Financial Group Says Sixers Arena Project will Generate $472 Million in State Tax Revenue (Plus Some Updated Spitballing on the Project)
Back in August, the Sixers put out a release declaring that their proposed Center City arena project will generate one billion dollars in new tax revenue for the City of Philadelphia and its school district.
Today, another release, this time with information on the net gain at the state level:
Philadelphia, PA, September 20, 2023 – In a new analysis of the tax benefits that the proposed 76 Place will provide to state taxpayers, MuniCap, Inc., which has more than 25 years of experience advising project managers and municipal governments, determined that a new arena on East Market Street will generate an estimated $472 million in new net state tax revenues. The $472 million in state tax revenues is in addition to the approximately $1 billion the project will generate in new tax revenues for the City of Philadelphia and its School District. These new tax revenues would not be available if the 76ers were not building a new arena and stayed at the Wells Fargo Center.
“Since we first announced the new 76 Place at Market East more than a year ago, we have been clear that we are committed to it being as much a benefit to our neighbors and taxpayers as it is to the 76ers and our fans, which is why we won’t use any city taxpayer money to build the arena and have committed to the largest Community Benefits Agreement in Philadelphia history,” said David Adelman, the Chairman of 76DevCo. “Now, MuniCap’s analysis confirms that the project will generate close to $1.5 billion in new tax revenues to the state, city and School District, making 76 Place one of the most significant private sector developments in the city’s history.”
The new MuniCap analysis identified five major categories of tax revenues the new 76 Place will generate:
- Personal income taxes: $74,721,570
- Sales and use taxes: $248,955,213
- Corporate net income taxes: $118,859,284
- Liquor taxes: $28,749,248
- Realty transfer taxes: $800,000
“Our analysis projects that 76 Place will generate significant tax revenues for state taxpayers—more than $450 million in net new taxes generated,” said Max LeVee, a Vice President at MuniCap. “While we have been involved in many high-profile projects over the last quarter century, 76 Place is notable due to its projected positive fiscal impact to taxpayers and its leveraging of private investment.”
In July, the team behind 76 Place announced the new arena will generate more than $1 billion for the City of Philadelphia and its School District due in part to a series of agreements it will make with the city. Among the agreements the team is prepared to make if the project is approved are the conveyance of the underlying property to Philadelphia, removal of the site from the existing TIF and creation of a new PILOT in accordance with state law.
The 76ers first announced its plans for 76 Place at Market East approximately 12 months ago. Since then, the development team has conducted more than 80 meetings with its neighbors and other stakeholders, including a series of five online community information sessions in August, announced new updates in response to community feedback — including the addition of a new mixed income residential building — and announced support from the Building Industry Association (BIA) and the Pennsylvania Restaurant & Lodging Association (PRLA). The City of Philadelphia is conducting an independent study of the project, expected to be finalized this fall. In the coming weeks, there will be exciting announcements about the project including additional community meetings and support for the project.”
Never heard of “MuniCap” before, but a quick Googling reveals that it’s a Maryland-based firm that was founded in 1997. They have 50 employees in six states and provide all sorts of financial analysis and other related mumbo jumbo that might as well be fucking hieroglyphics to the average sports blogger.
What’s interesting, and probably more relevant to the typical Philadelphia sports fan, is that the Tampa Bay Rays just had their new stadium announced, and ~$600 million in taxpayer money will be used. The Sixers are proposing to do this entire thing, which is ~$1.5 billion, with zero taxpayer dollars. If we’re talking strategy here, 76 DevCorp should absolutely try to leverage this Rays thing in their local pitch, something like “Tampa taxpayers will foot half the bill for a new baseball stadium, while we will provide 100% of the funding for this project ourselves.” I think that’s the strongest component to the Sixers’ efforts here.
As far as recent updates, there’s not much to share. We really need that study to be completed, to dive into some of the more finer details of the project. City Council returned to session this month and Mark Squilla was greeted by Chinatown protesters while a union labor truck drove in circles around the block, so that happened. We’re getting a little closer to this project either being approved or shot down, but things seem to move at a snail’s pace in Philadelphia, like if you thawed out a wooly mammoth and had it walk through molasses, he or she would reach the finish line before they bring this arena project to a vote.
I will say, just to digress for a minute, that I think the arena does get built. That’s my gut feeling, and it’s based on the fact that 76 Place has union labor support, which endorsed Cherelle Parker for mayor. If you’ve spent even 5 seconds in Philadelphia, you know how influential union labor is here. Plus, it’s going to be incredibly difficult for anyone in City Hall to turn down a $1.5 billion post-pandemic private investment in Center City. Remember, Mark Squilla has constituents across a giant swath of South Philly, Center City, and up into the River Wards, and represents much more than Chinatown.
That said, Chinatown residents absolutely have legitimate concerns here, in terms of construction, traffic, and gentrification, especially along that 10th street corridor, but if this project gets shot down, what next? There’s no guaranteeing that some dickhead from New York won’t come down and build a huge tower where the arena would have gone. That’s my biggest concern for Chinatown, that if they’re successful in scuppering the arena deal, the next proposal might be 5x more of a threat. The mall is failing and something else inevitably is going to replace it, plus the shuttered Greyhound terminal (which abuts Chinatown), so at some point the community will have to come together and determine what they feel is the lesser of two evils, or else they’re going to be fighting in perpetuity.*
We put this deal into the ESPN trade machine, and it came out approved:
- Sixers get: their arena
- City of Philadelphia gets: $1.5 billion private investment, half-decade+ of union labor jobs, SEPTA upgrades, development along a shitty portion of Market St.
- Chinatown gets: the entirety of the $50 million community benefits agreement, commitment to the 676 stitch project to reconnect the neighborhood across the highway
Surely there’s a compromise here, and look, Comcast is a major player in all of this. They want to retain the Sixers as a tenant and don’t want the competition of another possible music venue in Center City. They run Philadelphia and don’t want HBSE building some arena in their backyard. Of course they don’t. This is their territory. Inevitably, though, it looks like the Sixers are going to leave Wells Fargo Center in 2031 regardless of whether 76 Place is approved or not.
*(We do have a media request in with Chinatown reps and want to get their reaction to the last couple of week’s worth of news on the arena project)
EDIT – here’s a response from Comcast:
Another myth from Mr. Adelman: claims that their arena proposal will produce hundreds of millions in new tax revenue without providing actual data to back up those claims. They’ve talked about this report for months but have yet to make it public, and their projections don’t add… pic.twitter.com/C1aDcdIG9K
— Wells Fargo Center (@WellsFargoCtr) September 20, 2023