Arlington sports stadiums give city identity, bring in cash

Arlington is now known for AT&T Stadium, home to the Dallas Cowboys, and Globe Life Park, home of the Texas Rangers.
Arlington is now known for AT&T Stadium, home to the Dallas Cowboys, and Globe Life Park, home of the Texas Rangers. AP

Randy Ford always made a decent living running his popular J Gilligan’s Bar & Grill in downtown Arlington, providing food, spirits and big-screen TVs to crowds of sports fans.

But in 2009, he shook things up, adding a fourth dimension to his business model — call it customer trafficking.

When the $1.2 billion Dallas Cowboys stadium opened, Ford was among the first businesses to arrange for shuttling customers not only to NFL games but college football championships, concerts and scores of other non-Cowboys events each year at the stadium.

Soon his restaurant sales doubled, then tripled.

Tax revenue

Arlington has seen its revenue from sales and hotel taxes grow steadily since the Cowboys Stadium, now AT&T Stadium, opened in 2009.

“We’re independent, and this is huge for us,” said Ford, who opened his restaurant 38 years ago. “It’s changed the business.”

Now he and others in the sports ecosystem that has evolved around Arlington’s two big-league venues — the rechristened AT&T Stadium and the Texas Rangers’ Globe Life Park — are looking forward to the city’s next big project, a $1 billion retractable-roof stadium for the Rangers.

The Rangers believe a climate-controlled stadium will protect fans — and revenues — from Texas’ summer heat and game-stopping rains, resulting in a large bump in attendance. The proposal has the city and Rangers splitting the building costs, with Arlington’s share capped at $500 million, and promises to get the team into its new home in 2021, three years before the current 30-year lease expires.

Voters in November must approve the city’s plan to extend and redirect revenues from a half-cent sales tax, 2 percent hotel-occupancy tax and 5 percent car rental tax — now funding the city’s remaining $175 million share of AT&T Stadium — to begin making the city’s bond payments on the new Rangers stadium. The city would also receive rent payments of $2 million a year.

The city and Rangers have gone to some lengths to demonstrate a big benefit to both the local economy and the city’s burgeoning brand as an entertainment and tourism destination. For one, rededicating the taxes will mean no tax increase, they say. And a recent study indicated that slightly more than half of the city’s sales taxes were paid by visitors, not residents.

A separate economic impact study commissioned for the project estimated a $77.5 million benefit annually for the city of Arlington.

Nationwide, critics of publicly funded stadium deals say they never deliver the benefits that are promised to cities, instead subsidizing already rich owners of professional sports teams. They say the proposed new baseball stadium in Arlington will be no different.

“Certainly, for the city, this is nothing but a bad deal,” said Victor Matheson, a sports economics professor at College of the Holy Cross, who studies the impact of new stadiums. “There is no economic benefit whatsoever for the city building a new one. The stadium will certainly not be any bigger — it will probably be smaller. This is nothing but a pure giveaway to the team. It makes tons of sense from the team’s standpoint.”

But Arlington leaders say financing construction of sports stadiums over the past 25 years has expanded the city’s stature as an entertainment and tourism center. They say the city’s reputation has been built largely on the back of its half-cent sales tax, which voters approved in 1991 to pay for the Rangers’ current ballpark.

“That proved our community could build a world-class facility, and was also a big part of the equation for us getting the Cowboys,” says Mayor Jeff Williams.

‘We are a proven destination’

With AT&T Stadium, which has hosted such varied attractions as Super Bowl XLV, a Beyonce concert, WrestleMania 32, the NBA All-Star Game and the first college football national championship game, Arlington sees itself as a player on the national, if not international, stage.

“Now we’re hosting some of the biggest events in the world. That’s big-time,” said Williams, who credits that activity with attracting several major new developments to nearby sites at Collins Street and Interstate 35. “We are a proven destination. People know where Arlington, Texas, is.”

Growing sales tax revenue has been a golden goose, city leaders say, allowing Arlington to pay off bonds used to finance the Rangers and Cowboys stadiums well ahead of schedule. Its 30-year bonds used to finance the ballpark were paid off a decade early, and a similar early payoff of AT&T Stadium is on track.

Sales growth within the city limits has also generated more money for the city’s operating budget by way of a 1-cent sales tax, and for the street maintenance fund backed by a quarter-cent sales tax, said Mike Finley, the city’s chief financial officer.

Some city leaders say those results alone refute opponents who insist that funneling sales taxes into sports stadiums robs from other city services. But exactly how much the stadiums are contributing isn’t known because the state doesn’t break out the amount generated by individual businesses.

Williams said the city staff worked up an estimate a couple of years ago that showed Arlington’s city property taxes “would go up 15 to 20 percent” without the sports-venue sales taxes.

Meanwhile, spin-off development is breaking out.

A $200 million mixed-use entertainment complex and hotel called Texas Live! is set to break ground in September next door to Globe Life Park. Other projects are under construction at Collins Street and Interstate 30, a few blocks north of AT&T Stadium, including a $20 million, 150,000-square-foot headquarters for D.R. Horton, which will have 500 employees when it moves from downtown Fort Worth.

