Monday, August 03, 2015

Why build a stadium when you could roll out fiber for a fraction of the cost?

In recent months, I've seen news about new proposals for sports stadiums. Governor Scott Walker in Wisconsin recently signed a bill to finance a sports stadium by cutting education funding. Seems consistent with the fact that in most states, the highest paid public official is the football coach.

In the previous decade, most states could skate by on $300-400 million for a new stadium. Not so anymore as noted by Athletic Business News:
The three newest pro football stadiums have cost $720 million (Lucas Oil Stadium, 2008), $1.15 billion (Cowboys Stadium, 2009) and $1.6 billion (MetLife Stadium, 2010). Major League Baseball hasn't seen quite that level of inflation, but it has produced the three most expensive ballparks in history in 2008 (Nationals Park, $611 million) and 2009 (Citi Field, $900 million; Yankee Stadium, $1.5 billion). Perhaps it's worth noting that MLB's newest venue, four-month-old Marlins Park - the league's sixth to feature a retractable roof, and its smallest in total seating capacity - cost a mere $515 million. On the other hand, the stadium's complicated financing plan (currently being investigated by the Securities and Exchange Commission), will lead to a final public cost to repay debt incurred by the stadium's construction of $2.4 billion over the next 40 years.
An article in USA a couple years ago provides some interesting analysis on the subject of sports stadium funding:
In 2010, 121 professional sports facilities in use for all five major sports leagues required $43 billion in investments in new construction or major renovations. About half of that investment came from the public, according to research by Harvard urban planning professor Judith Grant Long.
But over the life of these stadiums, taxpayers will have to pay an additional $10 billion of what Long calls "obscured costs" that were not initially factored into the public's share, Long said. That means instead of taking on about half the cost of stadium construction and improvements, the public is now taking on about 75% of the cost, she said.
The public ends up paying 75% of the costs for a new sports stadium? Do they even get a return on their investment? The article goes on to say, not really, or at least, not a widespread return on the investment. I find it especially telling that much of the long term costs are "obscured" from the public. Besides, not everyone attends sporting events.

To make matters worse, a team from Stanford University has done a study to show that sports stadiums do not generate any significant economic growth. As public scrutiny grows, resistance to financing what are essentially private ventures is growing. The public is getting a clue to how they're being screwed by professional sports stadiums.

If the cost of a sports stadium can run into the billions, and is largely financed by the taxpayer and doesn't generate the revenue or economic growth that was advertised, perhaps we might consider an alternative use for that money: community broadband.

Muninetworks.org, a part of the Institute for Local Self-Reliance, has compiled the data on community broadband. The benefits are numerous. With community broadband, you get a better faster connection at lower cost than the private ISPs are willing to provide. The money stays in the community. Everyone gets a connection and that's good because more people are going to use broadband than will use a sports stadium.

Community broadband adds value to the home and increases the sales price on average by about 2-3%. Community broadband attracts jobs like no other facility does. And finally, community broadband gives businesses a fast, stable connection to the internet so that they can stop worrying about their connection and serve customers.

For a fraction of the cost of a stadium everyone in a city, and I mean everyone, could be hooked up with a fast and reliable broadband connection. For example, here in Utah, local governments are looking at financing a fiber buildout for 6 cities with 111,000 addresses for about $232 million (you can find the number on page 34 of that report in the link).

In Chattanooga, TN, they built a fiber network through their local electric power cooperative, the Electric Power Board (EPB). They spent $330 million to build the network and charge $70 a month for a gigabit connection to the internet. That monthly fee is actually down from $300 a month they used to charge for a gig.

Muninetworks.org has documented numerous examples of how municipal fiber adds value to the communities that deploy fiber. From job creation to property values, there is a lot to like about community broadband.

If community broadband is so great, why aren't more cities and states considering fiber instead of stadiums? It's possible that state governments are not fully aware of the benefits of municipal fiber and they just need greater awareness. On the other hand, it's possible that they are aware and their leaders would prefer not to spread the wealth around. It's hard to say for sure.

But we can be sure that municipal broadband is a much better deal than a stadium.
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