As noted yesterday, now that the elections are safely over, the D.C. council has finally issued its report on the D.C. United stadium plan, and man, oh man, is it long. The report totals 406 pages, which I have done my best to look through and pull out the main takeaways. So, bullet points ahoy:
- The first item of importance to note is the big logo at the top of page one, which belongs to Conventions, Sports & Leisure, one of the consultancy firms that specializes in these kind of economic impact studies. And when I say “specializes,” I mean that they do a lot of them, not that they necessarily do them well — CSL has a track record of crazy-high impact estimates, landed in hot water for conducting a stadium impact statement for the Los Angeles Angels when their parent company had recently signed a deal to run the Angels’ concessions, and is owned by the Dallas Cowboys and New York Yankees, which kind of puts a crimp in their claims to objectivity. But let’s not prejudge their work entirely based on past results — so, soldiering on…
- Still on page 1: “All information provided to us by others was not audited or verified, and was assumed to be correct.” Given that those “others” mostly consist of D.C. United itself and the city officials who are backing the stadium plan, should we really read the other 405 pages?
- At $286.7 million, this would be the most expensive MLS stadium ever. D.C. would be on the hook for $131.1 million of that, plus $50 million in sales and property tax breaks, which jibes pretty well with my $178.5 million subsidy estimate from earlier this year.
- The district would be overpaying for stadium land by $19.4 million and getting $11.2 million less for the city-owned Reeves Center than it’s worth. That’s not so much an added cost as a potential savings left on the table, but duly noted.
- The stadium would create 1,683 full-time equivalent jobs, which would be right around the typical craptacular $100,000-per-job-created cost for most stadium projects. If the job projections are correct, of course — they appear to come not from any estimate of how many people would actually work at the stadium, but rather by plugging the total projected economic activity into a formula and calculating it that way, which is awfully dubious.
- The stadium is expected to generate $109.4 million more over a 32-year period (why 32 years? why not?) in city revenues than it costs the city. This claims to account for both leakage (new spending that is generated outside D.C., such as when fans stay at hotels in Virginia) and substitution (spending that is just cannibalized from other local spending, say, if fans cut back on Nationals or Wizards tickets to go to more United games).
- There are other problems, though: First off, the report doesn’t compare spending at a new stadium with current spending at RFK Stadium, instead counting all spending as new — on the grounds that “it is likely that D.C. United would relocate to another market if a new stadium is not developed in the District,” though really then you should be deducting the amount of old spending that would get redirected to other things (Nats, Wizards, whatever) in D.C. if the team were to leave.
- Second, the report estimates that 73% of fan spending would be new to D.C. — and says this figure accounts for leakage and substitution — but doesn’t indicate where that figure comes from. If, as I suspect, it’s from D.C. United’s own figures on how many fans come from out of town, then there’s a huge problem here: Many people from out of town are already in town for other reasons and just choose to go to a sporting event while they’re already there. (I know the last time I went to a Nationals game, it was as a side trip for going to the Smithsonian and such, not the main course.) And while, as I discussed in the Nationals case, D.C. is a bit less susceptible to substitution thanks to so many people living outside the city limits in the Maryland and Virginia suburbs, they tend to come into D.C. for a night out anyway, so it’s dicey to assume that if they weren’t in town for a soccer game, they’d otherwise be spending all their hard-earned cash out beyond the Beltway.
- D.C. will need to lay out its money before D.C. United even puts together the financing for its part of the deal, which raises “the potential risk of non-performance by the developer.”
- The subsidies are the only thing keeping United in the black on the deal: Even just without the tax breaks, “team/stadium operating revenue is not expected to cover debt payments until year 19 (2035).” In other words, United wouldn’t be making money on the stadium, they’d be making money on the subsidies.
There’s more — it’s 406 pages, how could there not be more? — but those appear to be the major points. The upshot is: The industry usual suspects say, using figures provided to them by the team and not otherwise checked, that D.C. should earn back a small profit on the stadium, provided all their assumptions about who’s spending what where are correct. That’s a lot more questions than answers raised, which makes it all the more unfortunate that the D.C. council has now left itself with only a month or two to make a decision on the stadium plan — unless, of course, they decide to kick it back to after January 1, with a new mayor and a new council. We shall see.