The New York Times has an excellent article about about the financial struggles of all the new sports stadiums in the greater NYC area. With new ballparks for the Yankees and the Mets showing many empty seats on their TV broadcasts, the various new stadiums and arenas look to have saturated the market. There are only so many corporate sponsors, luxury box buyers or even fans that will be participating.
The developers and local government push for the prestige of these projects. Those of us in construction appreciate any project we get to build. Yet how do these projects get designed, funded, approved and built when the market seems to say no?
I think the private-public partnership can be a very good thing, but also a dangerous market distortion. When public money flows into these projects, or public guarantees back the bonds, poor decisions often follow. Too often the developers that propose the projects manage to get their fees in ways the public bodies simply aren’t sharp enough to catch (not illegally, just lots more cunning).
I remember when a big bridge contractor won a local huge roadway project and had a major dispute with the PA Dept of Transportation (PennDOT). The story goes that contractor noted that the project was headed to litigation. The PennDOT guy said, “We don’t care, we have attorneys on staff to handle it.” The contractor said, “Yes, well, we have attorneys on staff as well, but our attorneys went to Harvard.” Well, the litigation happened and PennDOT got shellaced. Which means the PA taxpayers paid their bill.
As these public/private partnerships occur, the public bodies need to be more cautious about the endgame. As much as we love building them, some of those projects shouldn’t get off the computer screen.