[Updated] The 76ers aren't causing gentrification. They're exploiting it.
This essay from April is more relevant than ever
The 76ers’ proposed arena in Center City Philadelphia is poised to win approval at the Philly City Council this week, despite vehement opposition from community activists. This prompted me to pull from the archives this essay, the second in a series about stadium development. I’ve lightly edited it from its original form. TL;DR we’re fighting the wrong fight.
In July 2022, the Philadelphia 76ers dive-bombed into land use politics and proposed a new arena in Center City Philadelphia. Considering the team’s playoff history, I’m surprised the proposal survived a second round of plan checks, especially with the adjacent Chinatown community having 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.
Studies and semantics are cold comforts, though, and gentrification is threatening Philadelphia’s Chinatown whether the Sixers move next door or not. The legitimate fear of displacement complicates my 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.
How gentrification happens
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 symptoms, not the disease. 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 eventually creates the conditions that capital loves: low costs and high margins.
It seems like luxury apartments attract yuppies and drive up rents, but this kind of development is about closing an existing rent gap. The underlying 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 depressed 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.
“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 must be no rent gaps near the facility and therefore no 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 a rich one. Their $82 million subsidy in Camden would have been better spent on $1,155 checks to each of the city’s 71,000 residents.
Why gentrification happens
Bear with me: the Sixers’ Center City arena proposal devolving into a political cage match stems in part 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 relatively 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. For comparison, the government passed a budget package in March that includes just $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, but any qualifying taxpayer can claim the MID.
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. And the homes created with that tool are privately owned. 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.
Our 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.”
Housing’s commodification, then, is an intentional 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. This is, in a word, gentrification. It’s a vicious cycle.
Prospective property owners view homeownership as a way to build wealth, and they demand subsidies so they can get onto the ladder. They buy a home, then oppose changes to land use or the tax code that they believe would devalue their assets. Fewer homes get built as a result, which drives up property values, which results in the government spending more to subsidize homeownership.
This often leaves disinvested and gentrifying urban areas as the only places to build, and the dispossessed oppose development because it’s about survival. Many renters have nowhere else to go. They can’t afford anywhere else.
A future of abundance and security is possible if we break this cycle.
What to do about gentrification
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. Stop succumbing to NIMBYism. Do whatever we need to do to build everywhere because restrictive land use policies drive up housing costs and promote sprawl and gentrification.
One of the many benefits of this would be capital flowing to 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 poorer 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.
Second, 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.
If much of Chinatown’s housing stock was publicly owned and tenure in those homes was secure for life, then there would be 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 the existential threat of displacement.
This isn’t a pipe dream because 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. An apartment 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 to go from this:
To this:
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.
The battle over the Sixers’ arena is an example of how land use politics have became zero-sum in a neoliberal economy. It doesn’t have to be this way. I look forward to the day when a sports team proposes an urban venue and we get excited for it.
Your piece reads like a professional academic public policy prescription for how we redirect the government’s huge current subsidy of gentrification to purposes that are humane and align with with real equal opportunity society. We look forward to your analysis of gentrification in the major cities of NY Chicago LA SD.