Arena Dreams, Taxpayer Nightmares

We noticed last week that we hadn’t done a single piece on what a new stadium can do for a town, and all the ** economic promise ** that comes with having a ‘insert naming rights’ dome in your city to host your existing professional team or attract a new one.

This issue just kinda flew under the radar for us. Not because it isn’t interesting, but we have a pretty cut-and-dry common sense view on who should pay for them: not the public.

So it makes total sense that the San Antonio Spurs, the most promising market in the NBA (our opinion), is trying to build a new arena.

The process has been nothing short of dramatic. The city, county, and team are locked in a years-long bureaucratic tussle, and new-ish mayor Gina Ortiz seems to be the one throwing a wrench into the process.

That wrench? She’s asking for a second economic study that isn’t done by anyone tied to the team.

I know.

How dare she.  

Sarcasm aside, we’re finding that the dynamic is a little more complicated than that.

Thanks to our subscriber and friend of the newsletter, Micah, for providing the necessary nuance we needed for this story.

Let’s get into it.

Project Marvel: A boilerplate new development

The Spurs are pitching Project Marvel. It’s basically a plan to revitalize the San Antonio downtown area. A $1.3B arena with an additional 1/4B in surrounding development. The proposal promises 1000’s of construction jobs and big-ticket events that will spur (ha) economic activity that will have tourists flocking to the city to spend their all their money.

Little but not so little caveat: it also comes with a 30-year non-relocation clause.

The Spurs’ New Arena: Economic Engine or Public Ruse?

When teams come asking for a new arena, the pitch is almost always the same: jobs, tourism, and downtown revitalization. The logic is simple—“build it and they will come.” More visitors in hotel rooms, more conventions, more foot traffic at restaurants.

Having lived in cities where this has happened (minor league hockey stadium; minor league baseball stadium), we know first hand that a lot of this is bullshit.

Decades of economic research—from Brookings to independent sports economists—tell us the story rarely holds. The money fans spend at an arena usually substitutes for other local entertainment. The permanent jobs created are few. The real beneficiaries are team owners, developers, and property values around the arena—not the average taxpayer footing the bill.

So why do cities still go along? AKA ‘why people still fall for this shit’

Fear of relocation, political optics, and the allure of “tourists will pay for it” venue taxes. Mayors and councilmembers see ribbon-cuttings; fans hear assurances their team won’t leave.

The math is always fuzzy, but politics and civic pride are incredible weapons that turn the public away from common sense.

Is there anything different about the Spurs’ plan?

Here’s where San Antonio breaks from the mold. The plan doesn’t retire the Frost Bank Center. In fact, taxpayers are being asked to upgrade the old arena and Freeman Coliseum while simultaneously funding a new downtown facility.

That means the economic studies underpinning Project Marvel assume a city of San Antonio’s size can sustain two major arenas at once—a leap that even seasoned stadium backers admit is unusual.

It turns out people in San Antonio are savvy

Mayor Gina Ortiz Jones has become the face of opposition – because it’s not like cities and towns haven’t seen this before.

She’s asked for an independent economic analysis, separate from Spurs-commissioned models, and slower timelines to hold more district meetings before locking in hundreds of millions. There’s also the consideration of a citywide vote, so taxpayers themselves weigh in.

One X factor here is that it’s really hard to get on her side. She’s made some…choices in her approach to sell her point of view. It’s honestly very cringey. At one point she “crashed” a pro-arena rally, sparking sharp exchanges.

That’s all we’re going to say. There’s also a city council meeting that’s…pretty brutal.

Despite the cringe, polls are on her side

- Support for the arena is slipping (41% → 34% since February).

- Opposition to the venue tax is rising (now ~44%).

- Ortiz Jones herself still leads in mayoral polls,  suggesting her skepticism resonates with enough voters, even if Project Marvel itself does not.

Are the Spurs offering real progress here?

Listen, Peter Holt is not a flashy hedge fund dude. The dude has roots in the community. The Spurs are not an organization that’s going to pull the ‘relocation’ card here.

But there’s some math that we can do that shows the city is better off lighting 300m+ on fire rather than coughing up a dime for this stadium.

We’re going to make some assumptions here but let’s do some math:

The city’s obligation

Debt service on $489m (30 years @ 4ish% interest) = 28.3 million a year

Total repayment to the city = $849 million over 30 years

Projected Revenues:

Spurs lease payments = 4m/year at a 2% increase = 162m over 30 years

Ground rent from new development = $5M/year = 150m over 30 years

Hotel tax + Incremental Property Taxes = 8M/YEAR = 240m over 30 years

Total projected revenue = $552 million over 30 years.

So what does this mean?

That means there’ll be a shortfall of 296 million dollars over the lifespan of this new development. But this is par for the course.

- The City of Sacramento coughed up 255m and while there was some development, the city is paying around $18m a year for 30 years with NO net tax windfall.

- Milwaukee put in 250m for the Fiserv forum, and there’s some development with bars and apartments, but the state won’t break even until 2045.

So what’s a city to do?

Listen, Spurs culture is amazing (thanks Micah). People rally around the team. It’s a huge point of pride for the people there. We’re not from San Antonio. Nothing we say really comes close to what a local thinks, but here’s our unsolicited opinion:

Vote against any measure if the city must provide more than $1 for the new arena.

And if the Spurs decide to leave?

San Antonio’s metro GDP is $160 billion. The Spurs’ total annual economic footprint is well under 1% of that. Losing the Spurs wouldn’t tank the city’s economic fundamentals. What could make the difference is focusing on the city’s outcomes instead…

The city has a 17.1% poverty rate.

Maybe making an effort to scale employer-led training/apprenticeships in key industries would create better outcomes than replacing an arena that’s less than 25 years old. 

What’s the bottom line?

You could light 200 million dollars on fire and it would be cheaper than funding the new stadium. Focus on the people instead.