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City publishes long-awaited studies on the impact of a Sixers arena in the city center

Mayor Cherelle L. Parker's administration on Monday night released long-overdue city-sponsored environmental impact studies to guide decision makers as they consider the Sixers' plans for a new downtown arena.

The analyses were posted on the city's website around 7:30 p.m., eight months after the late December deadline and just hours after the mayor met with Chinatown officials to hear their concerns about the project in person. None of the Chinatown advocates spoke in favor of the arena at the private meeting at City Hall, attendees said.

The city released four studies on community impacts, design, economic impacts, and parking and transportation, along with accompanying memos and descriptions that run to hundreds of pages.

Some highlights:

  1. The 18,500-seat arena would generate about $1.9 billion in additional economic activity during 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 the team says the project is expected to generate, and scholars who study stadium financing warn that consultants' estimates are often inflated.

  2. Although the project would not result in direct “housing displacement” in nearby Chinatown, meaning no houses would be demolished, an arena could cause indirect displacement through gentrification and loss of cultural identity.

  3. The Sixers' goal of increasing public transit use to 40% of fans while another 40% drive is achievable, but not a foregone conclusion. Traffic would still be manageable if no more than 40% of attendees drove, but even small increases in car use beyond that threshold would cause traffic congestion at critical intersections.

  4. Building an arena at the corner of 10th and Market streets would be “appropriate for Center City Philadelphia, provided it is done well,” according to the design review. However, the review also included concerns about the proposal, such as the lack of a public space such as an outdoor plaza – a common feature in recent arena projects elsewhere.

  5. In addition to the 76ers' roughly 41 home games, the new arena could host 53 additional entertainment events per year, including 35 additional concerts, according to the economic impact study. That number will be hotly debated in the coming months. A recent study commissioned by Comcast Spectacor, owner of the Wells Fargo Center, found that the Philadelphia market would see only eight to 12 additional concerts per year with a new arena.

“We are releasing these detailed reports so the public can better understand the impacts of such a multifaceted project for Philadelphia,” Parker said in a statement. “These studies are important inputs to my review of this proposal.”

The Sixers did not respond to a request for comment Monday evening.

Polls in Chinatown show overwhelming opposition to a new arena. Activists there have said they expected the results to be in favor of the project because the Sixers are funding the studies.

Timing of reports

The release comes 10 days before the City Council returns for its fall meeting, where it could pass legislation to approve the project, and 12 days before Chinatown activists and their allies plan to hold a rally and march downtown. to protest the arena. Demonstrators aim to surpass the size of the June 2023 protest that filled downtown streets and brought traffic to a standstill.

The Sixers have stated that a corresponding bill must be introduced in early September so that they can open the arena on time.

“The fact that the Sixers funded these studies and failed to disclose this fact from the beginning says everything about their credibility,” said Vivian Chang, executive director of Asian Americans United. “The failure to calculate the financial costs of the arena to Chinatown, other neighborhoods and existing businesses shows how frivolous and flawed these documents are. … It is clear that these are not the studies the community has requested or that the city needs.”

Council member Mark Squilla, a key player, has promised the public will have 30 days to review any bills before they are introduced. Squilla, whose district includes both Chinatown and the proposed arena site, said Monday he was informed of the study's findings shortly before release.

Like Parker, Squilla has spoken positively about the potential economic impact of the project planned for the corner of 10th and Market streets, but has not explicitly supported it. He said he wants to get feedback from stakeholders after the studies are released and a draft bill is available.

Traditionally, the City Council has asked Squilla to introduce legislation needed to approve the project, such as bills related to zoning changes, permitting issues or land transfers. He said the legislation would be drafted by attorneys for the 76ers and the city.

“They've been working on it for a year,” Squilla said. “I haven't seen it yet.”

The Sixers have repeatedly pushed back the timeline for council approval, and Squilla expressed skepticism Monday that it will happen before the legislature's winter recess. That means that if the bill is introduced, public hearings on the proposal and a final vote may not happen until 2025.

