Whatsup Squad,
To build or not to build? That is the question.
The Philadelphia Convention Center was packed last night with hundreds of people who favored and opposed plans for a new downtown arena for the 76ers.
Billion-dollar stadium projects like the one in Philly are on the rise across the country, but the effect it has on the local community often gets overshadowed.
Why the Rise in Stadium Development?
In recent years, team owners have turned to real estate development to bring in extra cash and drive up the value of their franchises.
Across the four major professional sports leagues, eight new stadiums or arenas have been built since 2020, at a total construction cost of roughly $3.3 billion, according to a September 2023 report.
About $750 million in public funds went toward those construction projects.
With excess demand for these stadium projects, owners have the leverage.
They can use the threat of leaving town to strong-arm political officials into better stadium packages that include public funding.
Philadelphia is no exception. New Jersey is offering $400 million in tax credits to lure the team across state lines.
How a New Sixers Stadium Affects Philadelphia
The coolest thing about the 76ers current arena is its neighbors.
Wells Fargo Center sits inside the South Philadelphia Sports Complex that features, Lincoln Financial Field, the home of the Philadelphia Eagles, and Citizens Bank Park, the home of the Philadelphia Phillies.
That said, it does not compete with the top arenas in the NBA. It does not have the historical significance of MSG or the latest technology and amenities of the Chase Center.
If the Sixers owned their arena, the team could increase their annual revenue by $70 million to $150 million from non-basketball events, naming rights, premium seating, and sponsorships.
Based on the current 10x revenue multiple for recent NBA franchise transactions, that would add a billion dollars to the franchise value.
76 Place — A New Home for the Sixers
Two years ago, Sixers’ ownership laid out plans for a new stadium in Center City – called 76 Place – set to open 2031.
The project aims to remake an underused mall in the Fashion District and create a local hub atop one of the most connected transit centers in the city.
Like the team’s process on the court, the Sixers’ process to build a new arena has dragged on longer than both the team and its fans would like.
If the project is successful, it will have both a massive economic and social impact on the local population.
Financial and Economic Impact
An economic study* on the proposed arena reveals multiple benefits:
12,200 new jobs and $2.3 billion of economic impact for Center City
Over $1.5 billion in new tax revenue for public schools, the City, and State during its first 30 years of operation
An estimated $400 million of net new economic impact annually
Increased foot traffic to 700+ retail businesses within ½ mile of the arena
*The study was paid for by 76DevCo, a partnership between 76ers Managing Partners Josh Harris and David Blitzer and Philadelphia Business Leader David Adelman.
While the numbers from the study are projections, the main bright spot for the project is it comes at no cost to city tax payers.
The 76ers are bringing the full funding required to build the arena, injecting over $1.5 billion in private dollars to revamp the Market East area.
Social Impact
Sports stadiums often come with significant social costs, particularly for the communities where they are built.
Historically, these large developments are situated in lower-income, marginalized neighborhoods due to the availability of vacant or low-cost land.
While stadiums can stimulate economic activity, they often catalyze gentrification and contribute to the displacement of long-established residents and businesses.
In Philadelphia, Chinatown residents have expressed deep concern over the proposed 76 Place arena.
A community impact study developed by the City of Philadelphia found that half of the small businesses in Chinatown are not positioned to benefit from the Arena and may experience negative impacts.
Many fear the development will shift the neighborhood’s identity, turning it into a hub for tourists and arena visitors rather than preserving its cultural legacy as a vibrant center for Asian American life in the city.
Final Thoughts
Let's be clear: The 76ers franchise, its ownership group, and the real estate developers will benefit the most from 76 Place.
Generally, a new stadium will create jobs and stimulate economic activity at the expense of local taxpayers and local culture
In Philly’s case, most of that is true as well.
The silver lining is that the stadium is privately funded, but the community impact cannot be ignored.
Having spent three years in Philly, including the thrill of an Eagles Super Bowl, I know how deeply rooted sports culture is and why a downtown arena feels deserved.
That said, some of my favorite memories were made in Chinatown, and I hope the Sixers can get their new arena without disrupting its vibrant community.
P.S. This article marks my 100th post for BACKCOURT Business! If you’ve enjoyed reading, consider upgrading to a paid subscription for access to more in-depth analysis and my full archive of content.
Until next time ✌🏾