As Sports Teams Struggle, So Do Their Hometowns
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J. Gilligan’s Bar & Grill, known for its signature Irish nachos, sits less than a mile from the home stadiums of the Dallas Cowboys football team and the Texas Rangers baseball team in Arlington, Texas.
For years, fans have converged on J. Gilligan’s every game day, spending as much as $350,000 a year on food, beer and shuttle service to Cowboys games. This year’s Rangers opening day, with no fans allowed because of the pandemic, brought maybe 10 customers, owner Randy Ford said.
“It’s just knocked our legs out from under us,” Ford, 70, said.
The pandemic has dealt a hammer blow to the entire sports industry and its dependent businesses, from restaurants and hotels to car rentals. That, in turn, hurts cities and states that have less tax revenue coming in for needed community services.
The fragile XFL football league, which included the Arlington-based Dallas Renegades, was thrown into bankruptcy after five weeks of play, and more stable pro teams still face uncertainty amid the risks of COVID-19.
“Pro sports are taking a beating,” said Michael R. Ward, a professor of economics at the University of Texas at Arlington.
A coronavirus outbreak among nearly 20 Miami Marlins and multiple St. Louis Cardinals players led to at least 30 postponed games during the first weeks of the new baseball season. Other leagues, including the NBA, NHL and MLS, are playing in a highly unusual “bubble” environment, without fans, on single campuses to reduce risk to players and coaches.
Governors in several states began allowing the return of pro sports in early May. But league officials, teams and players have increasingly become part of the decision-making as states with prominent sports franchises, such as Texas, California and Florida, also became hotspots for the virus.
For governors, permitting the return of pro sports has been part of broader plans to restart the stalled economy, return people to work and resurrect crumbling state and municipal budgets. Getting players back on the field also was seen as an important return to some semblance of normalcy and a way to boost the morale of a public stunned by the worst health disaster in a century.
But health experts say policymakers’ top priority has always been to fight the spread of the pandemic. “Safety, for the players and for the fans, trumps everything,” Dr. Anthony S. Fauci, director of the National Institute of Allergy and Infectious Diseases, said in April. “If you can’t guarantee safety, then unfortunately you’re going to have to bite the bullet and say, ‘We may have to go without this sport for this season.’”
Arlington, tucked between Dallas and Fort Worth, is a prime example of the pandemic’s economic fallout. It hosts three pro sports teams — the Rangers, Cowboys and Dallas Wings of the WNBA — as well as a Six Flags and other entertainment venues.
Other metropolitan cities bear a similar distinction. In California, Anaheim is home to the Los Angeles Angels baseball team, the Anaheim Ducks hockey team and the Disneyland Resort.
Across the continent, in South Philadelphia, four professional sports teams — 76ers basketball, Eagles football, Phillies baseball and Flyers hockey — play in a sports complex accessible by mass transit from the other side of town.
With sports and entertainment enterprises fueling much of their local economies, Anaheim and Arlington have been especially vulnerable to the collapse in tourism resulting from COVID-19. Both cities have populations around 400,000 and sit within two of the nation’s largest metropolitan regions.
More than 25 million international visitors a year typically pour into Anaheim, about 25 miles southeast of Los Angeles, to tour the Disneyland theme parks, watch the Angels or Ducks and catch sold out concerts at the Honda Center.
But Disneyland, the city’s dominant tourist magnet, has been closed for more than four months. Like other teams, the Angels are playing again, but without fans. The number of customers has plunged at hotels, restaurants, retail outlets and other businesses.
Anaheim city spokesperson Mike Lyster describes the catastrophe as “an unprecedented shutdown of our economy.” Municipal income from the hotel tax, traditionally Anaheim’s biggest source of revenue, has dropped 30%, from about $120 million to $84 million.
Sales taxes also are down by about 5%, reflecting in part the loss of money that visitors typically spent in restaurants and retail stores during their stays in Anaheim.
Projected revenue to the city’s 2020-21 general fund, the main source of day-to-day funding for public safety, community service and general operations, has fallen 22% to $344 million from a year earlier, forcing city officials to freeze hiring and nonessential spending and tap reserve funds.
Meanwhile, Arlington typically averages about 14.5 million visitors a year, employing 12,000 in the hospitality industry, but the number of visitors dropped by about half as the pandemic took hold.
