The home of the Dallas Cowboys and Texas Rangers is making a risky bet on the fast-growing world of competitive video games.
Arlington, Texas, is gambling $10 million of taxpayer money on what it calls the country’s biggest electronic-sports venue. The city of 396,000, which has sunk about $1 billion into football and baseball stadiums, is wagering that gamers will leave their homes, where they can follow “Overwatch” or “Fortnite” matches on live-streaming apps, to witness contestants in tricked-out easy chairs compete on big screens.
The lure is esport’s growth. Worldwide revenue from sponsorships, merchandise and tickets, game-publisher fees, media rights and advertising is expected to reach $906 million this year, according to Amsterdam-based Newzoo. For Arlington, that may be enough to overcome the unsavory underbelly of the subculture. This includes the mid-2010s scandal known as Gamergate, a social-media frenzy of male gamers who ganged up to harass and threaten female journalists and gamers and the Aug. 26 shooting deaths of three men at a “Madden NFL 19” tournament in Jacksonville, Florida.
“The revenue is growing so quickly, and the sport is growing so quickly, that we want to be there at the table and starting that revenue generation as soon as possible,” said Arlington Mayor Jeff Williams.
The venue, slated to open later this year, will accommodate 2,000 fans. It will also include shops, team training areas, a broadcast studio and a VIP room. The city said its investment will be repaid with event proceeds, arena-naming rights and lease payments on the building.
Economists have repeatedly warned cities about the folly of supporting sports venues.
“Every dollar that Arlington spends on this esports arena is a dollar it can’t devote to education or roads or public safety,” said Michael Farren, an economist at George Mason University’s Mercatus Center in Arlington, Virginia.
For the investment to pay off, fans will need to come from outside Arlington, said Andrew Zimbalist, an economics professor at Smith College in Northampton, Massachusetts. If most attendees already live in the area, it simply “reshuffles” spending from other entertainment venues, such as movie theaters or bowling alleys.
“It perplexes me that this is something that’s happening at all,” Zimbalist said.
Gamemaker Activision Blizzard Inc. has opened arenas in Taipei and Burbank, California. Allied Esports, a joint venture of Chinese gaming companies, has venues in Santa Ana, California, and Las Vegas and an internet cafe in Beijing with gaming stations and space for 200 spectators. The University of California-Irvine opened an arena in 2016.
Arlington voters have twice approved stadium funding for Major League Baseball’s Rangers. In 1991, they OK’d the sale of $135 million in bonds to build what’s now called Globe Life Park. And in 2016, they approved as much as $500 million for a $1 billion ballpark, yet to be built, with a retractable roof.
The city’s pride, however, is AT&T Stadium, also known as Jerry World after the Cowboys’s billionaire owner. In 2004, voters passed new sales, hotel and car-rental taxes to put $325 million toward the $1.2 billion, 80,000-seat stadium.
The subsidies were unnecessary, according to John Vrooman, an economist at Vanderbilt University in Nashville. Revenue from ticket sales and sources like sponsorships, concessions and parking over the next 30 years would cover the cost four times over, he said in a 2010 report. Forbes ranked the team the most valuable in the world this year.“There’s little left for local taxpayers in Arlington but the game-day congestion and the regressive tax bill,” Vrooman said.
While much has been said about the violence of the National Football League, a 2015 American Psychological Association report linked playing shoot-’em-up video games with heightened aggression. Jay Warren, a spokesman for Arlington, said the city works with local, state and federal partners to create plans for safe and inviting environments.
“We have strong safety protocols in place for the variety of events, big and small,” he said. “Our attention to the security of our new esports stadium will not be any different.”
©2018 Bloomberg L.P.