Stadium economic impact claims: The legend continues

Another week, another passel of underdocumented articles claiming the economic benefits of building sports stadiums. First, from Sunday’s Delaware County Daily Times:

For many [Chester] city residents, the epicenter of this revival is the freshly completed stadium of Major League Soccer’s newest franchise, the Philadelphia Union. …

A Local 845 carpenter, [Kyle] DeGraphenreed said the Union’s home, PPL Park, will provide tremendous economic impact, first and foremost by bringing tons of jobs to the city. Chester residents obtained 260 of the 491 “game-day” positions offered during a recent career fair at the stadium.

“The reality is jobs will bring money for the people, and crime will go down,” he said. “Crime will go down.”

The change is already evident to DeGraphenreed. City businesses have put up new signs, dilapidated housing has been torn down and new developments and homes are being erected.

DeGraphenreed said he recently had to put his car in reverse when he drove past a new apartment complex on Third Street.

“When did that get built? I was amazed at how fast they were building stuff, cleaning stuff up,” he said. “I’m like, wow they are really serious about turning this whole thing around.”

So to recap: There’s a citywide redevelopment plan that’s replacing old buildings with new ones — back in the day this used to be known as “urban renewal,” but somehow that term ended up with bad associations — and 260 local residents got game-day jobs. Each MLS team plays 15 home games in a year, so that means the game-day jobs are the equivalent of about 15 full-time jobs — at hot-dog vendor wages. If that’s all it takes to bring down crime, the city should have skipped building a stadium and just hired a couple of dozen municipal hot-dog vendors.

And, of course, the most notable recent trend in Chester, aside from city businesses putting up new signs, is a shooting spree that left the city under a dusk-to-dawn curfew. But crime will come down soon. Surely tomorrow.

On to San Diego, where the Regional Economic Development Corp. has issued a glowing report on the city’s return on investment from building the Padres‘ Petco Park:

Through sales, property and hotel occupancy taxes, the city will receive a 7.6 percent return, far ahead of the 1.7 percent first projected by promoters, said the report, developed for the EDC by Conventions, Sports & Leisure International, a research and consulting firm in Texas.

Though the report calls this “return on investment,” the reality is actually far murkier: The taxes in question are for a “ballpark development area” that was drawn around the new stadium, within which a large number of hotels and other development has since been built. But there are two factors that aren’t taken into account by the study: the “but-for” question (the Gaslight District was actually starting to draw development interest even before the Padres landed there, one of the reasons the team chose it for their stadium site), and the substitution effect, wherein at least some of the tax revenue now being generated around the stadium would have been generated elsewhere in the city otherwise (if fans had spent their entertainment dollars on something else — like, say, Padres tickets at their old ballpark).

To give the San Diego Union-Tribune credit, it does cite critics of the study, including Vladimir Kogan, author of an upcoming book on San Diego’s fiscal crisis, who says, “This report is largely useless because it combines the economic impact of the ballpark with the convention center expansion that took place over the same period.” But the headline is still the official line: “Ballpark’s 7.6% return tops forecasts.”

Sports economist Mark Rosentraub, meanwhile, is quoted as saying that even if some tax revenues were just relocated, Petco Park is a success because it’s “a model of how you can use a stadium to rebuild an entire neighborhood.” Not mentioned in the article: Rosentraub served as a paid consultant to MLB and the Padres during the campaign for the new stadium.


7 comments on “Stadium economic impact claims: The legend continues

  1. This is such an old tired story from people who don’t want stadiums to be build. The stadiums in Philadelphia generated over $18 mil. last year just from taxes away player had to pay for the games they played inside Philadelphia. This never seems to be mentioned and yes they might spend the tax dollar somewhere else like in another county outside the city. Thousands of secondary jobs have been created around sports stadiums, from vendors hiring people to deliver to the stadium, restaurants with extra staff on game day, more everything. Why don’t you go to Chester on game day and ask yourself what would make people come here. Now people go and from this people start to brainstorm in how they might make money and the process stats. You constantly see places around stadiums expand so stop with these stupid stories and give it a chance.

  2. This is such an old tired story from people who don’t want stadiums to be build. The stadiums in Philadelphia generated over $18 mil. last year just from taxes away player had to pay for the games they played inside Philadelphia.

    Right, because those taxes wouldn’t have been paid if the teams were still playing at the Vet and the Spectrum.

  3. Conventions Sports and Leisure is the same company the 49ers hired. Such companies exist to provide great numbers so as to convince taxpayers to vote for stadiums. In Santa Clara’s case, the regional numbers were never vetted by the city’s consultant, and the numbers for the city itself (which were vetted) showed a negative return on investment by about 1/2. Therefore, the campaign only used the CSL regional numbers.

  4. Well from a purely subjective standpoint I’d say San Diego’s stadium has been a success. It boosted the redevelopment of the East Village and Gaslamp district (along with the expansion of the convention center). And the results have been nothing short of spectacular for the average resident wanting to visit downtown. In 10 years the area has gone from a slum to a wonderful place to spend some money entertaining yourself, family and friends. Was the ballpark solely responsible for this, absolutely not. Did it help, without question.

  5. Lots of people don’t want to “get it.” About the only thing “proved” with stadiums and redevelopment is that when stadiums are built in improving neighborhoods, the neighborhoods generally continue to improve. When stadiums are built in static or declining neighborhoods, they generally continue to decline. It’s like attributing development to a shopping mall or a grocery store–they are signs of development and interest in a neighborhood, not usually the proximate cause.

    Presumably Baltimore gets more than $18m a year, with the Yanks and Sox visiting 18 times a year, and yet I wouldn’t say Baltimore is doing very well. Why wouldn’t that be?

  6. San Diego’s downtown rebirth is due to many factors. The renovation of the Gaslamp Quarter is a 25 year plan that began in the 1980’s. A Convention Center was also built and expanded. We also had a real estate bubble in the last decade.
    Crediting all of that to Petco seems highly exagerated.

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