Cities stuck with old stadiums

A bird's-eye view of the Rose Bowl stadium as the Michigan Wolverines play the USC Trojans on January 1, 2007 in Pasadena, Calif. USC won 32-18.

TEXT OF INTERVIEW

MARK AUSTIN THOMAS: This is the week of college bowl games. They're a big moneymaker for the NCAA and for the participating schools. But some stadiums like the Cotton Bowl in Dallas or the Rose Bowl in Pasadena, California need some serious renovations. Who should pay? David Carter is the Executive Director of the USC Sports Business Institute. He has also consulted for the Rose Bowl on strategic issues for a number of years. Good morning David.

DAVID CARTER: Good Morning.

THOMAS: Why has this become such a controversial issue?

CARTER: Well I think the debate follows what's happened the last decade or so where you've seen the costs associated with maintaining these older stadiums far outpace the potential revenue that they're able to bring in. And now these municipalities face the very real problem, the very real situation that they have to figure out how to reinvest in their facilities. And if they don't, not only will their brand be harmed, but also it might zap their city budgets. So there's a fundamental issue going on here right now with these cities: How do we decide to allocate resources to these buildings? Does it makes sense and do these games still fit in the fabric of the community?

THOMAS: Now they're not making enough money because the sports aren't popular enough or because the costs of maintaining these buildings has just grown so much?

CARTER: Well it's both of those but I think it's also the revenue generation. You have state-of-the-art stadiums that have come online over the last decade that have all the amenities that the well-heeled booster or alum would like as well as the corporate sponsors, and so I think at this point it really boils down to this question of who should pay. To me it's an issue of, well who benefits from these stadiums and maybe that gives you a little bit of an indication as to who should be paying for them.

THOMAS: Cities own some of these stadiums, like Pasadena. Do you think they should go after private dollars to meet expenses instead of asking taxpayers to foot the bill?

CARTER: Well at this point it's pretty much a must that they're going to have to find some sort of a partnership because many of these renovations that are being proposed right now are multi-hundred-million-dollar renovations and it's simply not feasible for cities, especially smaller municipalities to be able to pay the freight if you will. So I think what you're seeing as a primary mechanism is to either go it alone and try to finance these improvements as you need them, sort of piecemeal it if you are the city trying to keep a stadium going, or alternatively, outsource certain sales and marketing-related functions to outside private firms that they will then provide you with guaranteed revenue in exchange for taking the risk of selling and marketing those older stadiums.

THOMAS: Everybody seems to be moving. In Miami the Orange Bowl game has been moved to Dolphin Stadium, in Dallas the Cotton Bowl might end up playing in a new facility, does it even matter where the teams play?

CARTER: Well I don't think the teams themselves, it may not matter to them, but to the historic host communities it may very well be a big deal because in addition to harming their brand, what are those stadiums and facilities going to be left with? Maybe hosting an occasional 5K run or other community event or maybe serving as a backdrop for the shooting of TV commercials or the occasional movie shoot. So I think it is important to them, but we're in a sports business era now where you either evolve or perish and many of these older stadiums, especially the historic ones that have hosted some of the greatest college football games ever, are finally really admitting that they have a problem that they have to address or they'll no longer be financially relevant.

THOMAS: David Carter is the Executive Director of the USC Sports Business Institute. And in Los Angeles, I'm Mark Austin Thomas. Thanks for joining us. Have a great day.

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