Desperate dealing

City scrambles to finance arena privately--and steal racetrack back from Fort Worth

This, of course, is precisely why the citizens--along with the clear-headed few on the council, such as Paul Fielding and Donna Blumer--have been balking at the idea of building a new arena all along. If it's not a good business investment, why should the taxpayers be forced to do it?

"Welcome to the world of professional sports," says professor Mark Rosentraub, an economist and the director of Indiana University's Center for Urban Policy and the Environment, "where it's okay if the taxpayers build--just not the team owners."

Rosentraub has been a distant thorn in the side of the Dallas city council lately--especially the mayor--because, as an economist who specializes in the relationship between sports teams and cities (and a former professor at UT-Arlington), he understands Dallas' dilemma. So well, in fact, that six weeks ago, the Dallas Planning Council flew him down here to speak about the economics of sports arenas.

Which are, to put it bluntly, lousy--at least for taxpayers. Inevitably, they are asked to bear the burden of building new sports palaces for the benefit of rich franchise owners. And in return, they get almost nothing in economic benefits, since sports franchises are an inconsequential contributor to a city's economic engine (in 1991, pro sports generated only .16 percent of Dallas County's total of $30.7 billion in overall payroll dollars).

Rosentraub is reasonable and factual and, in a moment, can blow a huge hole in any hyperbolic economic drivel that the mayor and other overexcited arena boosters throw out.

Bartlett publicly ridicules him as a naysayer.
But Bartlett will be interested to hear that naysayer Rosentraub thinks the deal now on the bargaining table is a good one. For everybody involved.

"This is about as fair as it's going to get when you deal with cartels--professional sports," Rosentraub says. "If the city and the Mavs do this deal, you'd have to say it's balanced compared to everyone else who's making arena deals. This is what city management is all about--striking a reasonable deal that makes sense for everyone and where everyone takes some risk."

Carter's big risk, Rosentraub says, is building an arena that is going to have to book at least 200 event days a year--the industry's magic number--to stay afloat. Last fiscal year, Reunion Arena did 194 events--topping the previous high set in fiscal year 1987-88, pre-Starplex, when Reunion hosted 188 major events. "It's a very competitive business, and if you're doing 194 events right now, that will make it in a new arena," says Rosentraub. "But can you sustain it? That's the big question.

"And in Dallas, you have this big convention center expansion too. If Carter sits down with a good arena manager--and he can afford the best in the country--and Carter says, 'can we bid on some conventions for the new arena,' then you're bidding against yourself. It gets to be real cutthroat."

Which will surely pose a big problem for the West End, too, Rosentraub says, because Carter will want to put restaurants in the new arena. "Bottom-line is he has to wipe out the West End--or at least hurt it significantly. When his investment people and arena managers tell him he has to put in the high-volume activities, he'll talk to the people in Toronto about their enormous deal with McDonald's. He'll go to Phoenix and Arlington and look at their restaurants. He'll have to do it--he'll have too much money at risk--and the West End will become a competitor."

The hardest part of the deal for the taxpayers, Rosentraub says, is accepting that the remaining debt service on Reunion Arena--approximately $34 million in principal and interest--will have to be paid, whether or not Reunion is demolished. Plus, if it's demolished, it will cost as much as $25 million more to refinance its debt--a requirement if the building, which is the collateral for the bonds, disappears.

"But you have to remember the old economic adage--you don't throw good money after bad," Rosentraub says. "They made a bad deal 16 years ago, and now they still owe $34 million. You can't hold Carter hostage for a bad deal. Whether you do the deal or not, you're still stuck with the $34 million. So do the deal and go on."

It's a win-win for everybody, Rosentraub says. "The teams stay in Dallas. Carter gets his new arena. Hunt gets his land covered and gets his money. Hunt supports the mayor--so the mayor walks away covered.

"If Carter does the deal, you really have to take your hat off to him," adds Rosentraub. "That's got to tell you something about his allegiance to the city."

Irritatingly enough, it looks as though Hunt will get the sweetest deal of anyone. Carter has said for a year that he won't contribute a penny to a new arena unless the city gets Hunt and his 21-year-old sweetheart deal at Reunion out of the way.

Hunt now controls the entire 50-acre Reunion development around his hotel--he has veto rights over the aesthetics of anything built in the area; he leases city land and air rights all over the place; worst of all, he owns most of the parking lots and can reclaim them with a mere 90 days' notice, placing the city in violation of its agreement to provide parking for the Mavericks.

« Previous Page
Next Page »
My Voice Nation Help