City releases long-awaited studies on impact of a downtown Sixers arena
"We are sharing these detailed reports so that the public can better understand the implications of such a multifaceted proposed project for Philadelphia," the mayor said.
/cloudfront-us-east-1.images.arcpublishing.com/pmn/2SCKNN2X7FAN3BWYA4AJW4EQFE.jpg)
The long-overdue city-sponsored impact studies intended to guide decision-makers as they consider the Sixers’ plan for a new downtown arena were released by Mayor Cherelle L. Parker’s administration Monday night.
The analyses were posted on a city website at about 7:30 p.m., eight months past their end-of-December deadline and only hours after the mayor met with Chinatown leaders to personally hear their concerns about the project. No Chinatown advocates at the private City Hall gathering spoke in favor of the arena, participants said.
The city released four studies, on community impact, design, economic impact, and parking and transportation, along with accompanying memos and descriptors that cover hundreds of pages.
Some highlights:
The 18,500-seat arena would generate about $1.9 billion in additional economic activity over the course of its construction and 30 years of operation, resulting in $390 million in net tax revenue for the city, its school district, and the state. That’s far less than the nearly $1.5 billion in net tax revenue that the team claims the project would produce, based on a study it has declined to publicly release. (The team said Tuesday that it used a different cost estimation method that prevents an apples-to-apples comparison. Applying the 76ers’ method to the study’s findings would result in about $1 billion in net tax revenue.) Academics who study stadium finance caution that consultants’ estimates are often overstated.
Although the project would not cause direct “housing displacement” in nearby Chinatown, meaning no housing would be torn down, an arena could cause indirect displacement through gentrification and loss of cultural identity.
The Sixers’ goal of increasing transit use to 40% of fans, while another 40% travel by car, is attainable but not a foregone conclusion. Traffic would remain manageable if no more than 40% of attendees drive, but even marginal increases in auto use beyond that threshold would result in gridlock at critical intersections.
The construction of an arena at 10th and Market Streets would be “appropriate for Center City Philadelphia, assuming it is done well,” according to the design review. But the review also included concerns about the proposal, such as the lack of a public space like an outdoor plaza — a common feature in recent arena projects elsewhere.
The opening of a new arena would generate 53 additional entertainment events a year in the Philly market, including 35 additional concerts, according to the economic impact study. This number will be hotly debated in the coming months. A recent study commissioned by Comcast Spectacor, which owns the Wells Fargo Center, found that the Philadelphia market would see only eight to 12 additional concerts a year with a new arena.
“We are sharing these detailed reports so that the public can better understand the implications of such a multifaceted proposed project for Philadelphia,” Parker said in a statement. “These studies are important inputs as I consider this proposal.”
The Sixers said Tuesday that they were reviewing the studies and would have more to say when their analysis is complete, “but it is clear already that they support what we’ve said since we first announced 76 Place: The arena is an appropriate use for Center City and will generate significant new jobs and tax revenue because Philadelphia can support two arenas.”
Chinatown surveys show overwhelming opposition to a new arena, and activists there have said they expected the findings to tilt in favor of the project, given that the Sixers are paying for the studies.
Timing of the reports
The release was 10 days before City Council returns to its fall session, during which it could take up legislation to authorize the project, and 12 days before Chinatown activists and their allies intend to stage a rally and march in Center City to oppose the arena. The demonstrators aim to surpass the size of the June 2023 protest that filled downtown streets and shut down traffic.
The Sixers have said legislation needs to be introduced in early September for them to open the arena on time .
“That the Sixers bankrolled these studies, and failed to disclose that fact from the jump, says everything you need to know about their credibility,” said Vivian Chang, executive director of Asian Americans United. “The failure to calculate the financial cost of the arena to Chinatown, other neighborhoods, and existing businesses tells you how unserious and flawed this paperwork is. ... It is clear these are not the studies the community asked for or the city needs.”
Councilmember Mark Squilla, a key player, has promised that the public will have 30 days to review any legislation before it is introduced. Squilla, whose district includes both Chinatown and the proposed arena site, said Monday that he was briefed on the study’s findings shortly before they were released.
Like Parker, Squilla has spoken positively about the potential economic impact of the project planned at 10th and Market but has not explicitly endorsed it, saying he wants to get feedback from stakeholders after the studies become public and draft legislation is available.
Council tradition dictates that it will be up to Squilla whether to introduce legislation needed to green-light the project, such as bills concerning zoning changes, permitting issues, or land transfers. He said the legislation is being written by lawyers from the 76ers and from the city.
”They’ve been working on it for a year,” Squilla said. “I haven’t seen it.”