Mayor Jeff Williams, a Republican, describes the economic calamity as the equivalent of a “natural disaster,” saying a big part of the financial fall-off is from lost sports revenue.
City officials are facing an $18.3 million revenue shortfall that lowers the city’s current 2020 budget to $265 million, with a projected 70% drop in hotel taxes and a 40% reduction in sales tax, City Manager Trey Yelverton said.
The city has been forced to scale back expenditures and reduce or eliminate part-time hours but has thus far avoided layoffs or furloughs, Yelverton said.
An $11 million shortfall is projected for the fiscal 2021 budget that will be adopted in September, with revenue falling from $265 million to $254 million.
“Sports and entertainment are a critical part of not only our economy but just our way of being,” said Michael Jacobson, president and CEO of the Arlington Chamber of Commerce. “Sports franchises are economic engines for communities. So when a significant economic engine is not open, that has a negative economic impact.”
A 2016 study projected that the Rangers stadium that opened in July would generate an annual $77.5 million windfall in direct and indirect economic benefits for Arlington and $137.6 million for surrounding Tarrant County. The economic outlook has tanked since the pandemic struck.
“Visitor-oriented businesses are going to take a hit, and they’re taking a hit,” said Amitabh Barthakur, a Los Angeles-based partner at consulting firm HR&A Advisors, which conducted the study. “Cities whose fiscal revenues depend on visitor-oriented business are going to face some tough choices.”
Ward, the economics professor, said many of the restaurants, bars and hotels that support sports franchises already operate at below break-even capacity and “are teetering on the edge.” Even if pro sports franchises fully open, he predicted, fans may be too worried about the virus to attend games or “will think twice” before going to a bar or restaurant.
Not every eatery is confronting hard times. In February, 33-year-old Brandon Hurtado, who owns a digital marketing agency in Arlington, opened a Tex-Mex restaurant about a mile from the stadiums after operating a successful food truck near the sports locations. On a recent Sunday, as he looked out the window of his cafe about 15 minutes before it opened, more than 50 customers were waiting to pick up online orders.
“That’s why we selected this as our location for the restaurant,” he said, adding that he had a “gut feeling” that locating near the sports and entertainment sites would be a good business move. “It’s been pretty busy,” he said, adding that he has no intention of shutting down.
Last month, the Rangers, the team once co-owned by former President George W. Bush, played their first game in the new $1.1 billion ballpark just across from the Cowboys’ 11-year-old AT&T Stadium. The only fans were cardboard cut-outs, including front-row likenesses of the former president and former first lady Laura Bush.
The ballpark is the result of a nearly four-year public-private partnership to house the Rangers in a stadium with a retractable roof and air-conditioning to beat the oppressive summer heat.
“Obviously, these are unprecedented times,” said Rangers spokesperson John Blake, noting that city and team officials were forced to scrap plans for a Chris Stapleton and Willie Nelson concert and other events planned for the buildup to opening day.
The MLB season was scheduled to open March 26, with a 162-game run, before being shortened to 60 games that started July 23.
That has already resulted in budget cuts, salary reductions and furloughs of about 60 employees, or 12% of the Rangers’ 500-plus-member workforce.
The Cowboys expect to play their first home game Sept. 20. Under state anti-coronavirus protocols, attendance would be capped at 50% of capacity, but Texas GOP Gov. Greg Abbott has repeatedly been forced to retool restrictions amid surging infection rates.
Since its opening in 2009, AT&T Stadium has gained an international reputation as a multipurpose venue. It has hosted events ranging from high school proms to wrestling and rodeos as well as premier sports contests, including the 2011 Super Bowl.
The Dallas Wings usually play their home games at the College Park Center arena on the University of Texas at Arlington campus. Greg Bibb, the Wings’ president and CEO, believes the performances have had a positive economic impact by drawing more than 5,000 fans to the downtown area for summertime games when many students would typically be away.
But this year, all WNBA games are being played in a single location, at the IMG Academy, a boarding school in Bradenton, Florida.
As in other cities, the pandemic has thrown a cloud of misfortune and uncertainty over Arlington’s array of sports offerings. But team officials, city leaders and fans say they remain confident that better days are ahead.
“Sports is definitely in our DNA, and what we’re going through right now, everything is very depressed, and we’re looking for a time when our professional sports teams are back playing,” said Ron Price, president and CEO of the Arlington Convention & Visitors Bureau. “It’s going to lift the spirits of a lot of us.”