The 76ers aren't causing gentrification. They're exploiting it.
The 76ers aren't causing gentrification. They're exploiting it.
Part two of the progressive's guide to stadium development
In July 2022, the Philadelphia 76ers dive-bombed into land use politics and proposed a new arena in Center City Philadelphia. If the team’s playoff history is any indication, then the proposal won’t survive a second round of plan checks, but activists in the adjacent Chinatown community didn’t wait to find out. They organized immediately to oppose the project.
“To Chinatown’s champions, the proposed arena fits a pattern of land grabs, paving the way for yet another sports development project,” the New York Times reported. The Sixers’ proposal harks back to “what happened in Washington, St. Louis and other cities, when gentrification and redevelopment shrank or erased downtown Chinatowns.”
The Sixers fanning the flames of gentrification is an understandable concern, though one that may be difficult to substantiate.
No stranger to fiscal imprudence, my native New Jersey gave the Sixers $82 million to build a corporate headquarters and practice facility in Camden. "We are so proud … that the 76ers can now call Camden home and say that they, too, played a huge part in the rebirth of Camden, New Jersey," then-mayor Dana Redd said at the ribbon cutting in 2016.
Today, only a handful of the Sixers’ nearly 300 employees are from Camden, where the median household income is about $36,000, and little of the community and economic development promised to the area has been realized. This aligns with most research on the economic impacts of sports teams and their venues. They don’t add much to local economies. They just are there. The Sixers moved to Camden and nothing happened because nothing was ever going to happen.
But studies and semantics are cold comforts, and gentrification is threatening Philadelphia’s Chinatown whether the Sixers move next door or not. The legitimate fear of displacement complicates the vision of a more urban America, one that is sustainable, social, and just. (In part one of this series, I argued that sports venues should be in urban cores.) What we need, then, is a more honest consideration of arenas and ballparks and a different way of delivering them.
The Rent Gap
The late geographer Neil Smith explained gentrification as the difference between the money a property is generating and what it can generate. Smith called this the rent gap. That rent gap attracts investment to capture the potential profit. Et voilà: gentrification.
It’s purely an economic theory, one that considers the presence of real estate professionals, hipsters, and artists as a symptom, not the disease. Those people are often the face of changing neighborhoods; according to Smith, gentrification is “the class remake of the central urban landscape,” but the classes move because capital precedes them. Capital vacating an area one day leads to the conditions that capital loves: low costs and high margins.
It seems like luxury apartments drive up rents and attract yuppies, but this kind of development is about closing an existing rent gap. The conditions for gentrification are there long before the backhoes are wheeled in, and those who benefit most aren’t sleazy local developers but rather distant institutional investors like pension funds and private equity firms. Theirs is the capital shoveled into the furnace of the real estate industry. Modern capitalism demands gentrification. What we see on the surface is a delayed, tactile expression of it.
Speaking of economics, sports mean nothing. They represent about one or two percent of the nation’s gross domestic product, depending on how it’s calculated, and on the local level they mean even less. Andrew Zimbalist, the Babe Ruth of stadium research, notes that a sports team “contributes between one-third and one-twentieth of one percent to the local area economy.”
On average, about 76,000 households with televisions watched the Sixers’ regular season games in the 2020-2021 season. That’s just 2.5% of households in the Philadelphia media market. At most, another 20,000 are watching the game in person. The other 97% of the Delaware Valley prioritizes its mental health. For all intents and purposes, no one watches the Sixers and they have no impact on the Philadelphia economy. It strains credulity that their moving to Center City could cause gentrification.
That’s not to say gentrification isn’t happening in or near Chinatown. The Sixers moving to Center City, and doing so without public subsidies, indicates the existence of a rent gap. The team wouldn’t build a privately financed arena on the site of a bankrupt mall on the disinvested Market Street corridor if there wasn’t money to be made. And as Smith noted, rent gaps don’t end abruptly. They gradually peak and dissipate. If there is an investment opportunity at 10th and Market, as the Sixers believe, then there are likely investment opportunities one block away, near Chinatown’s Friendship Gate. Just as the Sixers presence won’t cause gentrification, their proposed community benefits agreement won’t stop it.
The Sixers’ facility across the river shows that gentrification is far more about the underpinnings of the economy than it is about a single sports team or where they play. State and city leaders in New Jersey wanted revitalization, if not gentrification.
