This story has been updated to omit an error regarding cuts to the police budget. Those cuts did not happen.
Philadelphia has cut spending on street cleaning, and other basic services as it braces for a $750 million drop in wage, real estate and sales tax collections due to coronavirus shutdowns stalling the economy for the next year.
One expense in the coming year that hasn’t been trimmed: The city will still pay $35 million, pledged to the Eagles, and both the Eagles and Phillies stadiums, under a 19-year-old agreement.
That’s even though both teams are expected to keep most fans out to comply with health guidelines barring large gatherings, and so will not be passing along many of the millions in annual tax revenues that help justify the city’s subsidies of Citizens Bank Park and Lincoln Financial Field.
Philadelphia is scheduled to pay a $10.37 million annual operations and maintenance grant to the Eagles, due Aug. 15; and $25.05 million, part in October and part in April, to repay investors on the bonds used to erect the South Philly outdoor arenas, said Jessica Calter, spokeswoman for the Philadelphia Industrial Development Corp., which arranges financing for public projects.
The city’s March ban on outdoor public gatherings of more than 50 people, extended through February by Mayor Kenney on Tuesday, will keep Eagles and Phillies fans from filling the stadiums and parking lots, buying tickets, and eating and drinking on site. On Wednesday, the city said the situation might change if the pandemic improved, but that is by no means certain. City spokeswoman Lauren Cox said it’s hard to estimate what keeping fans away will cost. “The situation is fluid,” she said.
Projections by Arthur Andersen LLP, which estimated costs and benefits for stadium proponents when they sought public funding in 2001, were for the Eagles, Phillies, their employees, vendors and fans to pay $24 million in city taxes this year, adjusted for growth and inflation. (The total cost of the stadiums was $1 billion, with a little more than half paid by city and state taxpayers, partly financed by the bonds, and the rest by the teams.)
Tax collections vary year to year; city officials are working on final figures for this year’s budget. The city’s wage tax income from pro football and baseball players may have been more in recent years, for example, because pro salaries have risen faster than expected since 2001, says Brett Mandel, who was director for financial and policy analysis for the city controller’s office, and has called the subsidies a poor deal for taxpayers.
If the Phillies (and visitors) were to play at least some of their games, in a shortened 60-game season, and the Eagles kept to their regular-season schedule and paydays, the two teams’ player, staff and visiting team wage taxes could still raise as much as $5 million for the city this year, half the total projected in a normal season.
But with games in empty stadiums, the loss of an estimated two million game-day visitors for the Phillies and nearly 700,000 for the sold-out Eagles would slash amusement tax revenues from game tickets, sales taxes on stadium meals and drinks, parking taxes, and other fan-generated taxes.
The city’s yield from its “very generous” stadium deals of 2001 “will be totally dismal this year and possibly into the future,” said Mandel, a consultant who has run unsuccessfully for the elected city controller’s job and has written books on public policy and baseball.
Mandel says taxpayer-funded stadiums “are never a good deal” for cities that hope to make them profitable, because of the high cost, and the fact that “most or all of the money folks spend attending sporting events would be spent elsewhere” in the local economy even if the stadiums fell down and the teams moved away.
Besides the nearly $10 million in wage taxes, the Anderson estimate projected the city would reap $7.3 million for this year’s city amusement tax on stadium tickets, $1.6 million for liquor and concession sales taxes, and $2.3 million for parking taxes, among other benefits in danger.
But the city now expects, among other reductions, a $22.7 million drop in amusement tax collections from sports stadiums, Cox said. Also, the city expects to lose, on average, more than $500,000 in parking revenue a month, every month the stadiums aren’t used. She said city officials are preparing more detailed projections.
Mandel suggested that the city might try to stop or delay the payments, given this year’s grim circumstances.
No way, city officials said.
The payments are “absolute obligations” and can’t be negotiated away, said city spokesman Mike Dunn. The Phillies chose to collect their public stadium subsidies up front; the Eagles negotiated the annual payment.
The bondholders for both stadiums need to be paid, and the payments are “not conditional,” Dunn added — games or no games.