Value Capture: A Baseball Perspective

Nationals fans board Metro after a game (courtesy PoPville)

For the second time in as many seasons, it appeared Metro would not be operating at the end of an MLB playoff series-deciding game. Apparently $100,000 – or, around half a bottle of ballpark-priced Dasani water for every fan who attended the game – was outside the team’s price range for an extra hour of rail service. So, following Michael A. Taylor’s grand slam in Game 4 that helped the Nats draw even against the Cubs at two games apiece, I prepared to gut out another evening during which anti-transit chants would overshadow the action on the field. 

But fortunately, mere hours before the game, Pepco generously ponied up the cash needed to avoid a repeat of the 2016 nightmare. Having long since recovered from my San Francisco Giants’ early-April elimination from playoff contention, I could relax and enjoy the game. While it was a tough loss for the Nats, the fact that silenced Metro-hating Tweeters also had to keep their champagne corked should offer fans some solace.

When last-second good Samaritans are the only thing preventing the streets of Navy Yard from becoming Uber-sponsored parking lots, it’s clear that we need a more stable funding mechanism for transit in the DC region. While dedicated funding is a big step in the right direction, amidst that chaotic prelude to last year’s Game 5 we may have caught a glimpse of an effective option that could supplement the funds from the three jurisdictions. As Nationals Park prepares to host the All-Star Game, let’s consider how transit agencies like WMATA can capture the economic benefits they provide not only to professional baseball, but all of society.      

Metro generates substantial revenue for the Nats

While the Nats could probably sell out a postseason game regardless of their ballpark’s location, during the regular season those Green Line trains serving Navy Yard help them earn a lot more money than they would if they played at an outlying stadium surrounded by a giant parking lot. There’s a reason Nationals Park is a popular place to spend an afternoon or evening anytime between April through October while the Redskins, who host only eight regular season games annually, have downsized suburban FedEx Field multiple times during the past decade. Think about it:

• Would you attend as many Nats games as you do if you had to drive, sit in traffic, and pay to park?
• Would you be willing to pay as much for tickets to watch a game at a ballpark inaccessible via non-car modes?
• Does the vibrancy of the transit-oriented neighborhood surrounding the stadium encourage you to attend more Nats games than you otherwise would?
• Have you ever purchased a ballpark beer that you would not have consumed had you driven to the game?

Answering these questions should demonstrate that the basic idea of WMATA’s funding approach for extended service hours – essentially, that those who benefit from the extra trains should use some of their resulting profits to help pay to operate them – actually seems like a pretty logical way to fund transit operation, maintenance, and expansion. Such beneficiaries include not just sports teams, but also housing companies, bars, restaurants, and offices.

Can we turn transit beneficiaries into benefactors?

Real estate developers constructed many of America’s early metropolitan rail systems to make their properties more accessible. But we need to do a much better job than those developers did. Their streetcar lines were soon slowed by automobile traffic, and eventually the private rail routes had to compete against taxpayer-funded highways. With little to no public direction regarding transit planning, the companies had little motivation to continue operating their systems, and in some cases sold their infrastructure to a consortium of auto and oil companies who expedited its dismantling.

Since then, plenty of transit providers around the world have figured out improved ways to capture some transit-generated business revenue. Hong Kong’s Rail + Property (R+P) model, in which the city’s Mass Transit Railway (MTR) purchases property around future station sites at a “before rail” price, sells it at an “after rail” price, and receives a share of developers’ future profits, may be the world’s most successful example. MTR’s active role in land use planning around stations maximizes development projects’ integration with transit.

Due to the resulting efficiency, Hong Kongers can get where they want to go easily. And, as transportation costs comprise only 5 percent of Hong Kong’s GDP, they do so at a fraction of the cost residents of auto-dominated cities such as Houston, TX – which devotes 14 percent of its GDP to transportation – incur (in auto ownership costs and road subsidies) to sit in traffic, receive traffic tickets, and risk crashes.   

Is WMATA capable of this level of success?

WMATA’s attempts at value capture are not limited to billing sports teams for extended service hours, as the agency’s Joint Development Arm works with developers to grant rights to station-adjacent sites in exchange for a portion of project revenue. However, these efforts have had only limited success, largely due to the well-known jurisdictional challenges the agency faces.

We should not expect WMATA to implement a North American clone of MTR’s R+P model. Basic differences regarding issues such as government structure, zoning policy, and labor costs abound, with our region arguably at least as well off as Hong Kong in many aspects of life. But these differences should not preclude us from further exploring innovative funding mechanisms to provide a stable supplement to the jurisdictions’ contributions.

For example, WMATA’s money-losing park and ride lots, catering to commuters who must own and drive cars to even access transit, provide a clear opportunity for value capture. The lots have difficulty attracting a stable base of Metro users, likely contributing to the recent ridership decline. But what if WMATA could sell portions of the lots to mixed-use developers, retaining a stake in the land to ensure they are involved in project planning and receive a share of the profits? The agency could even use some of that revenue to improve suburban first and last mile connectivity, reducing demand for parking and further diversifying the transportation modes riders can use to access stations.

If we can develop a robust value capture system to help fund operation, maintenance, and expansion of our transit system and infrastructure, maybe the buildup to future series-deciding games at Nationals Park will focus on baseball, rather than whether or not Metro will be open.