“They were saying it would bring job growth to our urban community,” Camden resident Jaylynn Silva told Metro Philadelphia, “but the fact that a lot of people don’t even know the facility is here is proof that they haven’t done enough.” It’s a sentiment also found in a neighboring affordable housing community.
“We don’t get nothing from them being here,” one resident said about the Sixers. “They could at least clean up the trash on the street near us and help out with all that money they saved moving here.”
Following Smith’s theory, there are no rent gaps near the facility and therefore not much money to be made and therefore no other private investment happening. Again, a business as small as the Sixers in a region as large as Philadelphia’s would never—could never—change the fate of a city. Like the yuppies, the Sixers are a symptom, if an extremely rich one. Their $82 million subsidy would have been better spent on $1,155 checks to each of Camden’s 71,000 residents.
Why the rent gap exists
Bear with me: the Sixers’ Center City arena proposal devolving into a political cage match stems from the founding of the Federal Housing Administration, established during the Great Depression to regulate the housing market and insure mortgages. It began the modern commodification of housing.
Homeownership through subsidized mortgages helped stabilize a depressed economy, but over time it has turned into a regressive form of welfare reliant on ever-increasing home values. This presents externalities from the global (2007–8 financial crisis) to the local (neighborhood opposition to, say, apartments and sports arenas). It’s actually an ingenious bit of conservatism. The U.S. can get away with providing a meager social safety net because Americans are reliant on privately owned homes for, like, everything.
This private wealth is further supported by the mortgage interest deduction (MID), which allows homeowners to deduct their mortgage interest payments from their taxable income. This costs the government $30 billion a year, and any qualifying taxpayer can claim it. For comparison, the government passed a budget package in March that includes $28 billion for rental vouchers, which are not entitlements. In 2023, Philadelphia opened its rental voucher waiting list for the first time in twelve years. Over 36,000 people applied. Only 10,000 were chosen. It could take up to five years for those folks to get assistance.
All you need to know about how the U.S. feels about housing is that the federal government’s primary tool for affordable housing development is administered by the Treasury. These homes are privately owned. Our implicit national policy is ensuring homeowners and investors never experience a dip in wealth, rather than making sure people are affordably and safely housed. “No longer was housing conceived as a common good that a society agrees to share,” Raquel Rolnick writes in her book Urban Warfare: Housing Under the Empire of Finance. “Instead it became a mechanism of rent extraction, financial gain and wealth accumulation.”
Since public housing never represented a significant portion of the U.S.’s housing stock, commodification is better exemplified across the pond. Almost half of Britain’s population lived in council housing, the U.K.’s unique form of public housing, at its high-water mark in the 1970s. Central to the council housing model was secure tenure. As long as a tenant adhered to their rental terms, their tenancy was secure for life.
This form of stability is essentially nonexistent stateside. Of the 144 million housing units in the US, about one million, or less than one percent, are publicly owned. And every year, rent restrictions on thousands of privately-owned affordable homes are at risk of lapsing.
Unfortunately, the council housing model has been mostly dismantled. The Right to Buy program, through which council housing tenants could buy their unit at a discount or with favorable financial terms, removed many units from public ownership.
The British government also incentivized localities to sell off council housing to private investors and companies and has pivoted to public-private partnerships to construct new affordable housing. As of 2018, seventeen percent of the English population lived in council housing, meaning millions are without the secure tenure that benefitted the postwar middle- and working-classes. I think it's no coincidence that in recent decades living standards have fallen in Britain.
Wherever it occurs, housing’s commodification is a feature of the modern economy, which political economist David Harvey describes as having four characteristics: privatization, financialization, the management and manipulation of crises, and state redistributions. He summarizes these elements as the accumulation of wealth by dispossession. This dispossession often takes the form of usurious rents and displacement—in a word, gentrification. This gentrification descends from and is turbocharged by scarcity.
Private ownership promotes wealth accumulation. Fueled by FOMO, prospective property owners seek subsidies and incentives to buy. Incumbent property owners impede any change they believe would devalue their assets. They both oppose the redistribution of their wealth for the common good. Fewer homes get built as a result, driving up property values and rents, which leads to further wealth accumulation.
