Saturday 11 May 2013

Stadium plans

Sam Richardson points out some problems with the proposed stadium-plus-office-towers combo for Christchurch:
It is not clear yet where exactly the funding for Christchurch's stadium plans is coming from, but it is fair to say that it will be largely funded by taxpayers - locally, regionally and nationally to some degree. As such, if my taxpayers money is going into funding a stadium, I would like to see some evidence that this amenity is going to be at least self-sustaining, and should not be detrimental to the local area. The idea that office buildings will make the stadium profitable is missing the point. If the office blocks are the profit-making parts of the venture, why not just build the office blocks? If they must be built as part of a stadium plan, we have to acknowledge that the rents earned by stadium offices will simply be transferred from other office spaces elsewhere within the city. It may well be the case that office space is at a premium in Christchurch, in which case the stadium offices may be beneficial to the city of Christchurch in that clients who were previously unable to obtain office space may now be able to do so. If, however, the offices are simply populated by clients who relocated from the suburbs, then this isn't making money (nor necessarily welfare enhancing either) at all - it is merely redistributing the rents on office space from the suburbs back into the CBD.

It is exactly the same argument as the claim that stadiums generate conference revenues too - which is only beneficial if the conferences wouldn't have been held in the city in the first place without the stadium conference spaces.
If people are willing to pay more for office space overlooking a rugby field than for office space elsewhere, then that can make a case for the stadium/office combination. And I can believe that there are plenty of tenants who would be willing to pay more for stadium office space than for regular office space - it isn't implausible that the project is feasible. But if that complementarity comes from tenants expecting to watch games from their offices for which they'd otherwise have to pay, then it's a trade-off against ticket revenues for the stadium's tenants - sports clubs would then be willing to pay less for use of the facility.

Lunchtime discussion in the economics staff room wondered whether we mightn't instead have hotel towers and a stadium including conference facilities. But that does start getting awfully close to Danyl's proposal from last year:
Christchurch Mayor Bob Parker and Earthquake Recovery Minister Gerry Brownlee provided more details of the rebuild blueprints for the earthquake-devastated city today, including plans to build a second sports stadium inside the new convention center to be constructed on Cathedral square.
‘The sports stadium will be a core attraction for visitors to the convention center,’ said Brownlee. It will be fully covered, provide seating for up to 2000 spectators, and will also contain a state-of the art convention center.
The sports stadium inside the convention center will complement the services provided by the main convention center. It will include business hotels, retail outlets and a covered sports stadium with natural fixed turf, which will also contain a convention center to attract business tourists who want to attend sports events during their stay.
‘We have one or two exciting ideas for what to include in that last convention center, but I don’t want to give too much away,’ Brownlee told reporters. ‘Let’s just say Crusaders fans will be very excited.’ City Council insiders suggest the convention center’s sports stadium’s convention center might house a sports stadium.
I still wonder whether it might be best to let the Crusaders own the stadium and to gift them the insurance payout for the AMI stadium. Tell them to make the best go of it that they can while writing legislation that the Mayor, Council, City Manager, and both the General Manager and Coach of the Crusaders will be shot in the face have something very bad happen to them if Council ever provides any other subsidy ever to the stadium or its tenants.


  1. I imagine there is a whole literature on stadiums? And am wondering what it says? NZ's recent experience would give cause for concern - the Dunedin Stadium, lovely and all as it is, will be a financial burden for generations to come. The Westpac stadium in Wellington is also currently weighed down with all sorts of problems that, essentially, make it uneconomic. Probably proof that politicians can always be talked into buying stuff that no-one else will touch.

  2. VMC. There is a large literature on the subject and it basically says stadiums are a bad idea. See Sam Richardson's blog and look under the label: stadiums for more.

  3. What is the point of a 2000 seat stadium? Its just too small for any big event.

  4. Hit the "stadiums" tab above. I've surveyed the lit a couple of times. Sam's blog is also great.

  5. Paul, you should note that the proposed second 2000 seat stadium is the one that's inside the convention center. The big events would be at the main stadium, which could also host conferences. And recall that Danyl writes satire.

  6. yes thats right , so much money Mr Eric, this one Stadium $150 million , 150,000 ratepayers ;,, . well its just just another $1000 to you Mr Eric,
    this is why we need a revolution. And as well there are the other her grandiose projects the Convention centre. goodness me Mr Eric, just another $1000 to you. The reason Tim Carter did not enter Mayoral competition is that being a Mayor in Christchurch is not a good option.
    We have 45 potholes on our street, I could fix them myself , but its better to go to Thailand with wife and be happy ..

  7. can we get some bloody houses fixed in here