Pontiac Silverdome auction revealed: Andreas Apostolopoulos of Triple Properties Inc.According to the Detroit News story above, the arena was “once called the most desirable property in Oakland County” and a quoted realty firm says the land itself “should have gone for more than that.” Apparently the arena was not considered worth its upkeep and the city of Pontiac was desperate to get the property “back on the tax rolls.” Sports stadiums and arenas on the tax rolls? There’s a novel concept that spendthrift New York City seems is absolutely unfamiliar with!
By Jonathan Oosting | MLive.com
November 19, 2009
November 17. 2009 2:52PM
Silverdome sale price disappoints, Pontiac officials wanted more than $583K for stadium
Mike Martindale / The Detroit News
November 17, 2009
Silverdome sold for less than a studio apartment in Manhattan
November 19, 2009
Things Not to Be Thankful For - Silverdome, Goldman Sachs & Congressional Recess (Detroit sells its Silverdome for less than a one-bedroom apartment, Goldman Sachs reports huge profits, and three congressmen warn New Yorkers of terrorism.)
(At the time of the Silverdome’s sale, city officials didn’t even know who bought it. It turns out it was a Canadian Company based in Toronto run by Greek-born Andreas Apostolopoulos. Does that sound like way the Nets arena is being palmed off to Prokhorov?)
Considering the Silverdome fiasco, we here in New York we can’t help but think of our own wasteful stadiums and arenas that are taking property off the tax rolls and giving less than nothing in return. We wrote already about how the new Yankee Stadium is not just itself off the tax rolls but is also removing from the tax rolls a substantial amount of neighborhood economic activity that used to be taxpaying. (See: Saturday, November 14, 2009, The Yankee’s Hoggish New Stadium Monopoly Taxes The Rest of Us.) And tomorrow a subsidiary of the Empire State Development Corporation is scheduled to vote to issue bonds for a new off-the-tax-rolls Nets basketball arena that is already calculated by the NYC Independent Budget Office to be a $220 net loss to the public. (See: Monday, November 23, 2009, Arena bonds authorization coming Tuesday: questions about transparency, PILOTs, and infrastructure spending remain.)
(Above: Proposed new Nets basketball arena. For more, see: Friday, October 30, 2009, Getting The Image Right: Forest City Ratner’s Proposed Atlantic Yards Nets Basketball Arena)
What must the Michigan city have been thinking when it built its worthless Silverdome stadium? Was this just another case of public officials taking their eye off the economic ball due to sports euphoria. This is a very clear warning: The mysterious value of team spirit sports euphoria that cannot, and generally is not, economically quantified is in all likelihood economic value that just doesn’t exist at all. The overall lesson to be learned is how these sports stadium and arena deals terrifically shortchange the public with stadiums and arenas that have very low true economic value.
There is one thing that will be different in New York when the city hits bottom with a mismanaged Bloombergian economy that has squandered its other economic opportunities: The city is setting it up so that it won’t have any sports stadiums and arenas to sell at a pittance when the economic day of reckoning comes; those stadiums and arenas will all still be in private ownership and they will all still be off the tax rolls.