This often leaves disinvested and gentrifying urban areas as the only places to build, and the dispossessed oppose development because it’s about survival. A future of abundance and security is possible if we break this cycle.
What to do about the rent gap
We don’t need a revolution to have government officials and sports executives stop making stuff up about their teams. No, your squad isn’t the linchpin to the regional economy. It’s just a business, and a small one at that. No, your arena isn’t a once-in-a-lifetime opportunity to revitalize a neighborhood. It’s just a building, and one that isn’t used everyday.
The public sees through these claims, in part because of the studies that show that teams and stadiums have no additive economic impact but mostly because they’ve lived through enough American hucksterism. We’re told over and over that a new project or business will be a game changer, then the game doesn’t change, at least not for the non-rich, or it gets worse.
The Sixers’ Center City arena is a real estate deal meant to enrich the team (i.e. its owners) by giving it full control of venue revenues and bolstering its balance sheet. If the Sixers need to spin in it, then they should say that the new arena will allow them to invest further in the roster and the fan experience, not that it’ll apply an AED to one neighborhood and protect another. Being honest engenders trust, which is essential to having productive politics. Eight years after the Sixers opened their facility in Camden, residents are embittered over commitments the team couldn’t possibly fulfill. That’s helpful to no one and it poisons the well for future development (see: the Sixers’ Center City arena proposal).
While cutting the crap would help on the margins, gentrification is a systemic problem, and three things need to happen to both protect vulnerable communities and make developing urban sports venues easier.
First, we need to allow development everywhere. Get rid of zoning. Get rid of height limits. Reclaim developable land from streets. Do whatever we have to do to build everywhere because restrictive land use policies drive up housing costs and promote sprawl and gentrification.
Of the many benefits, one is that capital would flow to the nicer areas that were closed off to redevelopment for decades. In other words, it would work to close a newfound rent gap; it would gentrify wealthy communities, if such a thing is possible. Lifting development restrictions everywhere would be like opening a relief valve for communities facing gentrification today. It would also give sports teams more options of where to build a venue, possibly diffusing the politics of stadium development.
At the same time, governments at all levels need to get into the business of housing. There is no permanent, long-term solution to gentrification without public housing options for all.
What if half of Chinatown’s housing stock was publicly owned, as half of all homes were at one time in the U.K., and tenure in those homes was secure for life? This would establish a beachhead against market forces, stabilizing a significant part of the neighborhood and offering affordability in perpetuity. A secure Chinatown would also allow the community and the 76ers to focus on the tangible impacts of the proposed arena—traffic patterns, crowd control, trash collection, and so on—rather than on existential threats.
To Americans clutching their pearls, I say: relax. Not all housing needs to be provided by the government. In reporting on Vienna’s social housing model, the New York Times found:
Vienna’s generous supply of social housing helps keep costs down for everyone: In 2021, Viennese living in private housing spent 26 percent of their post-tax income on rent and energy costs, on average, which is only slightly more than the figure for social-housing residents overall (22 percent). Meanwhile, 49 percent of American renters — 21.6 million people — are cost-burdened, paying landlords more than 30 percent of their pretax income, and the percentage can be even higher in expensive cities. In New York City, the median renter household spends a staggering 36 percent of its pretax income on rent.
Finally, we need stronger anti-displacement measures like rent control and relocation assistance. People playing by the rules shouldn’t be kicked out of their homes. A building being renovated shouldn’t imperil its tenants' livelihoods. Housing is a necessity. Let people live.
These three things aren’t a menu. Picking your favorite intervention isn’t going to flatten the rent gap and end gentrification. We need all three.
I love sports, which belong in urban areas, near people. The Sixers may not mean much economically, but they mean a lot socially and culturally. They bring us together in a way few businesses can. There’s a reason we don’t fill an arena to watch the Philadelphia Accountants click through spreadsheets. Watching people play pro basketball with the name of our city across their chests fulfills us uniquely. I look forward to the day when a sports team proposes an urban venue and we get to say, “Knock yourself out.”
Coming next month: Part Three, which will address stadium subsidies. Subscribe if you like what you read. If you’re already subscribed, then share this post with someone in your life.
Great post! It's interesting to see how lost Americans can be when it comes to housing and understanding the ins and outs of it.
You show with evidence
how gentrification is a baked in economic force that hurts everyone—except none of us realize it. Great piece.