There’s a multibillion-dollar metamorphosis of Baltimore sports underway, thanks to the generosity of Maryland taxpayers who, economists say, are unlikely to see the return on their investment they may expect.
Construction crews are already swarming M&T Bank stadium, where an indoor sports bar ringed with team memorabilia will lure tailgaters in from the cold as part of a new “grand entrance.” At Oriole Park, plans are being drafted to add themed gathering places and a members-only Home Plate Club. And creaky Pimlico — known as much for its faulty plumbing as its 153 years of racing history — will be torn down and replaced with a slimmed-down structure open year-round and owned by the state.
The state’s building boom totals at least $1.8 billion, not including borrowing costs, and is being driven by the shifting tastes of fans and insatiable profit demands of sports. Under legislation passed in 2022, $1.2 billion in state funding has been set aside to bring the Orioles and Ravens stadiums up to modern standards and upgrade heating, air conditioning and other infrastructure. That’s more than the nearly $500 million it cost to build them, not accounting for inflation, when they opened 25 and 32 years ago.
Another $400 million is set aside for Pimlico. Minor league Orioles affiliates around the state are tapping into $200 million in additional funds lawmakers designated for sports facilities.
The spending on Camden Yards could actually go up even further. The law established $1.2 billion as a cap on outstanding indebtedness at any given time, divided equally between each stadium. As bonds are paid off with lottery revenue, the Maryland Stadium Authority could, with the approval of the Board of Public Works, borrow more as long as annual principal and interest payments don’t exceed $90 million, and the bond maturity dates don’t extend beyond the teams’ leases.
That sounds wonky but it’s important and has drawn the interest of other cities. The restrictions are designed to encourage the ball clubs to exercise optional extensions in their leases to unlock more money. The hope is that regular stadium upgrades will keep the teams from threatening to move, an ordeal Baltimore has endured more than once.
These are big investments in an impoverished city in a small state, and likely won’t drive the kind of long-term economic boom boosters claim. In fact, it will likely draw spending away from existing bars and restaurants.
But the plan approved by lawmakers is cheaper than paying for a new stadium to keep the teams from moving. That’s a testament to the quality of the original Camden Yards designs, which drew acclaim and transformed their respective sports. But they’ve lost their novelty, and the business has evolved. Sure-fire revenue-raisers such as skyboxes have lost some of their allure. Team owners are now demanding in-stadium bars and gourmet restaurants open hours before and after the game as well as exclusive clubs with annual fees (which, like skybox rentals, don’t have to be shared with the visiting team as are ticket sales).
The evolution of entertainment
The changes reflect the evolution of society at large, says Ryan Sickman, Principal and Global Director of Sports at Gensler, the primary architectural firm working on Ravens stadium. Designers used to focus on seats and sightlines and fans who busied themselves filling out scorecards. Teams now must cater to mobile, Wi-Fi linked customers who want to congregate and associate with “the brand” during and even between games.
“We as humans have evolved to the point that the entertainment experience isn’t all about the sport,” Sickman says. “You think about where we were 15 years ago, the iPhone didn’t exist.”
The Ravens have sketched out $430 million in upgrades over the next three years to meet these evolving needs. The grand entrance is being grafted onto the north side of The Bank in the form of two giant towers. It will include an open-air tailgate and concert venue with three levels of viewing, an indoor sports bar for before-game imbibing and a hospitality area with 7,000 square feet of retail space that will be available for events throughout the year.
Inside, 10 new suites will be added below the current club level and connected to an uber-luxury lounge called “The Blackwing” available to dues-paying members even when there is no game. There will also be seats in a boxed in area on the sideline, not far from the players. It will take a few years, working between seasons and games, to build all that. But fans will have one new amenity this fall: a beer hall and rooftop bar on the stadium’s east side, overlooking downtown.
When it’s all done, Sickman says, “We will have holistically improved the totality of the human experience of coming to a game for every fan in the venue.”
The Orioles declined to comment on their plans. The Stadium Authority, which must approve them, cautions that no decisions have been made. It hopes to have a design team in place this summer.
Clues to the team’s thinking can be found in the lease it signed last December that includes a non-binding wish list labeled “initial capital works.” Among the items on the list:
- Seats installed at field level, under the lower deck, where fans can watch the action from a player’s perspective
- New bars, including one that would be built below the centerfield scoreboard on an expanded Flag Court
- “Social spaces” – most likely resembling the Coors Light Roof Deck now overlooking centerfield – to replace seats in the upper deck behind beyond left field and other places.
- A bigger and better kids’ zone
Additionally, the team recently sent an online poll to fans to gauge interest in these and other concepts and hinted at how costly they could be for fans. Among them: tabletop seating for four that could be rented for $600 to $800 a game. Or, for bigger groups, a 10-seat social suite that could be had for $3,500. They also asked if fans would be willing to pay an initiation fee of $1,500 to $2,500, and an annual fee of $1,000 to $1,500, to join a members-only club that would also be open for watch parties and other events. It didn’t specify where the club would go but said it would have good sightlines to the field which would rule out the adjacent Warehouse. It seems to match the “Home Plate Club” listed in the lease.
