It’s the nature of modern capitalism, at least the U.S. version, for corporations and billionaire business owners to ruthlessly pit cities and states against one another in competition for the next corporate headquarters move, new manufacturing facility, or pro sports franchise in search of a taxpayer-financed stadium or arena.
It’s not a pretty business. San Antonio has won some, lost some. It felt really good when AT&T left St. Louis and came here in 1993. It felt really bad when AT&T announced it was leaving San Antonio for Dallas in 2008. In both cases, it came down to the CEO making a choice. The arrival of Toyota sparked a Southside rebirth that continues to gain momentum. That still feels good.
People like Elon Musk, the larger-than-life inventor-investor who gave the world Tesla, and Mark Davis, principal owner of the Oakland Raiders, know they will get the best deal for their ventures by speed dating as many potential public suitors as possible. Every targeted city, sometimes multiple cities in the same state, are led to believe they have a shot at going to the altar.
San Antonio, for example, thought that it was runner-up for the Tesla factory, which will be built in Nevada, outside Reno and near the Fremont, CA Tesla factory. Perhaps we were, but we’re not alone in feeling jilted. Here is the headline in today’s Sacramento Bee: Tesla reportedly chooses Nevada for big factory; California falls short. Here is another headline, this one on AZcentral.com in Phoenix: Arizona loses bid for Tesla.
Hmm. Was San Antonio being played? Local officials say no, but some staffers understandably feel otherwise. When a Musk or Davis or their representatives slip inside the city limits here or anywhere, they get VIP treatment. Basically, elected officials and civic leaders drop everything and go into full sales and marketing mode. We citizens expect nothing less.
Behind every official or CEO is an army of hard-working people who are asked to work nights and weekends to put together the details of a deal. Those are the people today who are seeing the work they did to attract Tesla go for naught. Many of the same people are asking: Why do we have to go through this for the Raiders?
Musk and Tesla hit the jackpot in Nevada with a 20-year, $1.25 billion tax incentive package. Click here to read the Reno Gazette-Journal’s coverage of today’s press conference in Carson City. Click here to view the press conference video. In essence, Tesla will operate tax-free for a decade in return for a minimum $3.5 billion investment in the “giga-factory.” Nevada officials believe the project will ultimately lead to $10 billion in direct investment. The deal now goes to the Nevada Legislature for approval.
Cities act as if they don’t have much choice in offering such stupendous financial deals. Once a San Antonio is told it’s on the short list, officials with the City, Bexar County, CPS Energy, SAWS, the Chambers, entities like Brooks City-Base, Port San Antonio, etc., all come together to assemble the richest possible financial package that often includes free land, tax incentives, and workforce training. Some inducements require legislative approval. Outright cash contributions are made from state enterprise funds in some cases. Those funds, in Texas and other states, have been misused politically and become the subject of legal scrutiny.
The only alternative is to refuse to play the game, and that’s not really a choice for responsible officeholders and economic development leaders who are entrusted to create jobs, build the local economy and make San Antonio as attractive and amenity-rich as possible.
What local leaders can do is become more selective. Interestingly, San Antonio’s package for Tesla was said to be worth $800 million, according to reports in the Express-News, while a story in today’s Oakland Tribune reports that the city and county there will have to absorb the $1 billion costs of a new stadium if Oakland is going to keep the Raiders. Even then, an Oakland columnist writes, the city might lose the Oakland A’s because the Raiders and A’s are the last two teams from the NFL and MLB to share a stadium, and the city and county can’t afford to meet the individual stadium needs of both franchises.
Oakland at the moment is waiting on Davis. San Antonio shouldn’t do the same. Tesla and Musk might have used the city to get what they wanted elsewhere, but Musk did choose the Rio Grande Valley for his SpaceX rocket launching facility. He is a certified visionary who is changing the world. His battery factory would have created thousands of good jobs here. San Antonio was right to pursue Tesla and Musk to the very end, and when he comes up with his next venture, we ought to renew that pursuit.
The Express-News is producing one story after another pronouncing the Raiders deal still alive. Anything is possible, I suppose, but was the deal ever really alive? Davis would want San Antonio to give him the same billion-dollar stadium he’s being offered in Oakland and probably will be offered in Los Angeles, and he probably wouldn’t want it in the urban core.
Davis would want his 100-suite stadium far enough up I-35 that you might as well rename the franchise the Outlet Raiders. That way Austin corporations and pro football fans would feel the team was theirs, too. What would the city get in return? A mediocre franchise, on and off the field. Eight home games. No thanks.
The arrival of the Raiders might make us feel like a bigger city, but the team wouldn’t make us a better city, and therefore, no public investment can be justified.
I’ll be rooting for Coach Larry Coker and the UTSA Roadrunners as they take on Arizona at the Alamodome this evening. You don’t have to be a UTSA alum, as I am, to see the university building an incredible program and accomplishing more than anyone, even the most ardent boosters, thought possible in such a short time.
Then there’s the other futból. I think Mike Sculley, Bexar County’s community projects manager and sports expert, has it right. San Antonio and Major League Soccer make a lot more sense. The MLS is expanding, albeit with serious challenges as it tries to establish itself in new markets. The San Antonio Scorpions have fueled talk with the release of a colorful rendering of a proposed new MLS stadium here.
But it’s too early to get excited. So far, San Antonio isn’t even on the short list. Give people a chance to recover from the Tesla news before we ask them to put together the next big dream deal. When the next deal does come along, let’s remember to ask ourselves: What’s the return on investment?
*Featured/top image: Tesla’s Model S. Photo courtesy of Tesla Motors.
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