Mayor Martin Chávez is at it again. A few months ago he wanted to put taxpayers on the hook for a $300 million tourist trolley along Central. Now he wants a 16,000 seat arena and hotel complex with much of the expected $350 million price tag to be footed by taxpayers.
As much as we all desire Albuquerque’s Downtown to be a vibrant place to visit, spending megabucks on an arena is a costly and uncertain way to spur development. Like the streetcar, a taxpayer-subsidized arena and hotel complex will not generate new investment, but will suck money from other areas of the city and send it Downtown.
Economists have repeatedly found that there is no net increase in economic activity derived from stadium and arena projects. Dennis Coates and Brad R. Humphreys, for example, have explained that “As sport- and stadium-related activities increase, other spending declines because people substitute spending on sports for other spending.” In other words, fan money spent at a new arena would likely have gone to other entertainment absent the arena. Thus, net economic benefits are zero.
Of course, that is assuming that Albuquerque even finds a regular tenant for the arena that can draw a crowd. Given the track record of the area’s minor league hockey and basketball teams, even a permanent minor league tenant for the proposed arena may not mean success and would likely result in massive losses to taxpayers as the building sits empty much of the time. After all, the Scorpions are selling a disappointing average of just over 3,000 tickets per game in a brand new 6,200 seat arena in Rio Rancho and attendance at Thunderbirds games at Tingley averages in the hundreds.
These points are not meant to disparage the Albuquerque sports fan, but a team from any of the “major league” NBA, NHL, or Arena Football leagues is not on the horizon. More importantly, given the relative population and income levels found in the Albuquerque metropolitan area (our population ranks 65th in the country), there are a number of cities in line to get big-time professional franchises before us.
If a group of private investors were considering whether or not to invest their own money in a sports arena, they would undoubtedly look for signs that additional capacity was needed or that a market niche was being left unfulfilled. Clearly, that is not the case here in Albuquerque. With Rio Rancho struggling to fill an arena less than half the size of that being proposed for Albuquerque and Tingley Coliseum having experienced “an inconsistent event demand over the last few years,” according to the consulting firm that was paid by the city to evaluate the need for the new arena, it would appear that Albuquerque has a surplus of arena space, not a deficit.
So, why is Mayor Chávez pushing for a 16,000-seat arena despite the obvious lack of need? First and foremost, unlike a private investor attempting to turn a profit, Chávez can leave his legacy using our tax money. The wise use of resources is clearly not his first (or even second) concern. Secondly, although private arenas have been constructed in Columbus, Ohio, Detroit, Chicago, outside of Detroit, and in Washington, D.C., just to name a few, again, there would have to be some reason besides blind optimism for an investor to take interest.
Chávez, like most politicians, would rather spend taxpayer dollars on luxury items like trolleys and arenas than on maintaining streets and bridges and keeping the roads clear of snow. Ironically, despite what many would call Chávez’s “progressive” political bent, this arena project would do nothing more than take $350 million from middle and low-income Albuquerque taxpayers and give it to the wealthy developers and patrons of the proposed sports arena and high-end hotel, both of whom are likely to be wealthier than the average Duke City resident.
The case against a taxpayer-financed arena is rather damning, but in the mayor’s head it all boils down to the simple fact that he thinks he knows how to spend the taxpayers’ (our) money better than we possibly could. It happened before with the trolley; again it is up to the citizens of Albuquerque to tell their big-spending politicians “no!”
The Rio Grande Foundation is a research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.