Advocates of a new downtown Sacramento sports arena rolled out a study Thursday that puts an eye-popping number on the building’s projected economic benefits: $7 billion over 30 years.
[The study] said the new facility would shower the region with $157 million a year. That includes spinoffs such as sales at restaurants and hotels, as well as $6.7 million in taxes. … The Sacramento study’s author, Sacramento consulting firm Capitol Public Finance Group, contends that the downtown location would create considerable economic activity beyond the walls of the building itself. The arena would draw 3.1 million new visitors a year downtown, the report said.
The actual report is here. (Note that the task force has been renamed from Here We Build to Think Big Sacramento, apparently because they couldn’t get the rights to the old domain name.) Actually reading it reveals a few details not covered in the Sacramento Bee article:
- It’s not 3.1 million new visitors that the arena would be expected to draw each year, but rather 3.1 million visitors total. The report doesn’t bother to say how many visitors the current arena gets.
- Likewise, the $7 billion a year in “economic benefits” is actually economic activity: in other words, the gross total of all spending in the greater Sacramento region by anyone going to a new arena, whether inside the gates, at local restaurants, etc. Net spending — in other words, money that would be new to the region — is actually estimated to be just 15% of that, a little under $25 million a year.
- That’s economic activity, not revenue to Sacramento. Actual new sales and hotel tax revenue to the city is estimated at $1.7 million a year.
So, the plan here is to spend around $400 million (the task force hasn’t decided yet how the money would be raised), which comes to around $25 million a year in bond payments, to build an arena that would only generate about that same amount of money per year in new economic activity — and which in tax revenue would bring in less than one-tenth of what taxpayers were spending. That’s eye-popping, all right, but probably not in the way that the Bee meant it.