Sixers

Addressing Chinatown Criticism, Sixers Publish Response to 10 Questions “76 Place Won’t Answer”

By Kevin Kinkead

Published: Dec 8th, 2023 · 8:00 AM EST

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If you’ve been following the Sixers arena story, one of the criticisms coming from the Chinatown side of the debate is that they feel like certain questions about the project have been ignored or remain unanswered. They’d like to see the math behind various projections and studies parsed and presented via press release.

That was the theme of protests at the Center City meeting a few weeks ago, when demonstrators brought banners to the community gathering and did the unfurling about halfway through. Originally removed by security, Sixers co-owner and arena lead David Adelman asked for protestors to be allowed back in, and they returned to the ballroom during the Q/A portion of the event, standing around the perimeter of the ballroom while holding their signs.

In response to all of this, the Sixers took those 10 questions and published an answer to each one, which I’ve pasted below, verbatim. There’s also an extended FAQ on the 76 Place website that lists out each of the questions asked at the various sessions.

 

1. What are the specific calculations, data and sources that show how 76 Place would reliably generate $1B in new taxes?

76 Place will generate approximately $1.5 billion in new taxes for the City, State and School District — over $800 million for the city, $200 million for the School District and $450 million for the state. These are new funds that would otherwise be unavailable if the 76ers remained at the Wells Fargo Center.

To quantify the tax benefits of 76 Place, we hired MuniCap, a firm with over 20 years of experience in tax projections and advising municipal governments across the country, to estimate tax revenues by applying the City’s taxing methodology and tax rates to the taxable operations for both 76 Place and the redesigned Fashion District Mall. Their analysis assumes removal of the arena parcels from the existing TIF District, construction of the arena, and repositioning of the Fashion District Mall.

The tax streams analyzed include wages, business income, sales & use, use & occupancy, property, amusement, outdoor advertising, realty transfer and liquor taxes, and are based on construction and operating assumptions for the arena and portion of the mall to remain. The key underlying assumption is that Philadelphia will host 50 additional events each year as the result of having a second arena, a conservative estimate from CAA Icon, an industry leading sports and entertainment consultant, that has been reviewed by multiple industry experts, concert promoters, and analysts. Industry leaders, including Irving Azoff, Feld Entertainment and Live Nation have all confirmed Philadelphia is currently underserved and can handle a second arena, as it did when both the Wells Fargo Center and the Spectrum operated for over a decade.

The estimated tax revenues were first calculated on a gross basis, and then the tax revenue currently generated by the existing uses onsite was subtracted, as well as the tax revenue currently generated by the Sixers games and other events that are already occurring in Philadelphia at the Wells Fargo Center. This was done in order to ensure there was no “double counting” of tax revenue.

MuniCap’s analysis does not include any estimates of taxes generated by offsite activity such as spending at restaurants, bars, retail, hotels or other businesses: it is solely based on the onsite activity and thus is a conservative outlook on the overall tax impacts.

The detailed analysis has been submitted to the City for independent review and analysis by their consultants. For more information, please visit 76place.com, where the details of the two MuniCap studies are posted.

 

2. If 76 Place falls short of the projected $1B in new tax income, will the Sixers or developers Adelman, Harris and Blitzer commit to making up the difference to the City, State and School District?

76 Place will generate approximately $1.5 billion in new taxes for the city, state and School District — over $800 million for the City, $200 million for the School District and $450 million for the State. These are new funds that would otherwise be unavailable if the 76ers remained at the Wells Fargo Center. These are conservative estimates based on the addition of 50 events a year.

76 Place will be one of only a handful of sports venues in the country developed without a requirement for public subsidy. Taxpayer projects are generally judged by whether or not they generate enough income to pay back their public funding. When they don’t, the municipality is left holding the bag on any shortfall. Since 76 Place does not require any public money, the almost $1.5 billion is all NET NEW tax revenue and there wouldn’t be a “difference” for which the City or State are left responsible. It is unprecedented that any private development would guarantee a level of tax revenue, and we don’t plan on breaking that precedent. We are confident in our projects, and because the 76ers’ projections are conservative, we do not expect the total taxes generated to fall below projections.

 

3. 76 Place has said they will transfer ownership of the arena’s land to the City and make Payments in Lieu of Taxes (PILOTS) instead of paying property tax. To ensure 76 Place is paying its fair share, would the PILOT payments be equal to the arena’s full tax bill or would a 76 Place PILOT mean Philly misses out on tax dollars we’re owed? What taxes would 76 Place actually pay?

Pennsylvania law and its tax code provide for a PILOT (Payment in Lieu of Taxes) to be created for all professional arenas and stadiums. Like all of the arenas and stadiums in the South Philly Sports Complex, 76 Place will adhere to this law.

The PILOT for 76 Place would dramatically increase the amount of property taxes paid by the Fashion District Mall – 76 Place would pay more than triple the current taxes paid by the mall. 76 Place would also pay more than double the PILOT payment for Lincoln Financial Field and Wells Fargo Center, and more than four times the PILOT payment for Citizens Bank Park.

