Sixers

Sixers Arena Proposal, and Philadelphia in General, an Outlier in Public/Private Stadium Financing

By Kevin Kinkead

Published: Jun 7th, 2024 · 5:09 PM EDT

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There’s been a lot of yelling back and forth over the Sixers’ proposed Market Street arena, which has been going on for what seems like a lifetime now. We were supposed to get the results of the city-led study months ago, but for whatever reason that report has yet to come out.

As we wait, there’s an obvious story that hasn’t been written. In terms of funding, how does 76 Place stack up against other new construction and renovation projects around the country? Is it good? Bad? Fair? Unfair?

The key point in the Sixers’ proposal is the promise of 100% private financing at the local level. David Adelman and Sixers ownership are on the record saying that they won’t use any public money from Philadelphia, and would only consider subsidies at the state or federal level if something like solar panels came into play. Otherwise, it’s $1.5 billion in private money to replace the western section of the Fashion District and former Greyhound bus terminal site with a new home for the Sixers, which would open in 2031.

100% private financing is rare for stadiums, arenas, and ballparks, which more often than not are built with some portion of taxpayer money. That was the case with the region’s most-recently constructed stadium, Subaru Park, which is owned by Delaware County and leased by the Philadelphia Union. The team has a standard PILOT structure (payment in lieu of taxes) that’s used to pay back the bond that financed the stadium.

To build off that, I went through the stadiums currently used in the four major sports, and looked at public/private funding splits. I also cobbled together a list of proposals that are currently out there. Here’s the list of how other American cities, counties, and states are paying for their arenas or renovations, going back 10 years to 2014. I think I got them all, but if I missed one, email me at kevin.k@xlmedia.com and I’ll add it to the list. (EDIT – thanks for the shouts on the Clippers’ new arena)

 

New stadiums, arenas, and ballparks + proposals

Highmark Stadium (Buffalo Bills)

According to The Associated Press, the “the proposed $1.4 billion new home for the Buffalo Bills comes with a record $850 million taxpayer price tag.” $550 million is being paid for by the NFL and the Bills. The taxpayer commitment amounts to about 60%.

“Stadium of the Future” (Jacksonville Jaguars)

Plans to give the Jags a new home amount to $1.25 billion, split between the team and the city. Jacksonville would also kick in $150 million for ongoing capital improvements and deferred maintenance. 

Soldier Field (Chicago Bears)

Larry Mayer at the Bears website wrote this about the latest proposal:

“The Bears have pledged to contribute more than $2 billion to the project—over 70% of the total stadium cost. The remaining stadium funds are proposed to come from the Illinois Sports Facilities Authority (ISFA), a government entity that was created by the Illinois General Assembly in 1987 for the purpose of constructing and renovating sports stadiums for professional teams in the state of Illinois. The Bears’ proposal can be accomplished with the existing 2% hotel tax used to back ISFA bonds.”

New White Sox Stadium (Chicago)

The lease at Guaranteed Rate Field ends following the 2029 season. Owner Jerry Reinsdorf proposed building a new stadium using, in part, $1.2 billion in public funds from “various tax revenues, including a 2% hotel occupancy tax.”

Nissan Stadium (Tennessee Titans)

The Tennessee Lookout notes that “the stadium deal, with interest, will cost taxpayers nearly $2.3 billion… The team and NFL are contributing $840 million to the project.”

Allegiant Stadium (Las Vegas Raiders)

In an effort to lure the Raiders to Nevada, lawmakers came up with a hotel room tax hike to pay for $750 million in bonds. The stadium itself ended up costing about $2 billion.

SoFi Stadium (LA Rams, LA Chargers)

SoFi was built with 100% private financing by Stan Kroenke, who also owns the Nuggets, Avalanche, Arsenal, and Colorado Rapids. With a price tag of more than $5 billion, it’s also the most expensive stadium ever built.

Golden 1 Center (Sacramento Kings)

The Kings’ still-somewhat new stadium opened in 2016 with $255 million in public subsidy, financed mostly through the sale of bonds. The remaining money, which came out to a little less than $400 million, was paid for by Kings ownership.

Fiserv Forum (Milwaukee Bucks)

Reuters:

Wisconsin Governor Scott Walker on Wednesday signed a bipartisan financing plan passed by state lawmakers calling for taxpayers to contribute $250 million toward building a new downtown arena for the National Basketball Association’s Milwaukee Bucks.

The financing plan will pay for half of the cost of the new arena and is a key step in keeping the Bucks in the city where they have played for 47 years. The public money is due to come in several forms, including $203 million in bonds.

Private contribution from ownership and others amounted to about $250 million.

Oklahoma City Thunder new arena (…Oklahoma City Thunder)

The Thunder gained approval for their new arena last year, in 2023.

According to the city’s website:

“The new arena will be funded by a 72-month, one-cent sales tax that will start when the MAPS 4 tax ends and will not increase the sales tax rate. The arena will also be paid for with $70 million in MAPS 4 funding and $50 million from the Oklahoma City Thunder ownership group… The City agreed to spend a minimum of $900 million on the arena. The new arena will be built downtown, but the exact location has not been determined.”

