Do new NBA arenas pay off? Oklahoma City voters are the latest to weigh this question

Editor's note: This piece has been updated to clarify that Travis Roach, an associate professor and chair of the economics department at the University of Central Oklahoma, was referring to NFL, NBA or MLB franchises in his analysis of cities' economic growth, not all pro sports franchises.

OKLAHOMA CITY — Donning a sky-blue tracksuit with orange stripes and a temporary "OKC" tattoo on her cheek, Emma Watts flowed toward the Paycom Center with thousands of fans pumped for the first game of a new NBA season.

On Thunder game nights, Watts said she likes to walk from her office building downtown to the arena. The city comes alive.

"To see all these people downtown on a weeknight all together is magical," Watts, 37, said. "I remember what downtown Oklahoma City looked like growing up here as a kid, you just did not come down here. Now it's the place to be."

For more than a year, Oklahoma City Mayor David Holt has been championing a proposal for a new $900 million arena, funded largely by the city. It aims to keep the Thunder in the city until 2050.

But despite the team's booming fan base, the idea has drawn concerns over Oklahoma City's funding priorities, the true economic impact of a new sports stadium, and the possibility of losing its only professional sports franchise.

The Oklahoma City Council decided to put the question directly to voters. On Dec. 12, residents will have the chance to vote on the proposal, which includes a six-year sales tax of 1 percent. Many voters are feeling at odds.

"I just don't think it's right that we are footing so much of the bill," said Oklahoma City resident Jacob Longdale. "I'm a fan. I go to games, but I can think of about a dozen things I'd rather see us spend that money on.

"It just doesn't seem like the right thing to do," he added.

How much would taxpayers pay?

Before moving forward with the proposal and scheduling a vote, council members heard from citizens, nonprofit leaders, members of the city's chamber of commerce and local business owners. While many expressed their support for the new arena, other residents shared their skepticism about how the city is choosing to spend public money as it faces a housing crisis, along with what some described as a "lack of urgency" to address rising unhoused populations.

"Get out of your ivory tower, and go outside and look," said Joy Reardon to council members. "We have people sleeping right outside of city hall. When are you going to wake up? We don't need this arena."

City manager Craig Freeman detailed how the arena project would come — at a minimum — with a $900 million price tag, with a target opening date set for 2029. He cautioned the city council that the actual expenses could surpass this figure.

If the "yes" vote passes, the funding plan for the arena would include a 1 percent sales tax over six years, beginning in 2028. It will start when the current penny sales tax, known as MAPS 4, ends. In the past, MAPS taxes have funded Oklahoma City public school renovations, the creation of a downtown park and walking trails, the transformation of the Oklahoma River into an Olympic rowing and kayak facility, and the building of the current downtown arena.

The Thunder's ownership group, the Professional Basketball Club LLC, has reportedly pledged $50 million, or roughly 5.5 percent of the total proposed construction costs, Freeman said. This number falls below what other NBA teams have contributed to their own recently publicly funded arenas. The Milwaukee Bucks owners contributed $174 million, while the Sacramento Kings paid $284 million.

"For 15 years the Thunder has been honored to help lead the transformation of Oklahoma City and enhance the tremendous pride our citizens have in their community," chair Clay Bennett said in a statement. "We now have an opportunity to build on that progress, advance our status as a true big-league city, continue to grow our economy and secure the long-term future of the Thunder."

Holt, who wrote the 2012 book "Big League City: Oklahoma's Rise to the NBA," has been pushing the idea of a new arena since his 2022 State of the City address. In those remarks, he warned that not funding a new arena could prompt the Thunder to look outside the state for a new home. The team's current home, the Paycom Center, is more than 20 years old, and is the smallest and one of the least expensive arenas in the NBA, Holt said in his address.

Underlying the upcoming vote is Oklahoma City's history with how it landed the Thunder franchise in the first place. Formerly the Seattle Supersonics, the Oklahoma City ownership team bought the franchise in 2006.

Owner Bennett then asked the city of Seattle for at least $300 million in taxpayer money for a proposed $530-million basketball arena in Renton, south of Seattle. After the state legislature voted not to fund the arena, Bennett announced plans to relocate to Oklahoma City after more than 41 years in Seattle.

Oklahoma City would go on to see tremendous success in its first decade of professional basketball, making the playoffs in 10 of its first 12 years and reaching the NBA Finals in 2012 before ultimately losing to LeBron James and the Miami Heat.

The mayor urged that if a new arena is not funded, it will signal the end of the Thunder in Oklahoma City.

"The competition is cutthroat and the proverbial sharks are circling," Holt told the PBS NewsHour. "In the aftermath of a no vote. It will be the beginning of the end and there's no other real path."

Resident Thanh Tran said at the city council meeting that she appreciated Holt's efforts to maintain the city's progress but wanted to know: At what cost? .

