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Stadiums "Can Only Do So Much"

As the NBA All-Star Game rolls into town this weekend, Denver is bracing for thousands of fans, international media attention, and what officials hope will be a boon to the local economy. The spotlight will be on a revitalized section of the city known as Lower Downtown, home of the five-year-old Pepsi Center. Along with Coors Field and Invesco Field at Mile High -- all built within the past decade -- the arena has helped boost small business development.

An entrepreneur who made his mark in Lower Downtown was John Hickenlooper -- before he was elected mayor of Denver in 2003.fter being laid off as a geologist, he opened Colorado's first microbrewery, the Wynkoop Brewing Company, in what was then a severely economically depressed neighborhood.That was in 1988, and his rent was $1 per square foot a year for a large warehouse space.

Today, Lower Downtown is thriving. Although the stadiums have certainly helped invigorate surrounding small businesses, Hickenlooper says new arenas are not the economic cure-all that many claim. Pre-existing infrastructure and a broader strategic plan, he says, are what really spur development. BusinessWeek Online reporter June Kim recently spoke with Denver's 43rd mayor about how stadiums affect entrepreneurs -- and why business owners can be just as instrumental in a city's success. Edited excerpts of their conversation follow.

Q: In the ongoing stadium debate, some argue thatif you build it, they will come. Do you believe that simply building a new sports arena is enough to drive economic growth?

A: Here's the thing.We opened the brew pub in 1988. Denver wasn't awarded a baseball franchise until 1991.They didn't decide to build Coors Field in Lower Downtown until 1993, and it didn't open until 1995.So before they ever located there, we turned out to be very successful, and there were a couple dozen restaurants that had already opened. So the neighborhood was already coming.What happened was that Coors Field became the gasoline poured on the fire -- it became a huge accelerant.

Q: So what do you need to start that fire in the first place?

A: One of the keys is that you can't just build a baseball stadium in a warehouse district and think it's going to succeed.In the case of Lower Downtown, the infrastructure was already there.We had a historic district -- 24 blocks of turn-of-the-century warehouses, one of the largest assemblages of late 19th century warehouse architecture in the U.S. The area was designated a historic district, which gave it certain protections, and the city had also invested in some historic street architecture -- street lights, benches.

Also, in 1988, the city opened what's called the Auraria Parkway, a big eight-lane boulevard that comes directly from I-25, so all of the affluent southern suburbs suddenly had direct access, just like a shopping center. And in the last 12 years, we've built over 10,000 housing units down there in the adjacent downtown.

Q: Speaking as an entrepreneur, why do you think small businesses would want to set up near a downtown stadium?

A: The stadium becomes a big plus, a marketing vehicle.It brings all these people down there one or two times.But if they don't like the neighborhood, they're not going to come back, stadium or no stadium.

In 1995, the first year that Coors Field opened, it sold out every game. Eighty-one dates sold out, with 50,000 people coming down there to every game.The Wynkoop's sales went up 50%.I went from being successful to affluent in the space of six months.

What was amazing was that when baseball season ended in October, our sales stayed up through November, December, and January.All the people that came down and hadn't come downtown in a decade suddenly liked what they saw and said, "God, this is a cool neighborhood, this is a neat restaurant, and there are some other neat restaurants here." The stadium can be a catalyst -- but it can only do so much.You just can't stick it anywhere and suddenly expect a bunch of retail to thrive.

Q: The NHL has cancelled its season, so the Colorado Avalanche won't be playing at the Pepsi Center at all this year.What kind of effect will that have?

A: Certainly the restaurants that are closer to the Pepsi Center are unhappy.It hurts their sales, but I don't think it's the end of the world because there are only 34 home hockey games, and it's only 20,000 people [in comparison to 50,000 at Coors Field].And the Pepsi Center is surrounded by huge reservoir parking centers.So people don't park in the downtown parking garages and then walk to Pepsi Center. Some do, but it's not the same as at Coors Field.

Q: The stadiums in Denver -- Pepsi Center, Coors Field, and Invesco Field at Mile High -- weren't built during your administration, but stadium-building and paying for them is a big controversy in a lot of other cities.

A: Given the condition of our schools, it's somewhat galling the amount of money we spend for stadiums.That being said, that's what the voters voted for.For the football stadium [built at a cost of $364.2 million], the vote was very close.In Denver, the Pepsi Center was built [for $180 million] without any public subsidies.

Q: So should that be the strategy in cities like New York, which is considering a new football stadium? Less public money and more contributions from the teams themselves?

A: I think tourism and stadiums are good.I think you have to look at each case.[New York Mayor and billionaire] Michael Bloomberg has forgotten more about finance than I'll ever know.I'm not about to suggest to him what New York should be doing.

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