“We are working hard to take advantage of the opportunities that are out there,” Williams said.

Opponents aren’t sold

Still, the stadium proposal faces opposition at home. A half-dozen people spoke against the deal at a May 24 meeting of the City Council. Unswayed, the council moments later voted unanimously to approve it — to a standing ovation by the vast majority of those in attendance. A political action committee is gearing up to fight the project; another PAC announced last week that it will run the official campaign to support the proposal.

Some opponents say they might support a new stadium if the Rangers paid more or all of the cost. For others, tearing down the comparatively young ballpark, designed to capture the architecture and nostalgia of a bygone era, is a non-starter. They would rather that the city re-purpose the taxes to fund other community services and projects, such as a public transit system.

On any given morning from now until election day, you might see Peggy Rudd and husband Bill Gaut hustling between doors in Arlington neighborhoods, hanging fliers that urge taxpayers to rise up against the proposed stadium.

By July 11, they had covered 5,000 homes in about a month, with the rest of Arlington in their sights, Rudd said.

“The political climate right now is perfect for this — to campaign — because people are angry. They don’t trust their government,” said Rudd, who is particularly upset that the Rangers likely will “implode that wonderful stadium that we all paid for.”

“They knew about the Texas summers,” Rudd said, borrowing a line from her word-crowded flier. “If they don’t appreciate the stadium, they can build their own.”

Many accuse the city of rushing the master agreement with the Rangers; the council approved it just four days after publicly announcing it. Officials say the deal had been in the works for months, although they admit concerns that Dallas was secretly courting the Rangers did add a touch of urgency to the negotiations.

Faith Bussey, president of Citizens for a Better Arlington, the opposing committee, said she believes few would gain from a new stadium. The committee was founded in 2014 and led the successful campaign to kill the city’s red-light camera program last year.

“Personally, I think it’s going to be benefiting the billionaire owner, and it will be benefiting a select few people who are involved in the building process,” said Bussey, whose PAC created the “Save Our Stadium” campaign. “Long-term, we’re going to be paying way more into it than we’re going to be getting out of it.”

National sports marketing experts teed off on the proposal, saying that keeping the Rangers isn’t worth the cost.

Economic impact numbers are “routinely oversold,” said Mike Davis, a professor of business strategy and economics at SMU.

“Everyone says, ‘Oh Jerry’s World pulls in these wonderful concerts and the football games,’ ” Mike Davis said. “OK, so there’s a big college football game and 100,000 football people come in and park their car, and they spend money. Where does it go? Most of it goes right back out.”

‘A bad psychological loss’

Allan Saxe, a political science professor at UT-Arlington and an Arlington resident since the 1960s, says keeping the Rangers in Arlington goes far beyond economics.

“It would be a bad psychological loss,” Saxe said.

Indeed, Arlington has a long history as a sports town.

Decades before Major League Baseball arrived, Arlington served briefly as a destination for horse racing fans when the town of 4,000 became home to the Arlington Downs racetrack in 1933. It attracted thousands of visitors until pari-mutuel betting was outlawed in Texas in 1937.

The city had grown into a suburb with 90,000 people by the time it lured the Washington Senators baseball franchise away from the nation’s capital after the 1971 season. With its new, regionally respectable name, the Texas Rangers built on the tourism industry anchored by Six Flags, its neighbor in the bustling entertainment district.

The Cowboys’ move from Irving in 2009 only solidified that image for what is now the nation’s 50th largest city, with a population of 388,125, just ahead of Cleveland.

“We’re the Orlando, Fla., of North Texas. We’re an entertainment city,” said Saxe. “Even though the stadium looks pretty darn good, they need to build a new one. If that’s what it takes to keep [the Rangers] here, that’s what it takes.”

Local supporters roll their eyes at out-of-town doomsayers, contending they don’t know Arlington or its history of aggressively paying down its stadium mortgages.

And to residents who say the half-cent sales tax should be spent on more and improved city services, officials say they see the tax as an investment that has led to growing revenues from sales on stadium concessions and merchandise, as well as money spent by visitors at restaurants and hotels while in town.

“That investment we are making helps pay for our basic services and improve our basic services,” Williams said. “It’s been great for our community.”

‘The biggest and best’

While long-sought retail development near the stadiums has not materialized, such as the much-ballyhooed Glory Park project touted by former Rangers owner Tom Hicks, some projects are now on the drawing board.

The biggest will be Texas Live!, a 7-acre entertainment complex of pubs, restaurants and music venues that will include an upscale, 300-room, high-rise hotel, next to both the current and potential Rangers stadiums. The festive complex would be attached to the new stadium, according to some preliminary renderings, but officials say it will have the drawing power to keep busy when the Rangers are on the road and throughout the off-season.

By design, Texas Live! will look very similar to Ballpark Village in St. Louis, one of several such projects created by Cordish Companies of Maryland — the Rangers’ lead developer on the Arlington complex.

Similar, but not identical, Mayor Williams clarified. “We’re going to be the biggest and best.”

The pubs/restaurant/music part of the project is expected to cost $100 million, of which the city has committed $50 million as an incentive grant. The city dipped into the Arlington Tomorrow Foundation account to provide for the grant and will repay it over 15 years.

