A’s owners say moving four miles to new stadium will create $3B in economic benefits, I’m done

Okay, forget considering building a stadium on a site that’s really too small to fit one, because the Oakland A’s just trumped their own crazy yesterday, releasing a report that insists that a new stadium would generate $3.05 billion in economic impact over ten years for Oakland. That’s billion. With a B:

The study, conducted by the Bay Area Council Economic Institute, also concluded that a new stadium would boost annual attendance by roughly one million, up from the 1.5 million or so that the A’s drew in 2016. Building a new ballpark would also produce about 2,000 construction jobs…

The $3.05 billion in economic benefit is broken down into $768 million from construction and related spending, $1.54 billion from game-day spending and $742 million from ballpark operations.

Okay, let’s break this down some. The $768 million from construction is uncontroversial, since a stadium is going to cost close to that much to build, though whether it should be counted as a net win for Oakland is another question. (Are all the vendors providing steel for the stadium going to go out and spend their earnings at the local Safeway?) The rest of the study, though — which features a lovely opening photo of Ryon Healy about to be mobbed by teammates excited about all the new economic benefits he’s bringing to Oakland — relies on the assumption that “gate receipts grow by approximately 2x in the first year of operations of a new stadium while concession spending increases at an even higher rate.”

There are a couple of problems with this. One is, obviously, the substitution effect: If all those new fans would have been spending that money elsewhere in Oakland anyway, it’s not a net benefit to the city. The Bay Area Council Economic Institute study takes this into account by discounting new spending by 20% — a number they apparently got by seeing that a previous study for the Detroit Tigers used 25% as the amount of spending that was substituted, then arbitrarily reduced that to 20% because Oakland is likely to have more out-of-towners attending games.

Then there’s that doubling of gate receipts thing. The study actually calculates that MLB teams saw attendance increase an average of 40% in the first ten years of a new stadium — though it puts its finger on the scale by not counting the New York Yankees and Mets for “lack of applicability,” for which read “they actually saw attendance go down in their new stadiums, that’s not going to help our numbers.” I’m not going to re-run their calculations right now, but suffice to say that that’s a lot to expect from a stadium honeymoon period, and isn’t likely to be sustainable over the long term (cf. the Cleveland Indians, who sold out several seasons in a row after their new stadium opened and now can’t draw flies despite a shiny new league championship trophy).

So, in short: If the A’s move four miles down the road from the Coliseum to new digs, some unknown number of additional people might go to A’s games, and some unknown number of them might have otherwise spent that money eating dinner in San Leandro, and some unknown amount of that cash might end up getting recirculated in the Oakland economy rather than just getting pocketed by the A’s owners and players, and — hey, why don’t we just call it an even three billion dollars? And don’t be bothered by the fact that nobody who has ever tried to find evidence of one of these stadium-sparked public windfalls has ever found any — $3 billion! With a B!

Anyway, here’s hoping that the A’s owners are just using the clear plastic binder gambit because it’s available to them, and they’ll end up actually paying for stadium construction and land acquisition and accepting a site that works for the city of Oakland and not just for them, like they say they will. If that happens, I will forgive them all their silly economic projections, though I make no promises to stop making fun of them for them.

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32 comments on “A’s owners say moving four miles to new stadium will create $3B in economic benefits, I’m done

  1. I know spending public funds for stadiums is particularly unpopular in California but it will be interesting to see how Oakland city officials handle these negotiations. They can certainly stand on the side of reason and good public policy and say “no” to unreasonable demands by the A’s ownership, and then Oakland will have lost all three of it’s major league franchises in just a few years. The economic renaissance of Oakland would then paradoxically be accompanied by an exiting of all its major sports teams (you know, the ones that city officials like to think put them in big league status among municipalities).

    1. It’s not just city officials who think sports teams make them appear “big league,” Mark. A lot of fans think that way too. The line “An NBA team helps make Seattle a world-class city” is one I’ve heard and read so often up here, it could be a Maharishi Mahesh Yogi mantra. London, Paris and Tokyo have no teams in the Big 4 leagues, yet they’re all considered “world-class cities.” Then there’s Detroit, with teams in all four leagues…how many people plan vacations in Detroit?

