Economics / Entertainment / Public Relations

The North Shore Development Project Revisited


It has been sixteen years since two professional sports stadiums opened their gates in Pittsburgh’s North Shore. Those stadiums, Heinz Field and PNC Park, have played host to Pittsburgh’s respective National Football League and Major League Baseball franchises. Since the sports complex in the North Shore was completed, the city of Pittsburgh has enjoyed multiple championship parades (two of those stemming from the Steelers’ victories in 2006 and 2009 – respectively.) However, the joys of hosting the local teams in state of the art facilities comes at a price to citizens in both Allegheny County and the state of Pennsylvania.

In August of 1994, it became public that the Pittsburgh Pirates were for sale. When this  announcement came to light, Major League Baseball disclosed that a new ballpark was a requirement for this sale to occur. A little over one year later in October of 1995, Steelers president Dan Rooney publicly announced that Three Rivers Stadium needed to be extensively renovated or replaced for the team to be able to “remain competitive.” Later on in 1996, the Pirates were sold to Kevin McClatchy, with the stipulation that a new stadium would have to be constructed for the team by 2001. As all of these pieces of information come to light in the late nineties, it starts to become very apparent that there is going to be a big push by several powerful players to get these new facilities built. These press releases, quotes and plans culminate in late 1997 and early 1998 as the preliminary plans for financing these facilities were announced. 

 

In November of 1997, several key pieces of information regarding how this developmental project is going to be financed were announced. They included a 1% increase in county sales tax beyond the 6% base sales tax, a 7% tax on hotel and motel rooms rented in Allegheny County as well as revenue generated from parking and a payroll tax on athletes that are not residents. In short, the contributions from local and state residents in addition to federal and state funding amounted to 72% of the costs associated with this plan.

This is an oft-debated about issue in today’s society, but it was also highly contested in 1998, when this plan was being voted on. The decision to back the billionaire owners of sports franchises were not anywhere close to unanimous. When meetings were held on the matter of this plan, public opinion was incredibly split. Local sports fans opined that the construction of these stadiums was vital to the city’s future as a host to professional sports teams. However, there were many angry local residents who expressed their displeasure towards the fact that their tax dollars will, in part, be going towards the construction of this stadium. In fact, even before this public funding was committed, voters in Allegheny and surrounding counties voted 530,706 votes against and 281,336 votes in favor of the plan to construct these new facilities.

In the end, however, the plan was approved 6-1 by the Regional Asset District Board (RAD) and the local funding was approved to build these two stadiums and expand the convention center. Ralph DeStefano, the outlier on the RAD board who voted against the plan was very outspoken as he opined that it was time to “stop the insanity with sports salaries” as he likened the decision to use public funds as contribution to these stadiums as “corporate welfare.” Though many have their opinion over whether this was a decision that was right or just, the stadiums certainly do create both positive and negative externalities on the public.

The city kept their teams. Whether you are a sports fan or not, this is something that certainly adds to the cultural dynamic of a city. Having two of the most recently successful sports franchises (Penguins and Steelers) in your city attracts a lot of fans and tourists to the area. They go to the games at these stadiums, they populate local bars, restaurants, shops, hotels, etc. The North Shore has undoubtedly felt incredible economic growth since the early 2000’s, and the stadium project undoubtedly served as a direct catalyst.

The main issue that many take with cases like this is how these stadiums are funded. Certainly, in the case of this developmental project, there is a dangerous line that now exists due to the precedent that has been set with the public contributions towards funding these stadiums. Just this past March, the Pittsburgh-Allegheny County Sports & Exhibition Authority board approved nearly $300,000 in reimbursement payments for inspection services and structural steel painting. Though this payment was unanimously approved, there is currently a heated debate over who is going to pay for twenty-five million dollars in upgrades to the stadium (such as installing new Wi-Fi systems, an expansion within the stadium, and the purchase of a new scoreboard in the south end zone.) Obviously, it is troubling for the future if billionaire sports ownership groups are able to strong arm the local and state governments into forcing local residents to pay for their investments.

We are not yet at the point where public outcry against the use of public funds has led to notable drops in attendance across professional sports, but the general population is certainly becoming more aware. In recent years, there have been many people across the nation pushing for owners of franchises to finance their own stadiums. However, we probably won’t be seeing this type of debate come up in Pittsburgh anytime soon, barring any drastic expansions or renovations to these local stadiums. It seems as if Art Rooney and Kevin McClatchy had just enough time to work with to get these stadiums built – just like Ben Roethlisberger had for his game winning drive in Super Bowl XLIII.   

 

 

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