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Not Your Arena?

When it comes to new sports venues, entrepreneurs may be on the outside looking in.

For somebody just blocks away from a half-billion dollars' worth of civic improvements, Dan Bockrath doesn't show much boosterism. "How it affects me is zero, zilch and nada," says the 41-year-old co-owner of Cincinnati's CityBeat, an alternative newspaper with 37 employees. "It" refers to a pair of newly constructed stadiums for Cincinnati's baseball Reds and football Bengals. His lack of enthusiasm fits with a well-established but widely ignored fact: Professional sports franchises and facilities do little for most local entrepreneurs.

Backers of new stadiums say they pump up local economies by encouraging tourism and employing local workers. Nationwide, more than $12 billion has gone into more than 80 baseball, basketball, football and hockey facilities in the past 10 years. But numerous studies show stadiums generally yield few benefits. "Local media benefit, as sports teams usually mean more valuable advertising for newspapers and broadcast stations," says Mark Rosentraub, dean of the college of urban affairs at Cleveland State University and author of Major League Losers: The Real Costs of Sports and Who's Paying for It (Basic Books).

City Beat's advertising sales haven't been noticeably affected, but Bockrath hopes ad sales rise as new restaurants and nightclubs open near the stadiums. Rosentraub warns stadiums may not help nearby retailers much. "As teams become more dependent on in-stadium revenues, the number of restaurants and other retail outlets inside facilities have increased," Rosentraub says. "So there are fewer opportunities for entrepreneurs who invest in surrounding restaurants."

Hank Wiggins agrees. In 18 years of operating Hank's Ice Cream near Houston's Astrodome, he's watched baseball's Astros move to a new downtown stadium; football's Oilers relocate to Nashville; and a new football team, the Texans, move into a stadium close by. Wiggins says none of the comings and goings had a major effect overall. For entrepreneurs, hope revolves around long-range plans for development of stores, restaurants, housing and offices near new stadiums.

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This article was originally published in the August 2003 print edition of Entrepreneur with the headline: Not Your Arena?.

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