The field-level lounge was also mentioned in the poll, with seats priced up to $450 a game, and an in-stadium museum of Orioles history. They even asked about a crab shack.
Not a driver of growth
Economists are nearly uniform in warning against expectations that such stadium investments will pay for themselves through higher income tax receipts or spark an economic resurgence for surrounding neighborhoods.
Camden Yards was supposed to spark a downtown renaissance, spinning off private development and stretching the success of Harborplace westward. It didn’t and even Harborplace slipped into bankruptcy.
“The evidence is very, very clear that when the question is whether sports are big drivers of tax revenue, job growth or income growth – none of that is borne out,” says Dennis Coates, an economist at the University of Maryland, Baltimore County who has spent years researching the impact of stadiums and earlier this year hosted a national conference in Baltimore on the topic.
Because fans have only so much disposable income, a dollar spent at a sporting event is a dollar that won’t be spent at a movie, night club or restaurant. That’s redistribution, not growth. And adding dining and drinking options to the stadiums will diminish the economic spillover of Camden Yards to nearby businesses, Coates says.
The projects aren’t even good tools for urban renewal, as a stroll around the ballparks reveals. Practically none of the nearby businesses are there because of the stadiums. That’s because the ballparks are big, empty buildings most of the time – the last place to locate a company in need of pedestrian traffic.
That’s not to say Camden Yards is bad policy, Coates says. He grew up in western New York rooting for the Orioles and Baltimore Colts and in high school even wore the jersey number of Baltimore Bullets’ hall of famer Wes Unseld.
He just wishes the public subsidies were honestly sold to taxpayers. They are costly expenditures that boost a city’s quality of life and enrich team owners and players but don’t pay for themselves or generate riches for their host cities. In Maryland, the lottery revenue that’s paying for the projects would find its way to other public priorities if the stadiums weren’t there. Moreover, generous lease terms have put the Orioles and Ravens among the elite of their sports both on and off the field despite playing in a medium-sized market. It’s a big reason the Orioles sold for $1.725 billion this year. Forbes estimates the Ravens are worth $4.63 billion.
Fans can be excused for paying little attention to the economics of public stadium investments, preferring to focus on the thrill of the games, especially during a year of championship-caliber play. Who can imagine Baltimore without the Orioles and Ravens or a spring without the Preakness Stakes?
But expectations need to be tempered, especially as the Orioles pursue development rights specified in the lease extension. Such deals are growing more common around the country and often provide a team with the right to develop valuable public property without the burden of real estate taxes.
Maryland Gov. Wes Moore visited the Braves stadium outside Atlanta last year with Orioles executives and came away enthusiastic about the potential to transform downtown Baltimore with a similar plan.
But it’s unlikely one at Camden Yards would be as expansive, and the value of such projects to communities is fiercely debated.
J.C. Bradbury, an economist at Kennesaw State University in Kennesaw, Georgia, says the move of the Braves to a suburban location hasn’t been the home run that advocates predicted, even with the team’s investment of $400 million in the adjacent, 54-acre “Battery” featuring a craft brewery, BBQ restaurant and boutique shopping.
“It is inappropriate to operate under the fiction that the stadium and team are somehow economically beneficial to the community, when all available evidence indicates that they are not,” Bradbury concludes in his 107-page, 2022 study of the project’s impact. “This stadium has not been different from past publicly subsidized stadiums that have failed to generate promised economic returns.”
The study so outraged the Braves that they hired their own well-known sports economist, Andrew Zimbalist of Smith College, to conduct his own review. He only looked at the fiscal impact of the project but concluded that it is “more than self-financing” in part because of the surrounding development.
That sparked an unusually public, and vitriolic, feud among normally clubby sports economists.
Bradbury declined to talk about it with the Fishbowl, but another Georgia economist – E. Frank Stephenson of Berry College – says he enjoys his visits to the Battery. “I love the ballpark,” he says.
But Stephenson sides with Bradbury’s analysis and says there’s little doubt in his mind that the development is mostly drawing spending that would have occurred somewhere else in the region.
It’s been a moneymaker for the team, though. The Braves reported $59 million in revenue from the Battery last year, versus $582 million from baseball.
Vacancies at the Warehouse
The Orioles’ lease extension calls for negotiations on just such a plan, though on a much smaller scale. It obligates the state and team to negotiate in good faith on development rights for the historic Warehouse that runs along the eastern edge of the park, Camden Station on the other side and the slivers of land ringing Oriole Park north of Lee Street other than parking lot A.
It’s not a sure thing that a profitable use can be found for the Warehouse and Camden Station, which have been plagued with vacancies. (The Stadium Authority reported $3.2 million in rental income last year from the Warehouse.)
But internal studies have shown potential for converting unused space to a boutique hotel, apartments or condos.
The Ravens’s lease has a parity provision giving it the right to seek similar benefits if the Orioles get them but there’s even less available real estate on the southern end of Camden Yards. The two teams could cooperate on a development between the two stadiums where there is now a parking lot, an idea the Orioles vetoed when the Stadium Authority brought it up years ago. The Ravens have incorporated the possibility into the renovations of M&T Bank in case the development comes to pass.