The baseball club and its development partners are responsible for the $100 million cost of the hotel but will be subsized with refunds of hotel-occupancy tax, property tax, sales and mixed-beverage tax for 30 years from the city, and hotel-occupancy and sales tax for 10 years from the state.

Meanwhile, Williams credits AT&T Stadium’s economic energy with helping attract several developments near the Interstate 30/Collins Street crossing.

Those include the new D.R. Horton complex, which will become the first Fortune 500 company to be based in Arlington. Also, Williams points to Champions Park, which is building the first phase of an array of eight restaurants with retail, plazas and fountains.

“This is monumental because Texas Live! will signify the beginning of development around AT&T Stadium and Globe Life Park,” Williams said.

While some NFL stadiums only host eight to 10 games a year, the roofed AT&T Stadium keeps busy year-round. It hosted or is scheduled to host 495 non-NFL events in 2015 and 2016, including 56 high school football games, eight college football games, nine concerts and 139 corporate events, according to the Cowboys.

Defending national champs Alabama will play USC at AT&T Stadium on Sept. 3, one of many non-Cowboys games scheduled this season.

‘Ideals don’t build stadiums’

Arlington officials say it’s clear that Globe Life Park and AT&T Stadium are major contributors to the city’s growing tax revenues.

After dipping more than 8 percent in the 2008 fiscal year, before the Cowboys stadium opened, hotel-motel tax revenues have grown 68 percent in the years since, to $8.14 million.

The city’s sales tax revenues have been more recession-resistant. Revenues dipped once during that same period — just 1.4 percent in 2009. Overall, city sales tax revenue has grown 72 percent, to $55.5 million, over the past 20 fiscal years ending in 2015.

“These stadiums are major drivers of the success of our Entertainment District, which supports a significant job base in our city,” said Jim Parajon, deputy city manager of economic development. “The revenue generated by our tourists has a broad impact, from supporting arts programs … to helping the city maintain its parks and streets.”

The economic ripples have been felt in the downtown business district, says Tony Rutigliano, president and chief executive of the Downtown Arlington Management Corp., a nonprofit that promotes downtown development. That refers to an area south and west of Arlington’s Entertainment District, which includes the two stadiums, Six Flags over Texas, Hurricane Harbor and other attractions.

“Ten years ago, Randy was the only game in town,” Rutigliano said of the J Gilligan’s owner. “Now we have 20 restaurants.”

The Arlington tourism industry weathered the recession better and faster than national averages, according to an IHS Global Insight tourism impact study for Arlington.

Visitor spending in Arlington increased 8.4 percent, to $593 million, from 2008 to 2010. Nationally, tourist spending dropped 6.4 percent over that period, a decline that would have vacuumed $81 million from the Arlington economy, the study said.

Also, visitors to Arlington shoulder about half the sales tax burden. Last year, according to a VISA study commissioned by the city planning department, tourists paid 52 percent of sales taxes — a $76.1 million tax bill for spending $951.1 million in Arlington.

Former Mayor Robert Cluck, who was instrumental in wooing the Cowboys to Arlington, said the new Rangers stadium would also be aggressively marketed for events in the off-season and between home stands.

“The more events we have out there, the quicker we’ll pay for it” — and free up that half-cent sales tax, Cluck said. “I believe the sales taxes are critically important for Arlington. We’ve taken on some big projects like that, and we’re going to keep doing so.”

The economic impact study, conducted by HR&A Advisors, projects an economic benefit of $137.6 million annually and $4.49 billion over the 30-plus-year lease for Tarrant County, of which Arlington would experience $77.5 million annually and $2.53 billion overall.

Spending by visitors and the normal operating costs of the team would support 1,950 full-time jobs and $66.5 million in wages for Tarrant County, including 1,450 jobs and $43.6 million in Arlington, according to the study.

J Gilligan’s owner Ford, who gets far more business traffic from AT&T Stadium than Globe Life Park, is a big proponent of the new stadium for the Rangers.

“Somehow, some way, that money spreads throughout the community,” Ford said. “But it’s also that sense of pride — Arlington, Texas, where the Rangers are.”

Saxe, an admitted libertarian, caught grief from friends when he supported the sales tax to help build AT&T Stadium.

“You have to be practical at times,” Saxe said. “If it’s not going to be built here, it’s going to be built somewhere else. Ideally, this is not the way to do it, but ideals don’t build stadiums.”

Robert Cadwallader: 817-390-7186, @Kaddmann_ST

Arlington tax facts

  • The city of Arlington has a property tax rate of 64.8 cents per $100 of assessed value, which ranks 25th highest among the 41 cities on the Tarrant Appraisal Districts rolls.
  • A hefty rise in Arlington’s property values has city officials considering what would be the first property tax rate reduction in 15 years.
  • Arlington is one of the few cities that hasn’t reached the maximum state sales tax rate of 8.25 cents on the dollar. Arlington’s 8-cent rate includes 1 cent for the general operating budget, a half cent to pay on stadium debt and a quarter cent for road repairs. The state keeps 6.25 cents.

Sources: Tarrant Appraisal District, City of Arlington