      It’s a specious argument that’s self-delusional at best.

    2. Wait, where would the A’s move to? Unless it’s someplace with a decent sized market and a shit-ton of stadium subsidies, it’s not going to be a worthwhile alternative, and I can’t think of any such cities that exist. (Washington, DC was the last available.)

        1. Montreal probably qualifies in terms of market, almost certainly wouldn’t in terms of available subsidies.

          1. Quebec did build a new arena in QC without a hint of an NHL team so they could surprise. A ballpark is about twice as expensive though. If they changed the name of the team from the A’s to the Bombardiers, they’d get a subsidy for sure!

          2. Building a hockey arena in Canada isn’t a sports subsidy, it’s a religious subsidy. (i.e. hockey is like a religion there whereas baseball is not quite so much, not sure I phrased that a cleverly as I would have liked.)

        2. The Montreal mayor has stated he will support any ‘sensible’ (or perhaps reasonable… my translation skills aren’t what they once may have been…) plan to bring MLB back to Montreal. I assume this means he will support it with tax dollars, not write a check personally…

          I don’t think that means “we’ll build you a free stadium”, but it almost certainly means the city government is willing to commit money.

          The alleged stumbling block in 2002 (other than, you know, Jeffrey Loria…) was the province’s unwillingness to commit money. As I recall, the premier at the time (Bouchard) said “we cannot be building stadiums at the same time we are closing hospitals to cut costs”.

          Hmmph. Amateurs.

          1. If Quebecor decides it really needs a nouveaux Expos to air as programming, and Fisher decides to sell the team to them … maybe. It would have to be a hell of a loss leader, though.

  2. 20% substitution sounds about right. Most of the economic activity will be new, not the replacing the existing activity in the East Bay. People will work more hours, families will have multiple incomes, etc. in part or in whole because of the increased popularity of the team.

    The one real opposing argument is the Braves. Granted, the team has been bad for a few years now, but the attendance increase in Cobb County has been tepid compared to a lot of new ballparks. If the A’s are no good when they move, the ballpark operations and game day spending numbers will come in way below their projections.

    1. Simply stating that the economic activity will be new and that families will have higher incomes isn’t sufficient given studies have not found this.

      1. I think Ben is actually a satire account. That is the only thing that makes sense.

      2. Marty, it’s simple economics. You don’t have to believe in it (most on this board don’t), but there is no other way to explain economic growth.

    2. People in Miami seem rather non-plussed by their new baseballl stadium as well. It could that people aren’t impressed by this stuff anymore. Although people do still enjoy the relatively cheap one in Pittsburgh.

  3. The A’s don’t need to go public with these numbers. The A’s and MLB just need to pay 100% cost of the new stadium. – https://www.linkedin.com/pulse/case-more-public-money-major-league-baseball-scott-myers

    BTW, is the steel that will be used for the new stadium going to be manufactured in Oakland?

  4. The real economic benefits for the city will come from redeveloping the coliseum site into tax producing residential and commercial properties.

    If the A’s are concerned about attendance, put a quality team on the field and remove sections of the tarp at the coliseum.

    1. That was actually my assumption on reading the headline, that the team was taking credit for whatever the city elects to do with the Coliseum site, since that might actually generate economic benefit (assuming, of course, that the city doesn’t do something dumb).

      Which would be pretty brazen, since they’re tenants, not landowners, at the Coliseum, but at least the math looks less outlandish.

  5. They’ll wait as long for their $9B as Sacramento will for their 11,000 arena-related jobs. Don’t hold your breath.

    Chris Granger just left his job in Sacramento. He’s the guy who designed the Kings arena deal. He wouldn’t even wait around for the first financial report.

    I can tell you that businesses west of 16th Street — the 10 p.m. parking border — are closing. It’s dead west of 16th when there are no arena events. It’s night and day, and if you can’t see it, you’re definitely in denial.

    I can park 5 blocks from the arena for $5 on any event night. Used to cost $15-$25 at the old arena. Roughly the same walk. I don’t see how this grows revenues, especially for the team itself.