Taxpayers would get at least one benefit if the Orioles win the redevelopment rights, according to the lease. The team would begin covering the cost of operations and maintenance of the ballpark, instead of paying rent. That would shift an expense of millions of dollars a year from the Stadium Authority to the team – mirroring the arrangement the Ravens have at The Bank (the state also gets, and shares with the city, a 10 percent ticket tax paid by fans that generated $13.5 million last year).
The Orioles have this leverage: If no agreement on the development rights is struck in the next four years, the team will have the option to truncate its 30-year lease to 15 years with the potential to extend later.
Plans for Pimlico
An even more dramatic upgrade is in store for Pimlico Race Course, one of the nation’s oldest sporting facilities with roots reaching to 1870. The state is buying the building for $1 and will operate year-round racing there under a nonprofit established by the Maryland Thoroughbred Racetrack Operating Authority. New York runs its tracks under a similar structure.
Pimlico will then be rebuilt from the ground up for an estimated $250 million, and a training center will be constructed for another $150 million at a yet-to-be-determined site. The $24 million a year debt service will be paid back by a combination of slot machine revenue, a portion of bets wagered on races, licensing fees and other sources.
In this, the Baltimore track is joining the other Triple Crown hosts undergoing major upgrades even as the sport sheds fans and faces nagging questions about horse safety. Churchill Downs – where the Kentucky Derby is run — recently completed a $200 capital improvement of its paddock area. Belmont Park in New York is being razed for a $455 million redevelopment that forced the temporary relocation of the Belmont Stakes to Saratoga Race Course.
Pimlico’s current owner, The Stronach Group, will retain possession of its biggest events, the Preakness Stakes and Black-Eyed Susan Stakes, and license them back to Maryland for at least 10 years. In exchange, the state will pay a $3 million annual fee – subject to a yearly escalator of 2.5% – and 2% of the betting handle for the races, for a potential total of $5 million – $6 million. Stronach will even keep the Tiffany-designed Woodlawn Vase trophy that is ceremoniously carted out under police escort to be presented to the Preakness winner, though has agreed to let it be displayed at the track.
Coates, the UMBC economist, questioned the wisdom of devoting so much money to a sport in serious decline. Dozens of racetracks have closed in the past decade and Preakness attendance last year was only 47,000 — a far cry from its 2017 peak of 140,327 — in part because a portion of the grandstand was condemned for safety concerns, and ticket prices have climbed steeply. The track refused to release this year’s attendance figure after rain likely dampened turnout even more.
“It’s maintaining this thing that doesn’t really exist anymore,” Coates says. “People don’t go to the track like they used to. How much are we willing to spend to maintain the historic tradition rather than moving on to something that society values more now?”
Supporters cite the national attention the Preakness draws to Baltimore, and the jobs supported by breeding and racing. The Pimlico plan also calls for a privately developed hotel and two parking facilities – one for the hotel and the other to be shared with nearby Sinai Hospital. Another state agency will contribute $10 million to develop affordable housing in the area for track workers.
Governor Moore called the plan a “once-in-a-generation opportunity to make long overdue and meaningful investments in the Park Heights community.”
Alan Foreman, an attorney and member of the Racetrack Operating Authority who helped draft the plan, says he’s confident it will reverse years of losses. Laurel Park will be closed and year-round racing consolidated at a new Pimlico.
Plans are still being drawn up for the new track, with the aid of Populous, an architectural firm once known as HOK and responsible for Camden Yards. “I would like to see an iconic facility there,” Foreman says.
They are aiming for a capacity of about 70,000. If fans are permitted on the infield it won’t be the boozy spectacle of past years. And don’t look for expensive musical acts like Bruno Mars or Lorde: they cost a lot of money and failed to draw new fans to racing. Do look for a sports betting book, upgraded OTB wagering and rentable event space.
Foreman says he’d like to see the new track compete to host the Breeders Cup, a two-day series of races that is the Super Bowl of racing.
“We believe we have a business model that will make it work” without public subsidies other than what the industry currently receives, he says.
Public support for sports has a long history in Baltimore. City leaders built the old Memorial Stadium as part of a strategy to lock in place a World War II surge of population and industry. It managed to lure the Orioles, and house the Colts for a time, but a population that peaked in 1950 at 950,000 has plummeted to less than 600,000 as factories and jobs went elsewhere.
The twin-stadium Camden Yards project was conceived after the Colts bolted for Indianapolis. It displaced at public expense companies that employed about 1,000 people and the state tried to relocate in the region with mixed results.
Coates says, economically speaking, the latest appropriations represent “throwing good money after bad.”
“That doesn’t mean there isn’t value,” he says, citing the benefits of drawing residents closer together. “But if this is part of your economic development strategy to rejuvenate downtown it is bad.”
Jon Morgan covered the opening of both ballparks at Camden Yards for The Sun. He is the author of two books on the subject, “Glory for Sale: Fans, Dollars and the New NFL” and “Gaining a Yard: the Building of Baltimore’s Football Stadium.”