Globe Life Field (Texas Rangers)

The defending World Series champs opened their retractable roof stadium in 2020. Arlington issued $500 million in bonds to be paid off by sales tax, hotel occupancy tax, and car rental tax over the course of 30 years. Voters also approved a ticket and parking tax.

Truist Park (Atlanta Braves)

Cobb County described the funding this way:

“The total budget for the new SunTrust Park is $672 million. This includes the SunTrust Park, parking and other related infrastructure. Atlanta Braves will be responsible for $372 million and the remaining $300 million will be contributed by Cobb County and the Cumberland Community Improvement District.”

Oakland A’s leaving the Bay Area

The plan is to build a fixed-roof park on the Vegas strip, where the Tropicana used to be. The governor last summer signed a bill granting $380 million in public financing, with the rest being handled privately. The organization is using an investment firm called “Galatioto Sports Partners” to help raise the rest of the money, with investors getting a minority share of the franchise in return.

Tampa Bay Rays

The current proposal to keep the Rays in St. Pete, in a brand-new ballpark, includes $600 million in public money.

Levi’s Stadium (San Francisco 49ers)

The 49ers stadium was a public/private venture featuring a series of loans, including $850 million from Goldman Sachs, Bank of America, and U.S. Bank, and $200 million from the NFL. It’s going to be repaid with a hotel tax and city redevelopment funds, handled by Santa Clara’s stadium authority and the Niners.

Mercedes Benz Stadium (Atlanta Falcons)

Arthur Blank’s new digs were paid for with a “combination of loans to the Falcons, money from the NFL, sales of permanent seat licenses and $200 million from the NFL.”

U.S. Bank Stadium (Minnesota Vikings)

This was a public/private share that included about $550 million from the Vikings and $498 million from the public, funded in part through a hospitality tax.

Little Caesars Arena (Detroit Pistons, Red Wings)

The public cost of the 863 million dollar arena amounted to $324 million. They’re using a complex “tax capture” on downtown buildings and land.

Climate Pledge Arena (Seattle Kraken)

The Kraken play in the upgraded former KeyArena, which was a public/private partnership between Tim Leiweke and Irving Azoff’s Oak View Group, the Kraken, and Seattle Center. According to the official site, it “was entirely privately financed by (Oak View Group) with no City financing… All costs and potential cost-overruns of construction and arena operations are the responsibility of OVG.”

T-Mobile Arena (Vegas Golden Knights, UFC)

Home of the Golden Knights and most of the UFC pay per views, T-Mobile’s $375 million price tag was covered entirely by by MGM Resorts and Anschutz Entertainment Group. Team owner Bill Foley also paid the NHL’s $500 million expansion fee by himself.

UBS Arena (New York Islanders)

This one is privately financed, with the team owners bringing in Oak View Group as partners. 

Intuit Dome (LA Clippers)

I missed this one in the initial writeup. The Clippers are splitting from the Lakers and opening their own stadium soon, located next to SoFi Stadium and privately financed by owner Steve Ballmer at the cost of around $1.2 billion.

 

Arena renovations

Bank of America Stadium (Carolina Panthers)

$650 million in taxpayer money in the proposal:

Tepper Sports and Entertainment has unveiled a $800M proposal for upgrades to Bank of America Stadium in Charlotte.

• New seats
• Expanded team store
• Reimagined exterior pavilion
• New video boards, sound system
• $650M in public funding

A city vote is set for June 24th. pic.twitter.com/3kUI3YIrWx

— Front Office Sports (@FOS) June 3, 2024

Frost Bank Center (San Antonio Spurs)

Home to Wemby and the Spurs, renovations were funded through a voter-approved extension of a visitor tax that was first passed in 1999. There was additional private investment from Spurs Sports & Entertainment.

Smoothie King Center (New Orleans Pelicans)

Originally opened in 1999, the Pels’ arena was renovated in 2014 using a $54 million “capital bond issue that was approved by the state legislature and was part of the team’s new lease agreement approved in 2012 after Tom Benson purchased the franchise from the NBA.” That’s from John Reid at NOLA.com. 

Target Center (Minnesota Timberwolves)

The Wolves’ home venue opened in 1990, before Nirvana killed off hair metal. It’s gone through several phases of renovation, most recently in 2015 when Minneapolis City Council approved $74 million in public funding. Then-owner Glen Taylor kicked in $49 million.

State Farm Arena (Atlanta Hawks)

This building hosts Trae Young and his flopping, but also was a home for the Atlanta Thrashers and Atlanta Dream. It opened in 1999, but a few years before the pandemic, the city agreed to spend $142.5 million to to renovate the building. The Hawks paid $50 million and agreed to finance any overruns.

