Tidewater Stadium Public Financing Leaps to $54.3 Million
Tidewater Stadium Public Financing Leaps to $54.3 Million
It was reported by multiple outlets, including the Boston Globe and Providence Journal, that financing for the Tidewater Landing soccer stadium, both public and private financing, closed today.
It was reported by multiple outlets, including the Boston Globe and Providence Journal, that financing for the Tidewater Landing soccer stadium, both public and private financing, closed today.
The privately owned stadium — being built with a combination of private and public money — will be the new home for Rhode Island FC. According to the Globe, this sets the stadium project on a path to completion in time for its intended opening for the 2025 USL Championship.
The price of the bond sales was $54.3 million. As recently as October 2023 — according to the Globe — the bond sale was expected to be $48.5 million. That October figure was higher than the original amount estimated by the state of Rhode Island in 2022 of $36 million. All those figures were the escalating amount to be sold in bonds, the amount to be invested in the project from the bond sales is, and remains, $27 million.
The Globe pointed out the question of how much will this ultimately cost the taxpayers of Rhode Island. The bonds and the interest on them will be repaid with state tax revenue. Rhode Island taxpayers, whether they like soccer or not, would have been looking forward to $110 million in state tax revenue ultimately being paid on the bonds and the interest when it was projected to be a $48.5 million bond sale. Now that it’s $54 million, it’s safe to assume the bill for Rhode Island taxpayers will increase further.
The Rhode Island State Commerce Corporation voted to approve the borrowing and the bonds were issued by the city of Pawtucket’s redevelopment agency to be paid back with state tax revenue. The city also contributed — according to the Globe — $10 million in COVID relief money. One might wonder what COVID relief has to do with a soccer stadium.
Rhode Island’s economic development agency has also approved $14 million in tax credits for the project. Tax revenue being the source of repaying the bonds for the project and then giving that same project a tax break, when considering one of the selling points for publicly financed stadiums is increased tax revenue potentially raises further questions.
The one question that the Globe didn’t tackle today is why would the city of Pawtucket and state of Rhode Island go through with this process of using public financing for a privately owned stadium?
Rhode Island Governor, Dan McKee supplied the reasoning behind these types of projects, quoted below in a statement shared by ABC6 News in July 2022:
“Rhode Islanders and visitors will be able to attend a soccer game or a concert, enjoy the Riverwalk, grab a bite, or call Tidewater Landing home,” he said. “This world-class destination on Pawtucket’s riverfront will support thousands of jobs and create millions of dollars of tax revenue.”
It’s that last bit, about supporting thousands of jobs and creating millions of dollars in tax revenue that has been used time and time again to support the spending of public money on sports stadiums. That logic has also been refuted time and time again.
Below, is an excerpt from an article on Globalsportsmatters.com, aptly titled “So, Your City Wants to Build a Sports Stadium:
“Economists Dennis Coates, Brad Humphreys, and I (JC Bradbury) recently conducted a comprehensive review of more than 130 studies of the economic impact of sports teams and stadiums. Though the research methods, time periods, and stadiums examined vary, the findings are remarkably consistent: Teams and stadiums are not associated with having strong economic impacts on local communities. These findings explain why people in my line of work overwhelmingly agree that sports stadiums are poor public investments. In a recent University of Chicago survey of economic experts, 80 percent of respondents agreed that stadium subsidies were likely to cost taxpayers more than what they get in return.
“As for the rosy economic projections conjured up to support stadium subsidies? They are doomed by design. Easy-to-observe spending on tickets, concessions, and other related consumption in and around stadiums comes largely from local residents who were already spending their income locally. A family that buys hot dogs, peanuts, and popcorn at the game would have otherwise spent that money at some other local business, perhaps going out to dinner or a movie. Stadiums don’t boost host economies, because stadium-related spending mostly isn’t new spending. It’s the same spending reallocated to a different location.”
The article goes further and addresses other questions people might have about publicly funded stadiums, none of which the answers to offer much support in favor of public financing. The article also talks about how developers often rely on paid-for studies by consultants to showcase the economic benefits. These studies were deemed by the economists who wrote the article to be at “odds with all available evidence on the subject.”
All of this places concern as to whether this project — of which the stadium is just a phase of — will do more than just provide Rhode Island with a home for its pro soccer team. Rhode Island state officials said as far back as 2019 that the project would “pay for itself” and “create 3,500 jobs”.
Not all public officials in Rhode Island were in support of the public financing of this project either, the RI Commerce board vote was a narrow, 6-5 decision in favor of moving forward with the $27 million in funding.
To be fair, that is only one article by three economists citing a review of 130 studies on the subject. You’ll find much more of the same here from the St. Louis Federal Reserve, or here from Berkley and the entirety of this book.
Rhode Island FC’s owners have, of course, backed this project and its benefits while saying they want to be a club for all of Rhode Island. They seem genuinely motivated to put a great team on the field, they’ve brought in an impressive GM and coach, gone full tilt with their marketing, community outreach, engaging with local media, and selling tickets all across Rhode Island.
No one begrudges an ownership group from doing that and many in Rhode Island will benefit from it but it’s understandable to think the ownership group should aim to meet their vision with their own funds, not the taxpayers paying 7.5% interest on bonds sold for $54 million dollars.
In case you’re wondering, Gillette Stadium was not funded by taxpayer money after Robert Kraft decided not to proceed with moving to Connecticut, where he had been offered incredibly friendly terms to develop a stadium. It was lauded as a “monumental achievement” by public stadium financing critic, Andrew Zimbalist.
State and local governments play a zero-sum game with their investment decisions. Money spent on one project, becomes money not available for another investment. If the state of Rhode Island wants to sell bonds to finance projects to make Rhode Island a better place to live for a larger portion of its citizens, not just its soccer fans, putting taxpayer money into infrastructure might be a better place to look. I hear there’s a bridge in Rhode Island, owned and maintained by the state, that was lacking from investment.