On July 25, it was a done deal: an agreement was signed between Vincent Grey, Mayor of the District of Columbia (DC), and Major League Soccer’s (MLS) most successful side, DC United, on a public-private partnership to build a $300 million, 20,000-seat stadium at Buzzard Point, an urban peninsula in the south of the city.
Mayor Grey described it as “an exciting plan that moves the District forward”, and in an open letter to fans, United investor Jason Levein called the agreement a “significant milestone towards having a venue of our own”.
But not everyone is happy with the terms of the agreement. Ed Lazere, executive director of the DC Fiscal Policy Institute (DCFPI), the body that seeks to ensure that the needs of low-income residents are considered in public sector decisions, has expressed concern over the level of financial risk being shouldered by DC taxpayers for a privately-owned stadium.
As the agreement stands, the city will foot the bill for acquiring the land on the site, and all costs for preparing the land for construction, with the team paying to build the stadium. Washington DC is due to contribute an estimated $150 million towards the final figure, but Lazere believes the project can be delivered for two-thirds that.
“The big picture is that $150 million is a lot,” Lazere told SportBusiness International. “Every dollar that goes into the stadium from selling a public asset, or whatever other source, is a dollar that is not going to rebuild schools, affordable housing, or other needs that are important in the city, so in that context, it’s a lot of money. A soccer stadium has suddenly become the city’s top budget priority. In a city that has tremendous affordable housing challenges, education and healthcare needs, it’s not clear why.”
One reason for Lazere’s concern about the lack of control over potential taxpayer costs is Washington’s history with new sports facilities. In 2006, the city agreed for a new stadium for Major League Baseball’s Washington Nationals, in part to keep the team from leaving the city. On that occasion the stadium, fully funded by the city, was expected to cost $500 million, but by the time it opened in 2008, due to an underestimation of land costs, the amount spent was closer to $700 million.
From DC United’s point of view, there are clear reasons as to why a new stadium is top priority. A combination of rental payments, lack of control over matchday revenue and low attendances – an average of 13,846 for the 2012 season in a 55,000-capacity stadium – mean that every match played at the 52-year-old Robert F Kennedy (RFK) Memorial Stadium results in a financial loss for the team.
A finalised design for the proposed stadium has not yet been completed, however it will be located adjacent to the nearby Fort McNair army base, contingent on acquiring the land. It is anticipated to be complete in time for the 2016 season.
A version of this article, written by Adam Sheppard, appears in the October issue of SportBusiness International magazine, the leading publication covering the global sports industry.