Rocket Mortgage Field House (Cleveland Cavaliers)

Another arena built in the 90s, a public/private renovation was completed in 2019. Originally laid out as a 50/50 split on a total of $140 million, the project increased to $185 million and the Cavaliers increased their level of private funding from $70 million to $115 million. The remaining $70 million was paid for primarily using taxes on hotel rooms and ticket sales. 

Footprint Center (Phoenix Suns)

This thing has been renamed about five times since it was first erected in 1992. The most recent renovation was in 2020, with Phoenix City Council approving $150 million in public funding to go along with $80 million from the Suns. 

Gainbridge Fieldhouse (Indiana Pacers)

Home of the Pacers and Fever, the 2022 renovation included $295 million in public subsidies. They diverted tax revenue to pay for it.

Spectrum Center (Charlotte Hornets)

The City of Charlotte owns the arena in which the Hornets often lose.

The renovations are explained this way by WCNC:

“As far as funding sources, the city said no general funds would be tapped into. However, the plan suggested involves dipping into the tourism fund for additional capital upgrades, to the tune of $42 million. This would not kill any projects, but rather change the timeline for some projects if approved. $60 million is also being sought for naming rights in the performance center. The naming rights and tourism funds for capital upgrades is what pushes the cost up to $245 million.”

Capital One Arena (Washington Wizards)

Ted Leonsis threatened to take the Wizards and Capitals to Northern Virginia, but earlier this year a deal was struck to keep both teams in DC with a public price tag of more than $500 million. 

PNC Arena (Carolina Hurricanes)

As part of a $1.1 billion dollar transformation of the arena and surrounding area, Raleigh is chipping in $300 million. 

 

Other/notable

Wells Fargo Center (Flyers/Sixers)

The $400 million recent upgrades to the Wells Fargo Center were 100% privately funded by Comcast-Spectacor. The transformation included the Sixers paying $10 million (EDIT – I was wrong, it’s $12 million) to renovate their locker room.

Chase Center (Golden State Warriors)

This is a unique one. The Warriors’ new arena was privately financed and does not have a PILOT setup. Reading up on this, I found a handful of articles noting that ownership asked San Francisco to lower their property value, which would bring down the tax bill at the same time. Adam Shanks at the San Francisco Chronicle wrote this in 2023:

All of the stadiums in the Philadelphia area have the PILOT structure, which provides for a fixed fee in lieu of these value-dependent property taxes. It’s true that the city would make more money if the Sixers came in with the Chase Center setup, instead of the PILOT, but it’s noted in a recent Inquirer story that the current tax bill on the portion of the Fashion District the Sixers are purchasing amounts to $1 million. The PILOT will be more than that. If the arena replaces that plot, the city will make more money.

 

Conclusions

As you can see, an overwhelming majority of new stadiums, proposals, and renovations in this country going back to 2014 have used some percentage of public funding.  The main outliers are the Chase Center, Intuit Dome (edit) and SoFi Stadium, plus T-Mobile and UBS. The Sixers arena proposal is more in line with those projects than anything else on the list.

We should, however, add a caveat for how the public money is raised, since you’ll see in the examples above things like hotel or hospitality taxes, which place a portion of the burden on non-residents of a particular city. Oftentimes, cities will find a way to shift the burden to visitors or tourists, instead of the local populace, but this nonetheless remains public money that the cities, counties, and states are responsible for generating. Someone who does not own the team is funding the project or the renovation, or local leaders are taking money from another source and diverting or re-allocating it.

The other caveat is that if you go outside of the four major sports, you’ll find that a lot of the new or refurbished MLS stadiums are privately financed. They’re also much smaller and much cheaper than baseball, football, basketball, and hockey arenas. For instance, there were three MLS stadiums that opened in 2021 – Austin, Cincy, and Columbus – which were privately financed between $250 million and $300 million. The Sixers’ proposal calls for five times the amount of private money at the same 100% rate.

Note as well that when Lincoln Financial Field broke ground in 2001, and Citizens Bank Park a short time later, Philadelphia residents made out relatively well in what essentially amounted to a 50/50 split. The public portion of the money was funded with a 2% car rental tax, which affected very few people actually living here. The state chipped in as well, contributing about $170 million to the pair of stadiums while the city’s portion amounted to a little more than $300 million. The rest was private money.

Same thing with the Wells Fargo Center. When it opened in 1996, Comcast paid for most of it. There was a little more than $30 million from the city and state that went towards infrastructure costs, and the land was given by the city. The main difference with the Sixers’ proposal is that ownership needs to make land this purchase themselves.

Taking all of that into consideration, we’re in a unique and ideal tier of cities and states when it comes to private/public skew for our stadiums. Philadelphia has largely avoided putting any kind of significant burden on the local taxpayer at all. That’s the case with the Sixers’ arena proposal. $1.5 billion in private financing, with public money possibly only coming in at the state or federal level, is not common and you don’t see this frequently across the country.

Depending on how the Comcast+Phillies plan develops, it’s quite possible that Philadelphia will get a new downtown arena and revamped sports complex at the same time, paid for overwhelmingly with private money.