The Sixers have repeatedly pushed back the timeline for Council approval, and Squilla on Monday sounded skeptical about the prospects of that happening before lawmakers go on their winter break. That means if the legislation is introduced, public hearings over the proposal and a final vote may not take place until 2025.
Chinatown leaders and activists said that last Thursday evening, they began receiving phone calls from Parker administration aides, inviting them to a Monday meeting about the needs of the neighborhood. At that meeting, Parker told the group she has not made a decision on the arena, pro or con, participants said.
“We were invited on pretty short notice,” said Chang of Asian Americans United, who took part. “I kind of came in here not knowing what to expect and then being blindsided by the fact that these studies are coming out.”
John Chin, executive director of the Philadelphia Chinatown Development Corp., who also attended, said the mayor said “she wanted this meeting to hear from us first. What are our issues? What are our concerns? How do we feel about Chinatown in general? … She said she’s going to take all the information that she heard today as part of her evaluation process.”
Mayoral spokesperson Joe Grace said the administration does not comment on private meetings.
The plan needs City Council approval
The Sixers’ efforts to erect a $1.55 billion arena and housing tower in downtown Philadelphia, announced two years ago, still await local-government approval. New Jersey Gov. Phil Murphy said Garden State officials were talking to the team about moving to Camden, where the Sixers have a practice facility, and Delaware Gov. John Carney has invited the team to explore a relocation to Wilmington.
The Sixers say they’re focused on Philadelphia.
In July 2022 the Sixers announced their intention to construct a world-class showplace atop Jefferson Station, a project they said would not only benefit the team but bring new life and economic vitality to the struggling business corridor.
Comcast Spectacor, the company that owns the Flyers and the Wells Fargo Center, where the Sixers are a tenant, wants the basketball team to stay and join in plans for a future arena in South Philadelphia. The Sixers insist they’ll be gone when their lease expires in 2031.
Comcast Spectacor Chairman and CEO Daniel Hilferty said Monday night that the company was reviewing the studies and credited Parker for their release.
“We believe the best outcome for fans and the community is that the 76ers and Comcast Spectacor remain united and based in South Philadelphia,” he said.
City officials have offered no explanation for the long delay in releasing the studies, except to say that producing these types of reports is complicated. All four reports were translated into Spanish and Chinese.
Then-Mayor Jim Kenney had ordered the studies in an effort to bring clarity to what has become the city’s biggest development fight in years.
The economics of a new arena
Sports and entertainment specialist CSL International was hired to carry out the economic assessment around a project that the Sixers say would provide a huge economic boost.
Part of CSL’s task was to examine markets that have more than one arena, a big question for Philadelphia, where the Wells Fargo Center recently concluded a $400 million renovation. The Sixers say the city is missing out on concerts and shows, but others believe that adding a second, similarly sized venue would sink them both, leaving each with one sports team and forcing competition for other events.
A study commissioned by Comcast Spectacor concluded that having two arenas would split the market, starving both places of attendance and revenue.
The CSL-produced study released Monday said that the Wells Fargo Center would suffer, seeing significant losses in suite and naming-rights revenues along with the disappearance of Sixers games, but the Philadelphia market could support two financially viable arenas.
Despite being a fraction of the team’s estimate, the study’s $390 million projected tax impact may be an overestimate still. Academics who study stadium and arena finance say studies by consulting firms routinely overstate potential economic and tax benefits of new arenas.
For instance, Arthur Acolin, a professor of real estate and finance at the University of Washington, recently estimated that the Sixers project would reduce tax revenue by $908 million, in large part by displacing or disrupting nearby businesses.
”Independent economists agree that arenas and stadiums consistently do not fulfill their developers’ financial promises, and that they do not add to city and state tax base when their true costs are counted,” Acolin wrote.
The community-impact study is being handled by firms including BJH Advisors, a New York real estate planning company, and Philadelphia-based Sojourner Consulting.
The aim there is to examine the most impacted neighborhood, Chinatown, where opposition to the arena is huge, but also to explore an arena’s influence on other residential and commercial entities, including Washington Square West and the Fashion District mall.
Chinatown advocates say the studies have been framed to endorse the construction of an arena, not to ask whether one should be built.
Owning their arena would allow the Sixers to control and profit from everything that occurs inside, while removing one of the city’s four major teams from the South Philadelphia Sports Complex. The Sixers say the project would benefit the city, stoking economic growth and encouraging people to use a SEPTA system that needs riders and income.
An earlier version of this article inaccurately described the economic impact report’s estimate of how many new entertainment events would be generated by the opening of the proposed arena. The report said that the overall Philadelphia market would see 53 additional entertainment events.