Saturday, February 19, 2000
Surprise cost hikes common
BY PHILLIP PINA and LUCY MAY
The Cincinnati Enquirer
The controversy that has erupted here over Bengals stadium construction costs is brewing in other major-league cities, too.
Earlier this week, Hamilton County leaders said Paul Brown Stadium is over budget, possibly by as much as $45 million over the $287 million price tag.
It's a similar story in Cleveland, Indianapolis, Phoenix and other cities that have undertaken such major projects.
Eager to keep or attract professional sports teams, cities across the country have spent an estimated $12 billion on sports facilities since 1990, said Dean Bonham, chairman of The Bonham Group, a Denver sports consulting firm.
Cost overruns, he said, are commonplace.
“I know it's not that much consolation for Cincinnatians, but it's not all that unusual,” Mr. Bonham said.
In Cleveland, officials blame a quick schedule and higher contractor bids than expected for $67 million in overruns on the Browns stadium. In Indianapolis, soil contamination added $8 million to the cost of a new arena. And construction changes and a steel shortage added to $80 million in overruns at Bank One Ballpark in Phoenix.
“A lot of fast-track projects run into this,” said Tom Harris, vice president of finances for the Arizona Diamondbacks, Bank One Ballpark's main tenant. Unexpected problems must be dealt with quickly, he said.
The options are to delay the facility's opening, he said, which is never acceptable, or pay higher labor costs for overtime and more workers.
Critics say that should not happen.
“The real scandal is that politicians sign these things (stadium deals) without anticipating the likelihood of cost overruns,” said Andrew Zimbalist, an economics professor at Smith College in Massachusetts and an author of books critical of the economics of stadiums.
During the stadium construction boom of the past few years, cost overruns have typically ranged between 30 percent and 40 percent, Mr. Zimbalist said.
But there have been a few success stories. Enron Field in Houston will likely open in March about $2 million under budget, said Chris Begala, spokesman for the Harris County-
Houston Sports Authority.
The agency, created to build two new major-league stadiums, is building a $250 million retractable-roof ballpark for baseball's Astros. Attention to details in planning, contract language and at the work site are the reason for Enron Field's financial success, Mr. Begala said.
Houston created a quasi-government authority for the stadium projects using a 2-percent hotel occupancy tax and a 5-percent car-rental tax. Its board members include well-known businessmen and developers, experienced in large-scale building projects.
They knew what to expect, what to challenge and what to demand, Mr. Begala said.
They insisted on an unwavering maximum price for the stadium, he said. And they went to three separate insurance companies to insure against overruns. It was in everybody's best interest, he said, to get this done on time and on budget.
The moves have made it in everybody's best interest, financially and politically, to get this done on time and on budget, he said.
Yet even Houston has its problems. The authority will break ground this spring on a new NFL stadium. On Wednesday, it was revealed that the construction cost, originally believed to be $310 million, has been refigured at $367 million.
But Houston officials said the $57 million increase will be borne by taxpayers.
With the first football game in Cincinnati's Paul Brown Stadium only six months away, there is a big push to make sure the project is completed on time. That means more workers, and more overtime.
And still ahead is a new ballpark for the Reds. The county says it is taking steps to prevent similar cost overruns. For example, an auditing firm will be hired to work on the project, which was not done for the Bengals stadium.
Also, the Reds lease includes a “maximum county contribution” of $280 million. County officials say anything above that would be the responsibility of the Reds. Yet that figure does not include costs for site preparation and demolition of Cinergy Field. And there is no guarantee those will not rise.
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