Importantly, the fact that 76 Place will not require taxpayer subsidy differentiates the project from other city venues. All of the venues in South Philly took money and/or land from the City, whereas we won’t take money and are paying to buy the land from the current owner of the mall and conveying it to the City at no cost. The City tax code is not structured in a way to properly assess sports and entertainment venues, that’s why there is a State statute that governs all of these venues and they pay PILOTs. 76 Place will be treated the same way as all other professional sports venues in South Philadelphia, even as it generates significantly more tax revenue through its PILOT.

 

4. When the Sixers moved their headquarters to Camden they promised tax revenue, revitalization and jobs to residents. Today, that facility employs only 11 Camden residents. Will you publicly release your business plan detailing how 76 Place will fulfill its promises of tax revenue, jobs, increased economic activity and revitalization?

The 76ers are incredibly proud to have far exceeded the commitments it made when it relocated its headquarters to Camden and are proud of the work we’ve done to support the Camden community and its residents since relocating our headquarters in 2016. Although there was no requirement for hiring Camden residents, we have hired locally and, in addition to the support for Camden-based schools and charities, the 76ers recently made a seven-figure donation to multiple local organizations such as Camden Works, Hopeworks, and Urban Promise to support job skills training and workplace development for local residents. All of 76 Place’s plans, projections and studies have been submitted to the City for review by their independent consultants.

 

5. If the cost of building 76 Place exceeds the estimated $1.55B, can you guarantee that no taxpayer dollars will be used to make up the difference in funding?

Yes, no City tax dollars will be used to build 76 Place and we do not need any public funding to complete the project. If there are state or federal funding programs that allow us to enhance the project, we are open to them, but we do not need them.

 

rendering via Sixers

 

6. Who will pay for infrastructure upgrades the arena would require (upgrades to or reroutes of public transit, electrical grid, sewage, traffic management etc.)?

One of the main reasons why East Market Street is the ideal location for 76 Place is because the needed infrastructure is already there. There are no reroutes of public transit lines needed to serve the site – it is already immediately adjacent to almost every route serving the region. The PATCO speedline, SEPTA Regional Rail, subway and trolley lines, and multiple bus routes all serve the site. Center City has multiple electrical, water, sewer, gas and steam mains in place that serve the mall and surrounding high-rises that have ample capacity to serve the arena.

Moreover, as Paul Levy, the head of the Center City District recently noted, a new Market Street East arena could actually be part of an overall plan for additional state and federal investment that could, as reported by WHYY, “make Market East a part of town where people want to spend time and money year-round, residents and non-residents alike.”

 

7. Will 76 Place sign a legally binding pledge to not accept a penny of public funding for 76 Place development or related infrastructure upgrades?

76 Place does not require any taxpayer support, a fact that has been stated many times.

As detailed above, if there are existing state or federal programs that this project qualifies for and could help enhance the project, we will explore them.

 

8. What data supports the assumption that only 40% of fans will drive to 76 Place development, slashed from 85% who currently drive to Wells Fargo Center?

Langan Engineering, a nationally recognized transportation firm with deep experience with largescale sports and entertainment venues, looked at data from the Philadelphia Auto and Flower Shows, as well as other comparable cities and venues like Barclays Center in Brooklyn, Chase Center in San Francisco, and Madison Square Garden in New York City to inform the modal splits used in their analysis. They also analyzed existing transit accessibility and travel patterns at Wells Fargo Center and physically monitored over 70 intersections and 29 garages surrounding the proposed site. This analysis was submitted to the City and PennDOT for review and comment by their independent consultants, which remains ongoing.

 

9. What data suggests 76 Place will attract and sustain enough events to support year-round employment for arena workers?

CAA ICON, an industry leading sports and entertainment consultant, performed a market study that analyzed key demographic and supply/demand metrics for Philadelphia as compared to other peer cities. Their analysis, which was supplied to the City for independent review, estimates that the arena would host approximately 150 event days per year. Live Nation, Feld Entertainment and The Azoff Company – three industry leaders all of whom book major acts and events in Philadelphia and across the world – have all agreed the market is underserved and can support two arenas. Further, the ground floor retail and residential building would be open year-round, creating jobs even on non-event days. Finally, the additional development along the East Market Street corridor, which is expected to be catalyzed as a result of 76 Place, would create additional year-round employment.

 

10. Will 76 Place, or any further development in the Fashion District and immediate areas, allow gambling of any kind (sports betting, slots, casino games, etc.)? 

There are no current or future plans for casino-style gaming or slot machines at 76 Place. There are deed restrictions in place on the arena site and portions of the mall that remain from when PREIT redeveloped the mall that prohibit this type of activity.

However, it is important to note that under current Pennsylvania law, online gaming is available to anyone legally eligible to play in the Commonwealth. Gamblers can bet from their phones regardless of where they are, which is outside the 76ers’ control.