Chinatown officials and activists said they received calls last Thursday night from Parker administration staff inviting them to a meeting Monday to discuss the neighborhood's needs. At that meeting, Parker told the group she had not yet made a decision about the arena, either for or against, attendees said.

“We were invited on pretty short notice,” said Chang of Asian Americans United, who attended the event. “I came here not knowing what to expect, and then I was completely blindsided by the fact that these studies were published.”

John Chin, executive director of the Philadelphia Chinatown Development Corp., who was also in attendance, said the mayor said, “She wanted to hear our opinions first at this meeting. What are our issues? What are our concerns? What do we think about Chinatown in general? … She said she would incorporate all the information she heard today into her evaluation process.”

Mayoral spokesman Joe Grace said the administration does not comment on private meetings.

The plan must be approved by the city council

The Sixers' efforts to build a $1.55 billion arena and residential tower in downtown Philadelphia, announced two years ago, are still awaiting approval from local government. New Jersey Gov. Phil Murphy said Garden State officials were talking to the team about moving to Camden, where the Sixers have a training facility, and Delaware Gov. John Carney has invited the team to explore a move to Wilmington.

The Sixers say they are focused on Philadelphia.

In July 2022, the Sixers announced their intention to build a world-class showpiece on the roof of Jefferson Station. They say the project will not only benefit the team, but also breathe new life and economic vitality into the struggling business district.

Comcast Spectacor, the company that owns the Flyers and the Wells Fargo Center, where the Sixers are tenants, wants the basketball team to stay and participate in plans for a future arena in South Philadelphia. The Sixers insist they will be gone when their lease expires in 2031.

Comcast Spectacor Chairman and CEO Daniel Hilferty said Monday evening that the company is reviewing the studies and thanked Parker for their publication.

“We believe the best thing for the fans and the community would be for the 76ers and Comcast Spectacor to remain united and based in South Philadelphia,” he said.

The city administration has not offered an explanation for the long delay in publishing the studies, other than to say that preparing this type of report is complicated. All four reports have been translated into Spanish and Chinese.

Former Mayor Jim Kenney commissioned the studies to bring clarity to the city's biggest development dispute in years.

The economics of a new arena

Sports and entertainment specialist CSL International has been commissioned to conduct the economic assessment for a project that the Sixers say will provide a huge economic boost.

CSL's job also included looking at markets with more than one arena. That's a big question for Philadelphia, where the Wells Fargo Center recently completed a $400 million renovation. The Sixers say the city is missing out on concerts and shows, but others say building a second, similarly sized arena would ruin both, since both would have only one sports team and other events to compete with.

A study commissioned by Comcast Spectacor concluded that two arenas would split the market, resulting in a loss of attendance and revenue in both cases.

According to the CSL study released Monday, the Wells Fargo Center would suffer from the losses, as it would suffer significant losses in suites and naming rights as well as the loss of Sixers games, but the Philadelphia market can support two financially viable arenas.

Although the $390 million tax impact projected in the study is a fraction of the team's estimate, it may still be too high. Scholars who study stadium and arena financing say studies by consulting firms regularly overstate the potential economic and tax benefits of new arenas.

For example, Arthur Acolin, a professor of real estate and finance at the University of Washington, recently estimated that the Sixers project would result in $908 million in lost tax revenue, largely by displacing or disrupting neighboring businesses.

“Independent economists agree that arenas and stadiums routinely fail to deliver on their developers' financial promises and that, when their actual costs are taken into account, they contribute nothing to city and state tax revenues,” Acolin wrote.

The community impact study is being conducted by BJH Advisors, a New York-based real estate planning firm, and Philadelphia-based Sojourner Consulting, among others.

The aim is to examine the most affected district, Chinatown, where resistance to the arena is enormous. But also to explore the arena's impact on other residential and commercial areas such as Washington Square West and the Fashion District shopping center.

Chinatown advocates say the studies are designed to support the construction of an arena, not whether one should be built at all.

Owning their arena would allow the Sixers to control and profit from everything that happens inside, while removing one of the city's four biggest teams from the South Philadelphia Sports Complex. The Sixers say the project would benefit the city, spur economic growth and encourage people to use a SEPTA system that needs ridership and revenue.

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