"Our local community is struggling with poverty, food insecurity and health issues," said Tran, the co-founder of the OKC Food Hub, a local nonprofit aimed at helping local farmers and producers connect with local restaurants, schools and retailers. "How can this $1 billion project be better balanced and hold city officials and Thunder business owners more accountable to its local community? I bring these points to you from a lived experience from poverty. … We live in a community where people are suffering and we need to be more prudent with these funds."

An additional $70 million is anticipated to come from MAPS 4 funds, previously designated for improvements to the current arena.

Is a new sports stadium a worthwhile investment?

Councilperson James Cooper said he would support the arena vote as long as the construction and operation of the facility also benefited workers with fair pay, training, and other assistance to those who have a difficult time gaining employment.

He proposed a resolution outlining community benefits that must be included in an arena project, including the establishment of a workforce intermediary to address unemployment in affected communities, the implementation of a companion apprenticeship program to train workers in trade skills, a commitment to achieving livable wages of at least $15 per hour for both full-time and part-time arena employees, and the introduction of worker protections to safeguard the city's investment in the $900 million arena while simultaneously investing in the well-being of individuals. Cooper based the model on a modified version of one used in the building of the new arena in Milwaukee for its NBA team.

Part of Mayor Holt's pitch to fund the arena is the Thunder's financial contributions to Oklahoma City. Holt said the direct annual economic impact of the Thunder's existing arena is estimated at $600 million and 3,000 jobs. He also said the city's GDP has grown 62 percent since the team arrived in 2008. In that time, Oklahoma City has moved from the country's 31st-largest to its 20th-largest city, according to 2022 U.S. Census Bureau population estimates. Holt's office said a report on the Thunder's economic impact on the city is expected at the end of the month.

"The city before the Thunder and after the Thunder are two very different cities in every way imaginable," Holt said. "Our economy, our culture, our profile, our diversity and our population have all taken massive steps forward in the 15 years since the Thunder arrived."

But Travis Roach, an associate professor and chair of the economics department at the University of Central Oklahoma, said the numbers Holt cited have little to do with the Thunder and more to do with Oklahoma's oil and gas industry.

For instance, Oklahoma City had nearly identical GDP growth to Midland, Texas, and Raleigh, North Carolina, according to Bureau of Economic Analysis data from 2004 to 2020. Neither of those cities has an NFL, NBA or MLB franchise, but all three cities benefited from the fracking boom, he said.

"Economic research consistently shows that professional sports stadiums produce little to no tangible economic impacts in host communities," Roach said. "The reason is that much of the money that goes to ticket sales would have been spent elsewhere. It's not new money spent, but rather reallocated money."

Using public funds for stadium projects is not new. Lawmakers across the U.S. pledged billions in taxpayer funds for stadium projects last year. New York Gov. Kathy Hochul allocated $850 million of public funds toward the Buffalo Bills' new stadium, while Maryland committed $1.2 billion to upgrade the sports complex for the MLB's Orioles and the NFL's Ravens. But some regions shifted away from it in the past decade, seeking significant private investment instead.

The most recent NFL stadiums, SoFi Stadium in Inglewood, California, (at least $5 billion, privately funded) and Allegiant Stadium in Las Vegas (nearly $2 billion, including $750 million in public money), highlight this contrast. The new Tennessee Titans stadium in Nashville is over half publicly funded, making it one of the country's priciest publicly financed stadiums. The Buffalo Bills' planned stadium has a $1.5 billion budget, although the overall price tag is suspected to be steadily increasing.

Despite professional sports teams' promises of positive economic impacts, economists who have researched this topic say the economic gains promised from these stadium and arena investments are rarely ever fulfilled.

"Recent analyses continue to confirm the decades-old consensus of very limited economic impacts of professional sports teams and stadiums," professor J.C. Bradbury of Georgia's Kennesaw State University said.

Bradbury co-authored a study on economic impact of stadiums from the past three decades and found that even when adding in social benefits from stadium investments, welfare improvements from hosting teams tend to fall well short of how much the government spent to obtain these benefits.

The study evaluated GPD, home values, and surveys that asked people why they considered moving to a certain location. It found that an arena or stadium did not have much of an effect on any of those data points.

"The large subsidies commonly devoted to constructing professional sports venues are not justified as worthwhile public investments," Bradbury said.

For Holt, the upcoming vote is about the city's identity.

"It's our status as a city and it's our ability to … grow and attract people. So much of American life, whether you like it or not, is tied up in the credibility that comes with having a major league professional sports team."

As he walked in for his first home game of the season, Richard Black, 43, wore his 2012 Finals shirt. Black said he feels like the Thunder is on the verge of greatness again, after three-straight years of missing the playoffs.

He's planning to vote "yes" on the stadium proposal. He can't imagine life in Oklahoma City without the Thunder.

"I would be devastated," he said. "Beyond devastated."