  6. Well I’ll be one of the net new game attendees. I don’t really go to A’s games because the food sucks. New stadium = better food = me going to the games!

    I think today’d coliseum discourages lingering in the neighborhood after a game. Better neighborhood and nearby amenities = more people sticking around before or after a game.

    Today when I go to an A’s game (I have been to a few), it is a one thin only kind of day. I eat at home first and then go home after. It is really too much work to try and visit multiple neighborhoods just to get some food and the like. Do you think game attendees hop of BART in downtown, get some food, then get back on BART to go to the game?

    When I have gone to Giant games, we have done something before or after the game since it was convenient to do so.

    Having stuff adjacent to the stadium gives you an excuse to get there early or stay late. Right now it is really inconvenient. This will improve no matter where the stadium goes because it is part of the plan.

    1. I don’t buy it. My goal after games is to get home.

      We stuck around for about an hour after Game Five in Oracle last week, got back to Sacramento at 11. I’d bet at least 90% of the people there had getting home by 11 as a top 5 goal.

    2. Adjacent amenities can be built next to most stadia, including existing ones, though.

      We run into this argument often… the new ballpark is necessary because of the surrounding development it will create. Pretty clearly, the old stadium did not create that, so is it the new stadium that drives the surrounding development or will that be part of the publicly funded facility that the franchise owner controls?

      It’s a classic ham and eggs play, really.

      When I go to my local team’s games, I quite often stop downtown at restaurants or bars before jumping on transit to get to the stadium. You often see people leave the stadium, get on the train and go back downtown to the bars and pubs to cap their night after the game too (even though there are some bars right next to the facilities I’m talking about).

      If the city was to build a “stadium village” (which isn’t to suggest some version of one hasn’t grown up over the years) they would really just be cannibalizing revenues from the downtown pubs and restaurants that sports fans frequent.

      Net gain for the city? Zero.
      They are also interfering with free market competition by funding these developments (making it harder for non-professional sports entertainment options to compete).

      1. That is 100% what is happening here. Business for 3-4 blocks around the arena has picked up on event nights. I’d be stupid to deny that. But in the rest of the 10 p.m. parking zone? Way down. Several restaurants have closed down. They were too close to the arena, but too far from the arena to benefit from it.

        Plus, business has to be down near the old arena.

        It’s breathtakingly stupid. I really believe the reason Granger is leaving Sacramento is that the revenue models Think Big concocted aren’t working out.

        We’ll have 135 events the first 12 months of operation, about 15 of which are owned by the City. I think they said the arena would work at 120. So basically, in the first year, they’re right at the minimum. And I bet it loses money with 120 nights. In addition, the premium parking rates do not take effect when the event has 15,500 or fewer attendees, so I bet we’re already down to 100 events where the City makes some additional parking revenue.

        1. Somebody (Robert Baade, maybe?) did a great study years ago of the impact of one of the Seattle stadiums on local business activity. There was a large uptick within about one block of the stadium, then nothing beyond that.

    3. The food no longer sucks if you use the food trucks. Some of the food truck food is genuinely excellent, and it’s not expensive.

  7. So, if the Arizona Coyotes move from Glendale to Tempe, a distance of 18 miles, would they generate any revenue?

    1. For Tempe by siphoning off the spending from Glendale, a little. For Arizona as a whole, ha ha ha that’s a good one.

  8. In fairness, the coliseum doesn’t have any restaurants around it. There is just industrial warehouses on one side and airport hotels on the other opposite 880. When the A’s added Championship Plaza with the food trucks, that was the greatest improvement in food quality the neighborhood has seen…yet that was for those with tickets only. A downtown ballpark will draw people to the restaurants nearby. I like Schaff’s stance on the ballpark issue.

  9. “gate receipts grow by approximately 2x in the first year of operations of a new stadium while concession spending increases at an even higher rate.”

    The concessions part is what surprised me. Can that really be true? Gate receipts I can understand because not only are there more people attending when the stadium is brand new and interest is high but steep discount pricing goes away. But to have concessions more than double is tougher for me to explain. Tons of people wanting to see the new park and try everything out?

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