The owners of the Pawtucket Red Sox are asking the city of Pawtucket and state of Rhode Island for $38 million in public money so they can build a new stadium to replace historic, 4.5-star-Yelp-rated McCoy Stadium, which means they need to explain why they can’t just build the damn thing themselves. As part of that mission, the team gave the state senate figures on Wednesday showing that they have net equity in the team of $11.2 million:
The current PawSox owners have never disclosed how much they paid the Mondor family to buy the team in 2015, but The Boston Globe has reported the price was more than $20 million.
“We are a small, stable, but declining business,” PawSox Chairman Larry Lucchino and Vice Chairman Mike Tamburro wrote in a letter to the committee. “Nonetheless, in our opinion, the business is unsustainable over time if we continue operating at McCoy Stadium and declining trends continue.”
This is one of the core strategies in the stadium playbook, of course: Crying poor and insisting that the only way forward to profitability is to receive taxpayer cash. Which sort of makes sense, until you think about it and realize two things:
- This is pretty much saying that the goal of a new stadium is to use public funds to put more money in the pockets of a private business, which, while certainly true — it’s our book’s subhead, after all — is maybe not the best argument here.
- If you’re asking for $38 million for a team that’s only worth $11 million — or, to be generous, $20 million if you figure the sale price is a better representation of the team value than just net assets on hand — maybe it’d be cheaper for Pawtucket just to buy the damn team and forget this stadium nonsense, huh?
And while we’re on dubious arguments, the Pawtucket Foundation, a pro-development business group that strongly backs a new stadium, hired University of Michigan economist Mark Rosentraub to study the project’s revenue potential, and he determined it would generate enough revenue for both the team and the public “to enjoy positive returns on their investments.”
Reading the actual study shows the math behind Rosentraub’s conclusions, which is not exactly robust: He assumes that the team would leave without a new stadium, and then attributes all income and sales taxes paid at the stadium to the team’s presence, even though the substitution effect means that much of that money would be collected even if the PawSox relocated, as Rhode Islanders would spend their entertainment dollars on something else. (Rosentraub indicates his calculation assumes that all PawSox fans would just drive to Worcester to see games, which, uh, sure.) Plus, he counts money from tax revenues generated by additional development the team would build around the ballpark, but doesn’t indicate whether that would soak up housing demand that would otherwise lead to construction elsewhere in the state, or if the housing could just be built without the stadium (or the stadium subsidies) anyway, and … you get the idea.
Rosentraub is an inneresting character, as Neil Young would say: He wrote a book on the ill effects of stadium subsidies shortly before Joanna Cagan and I started working on Field of Schemes, but has since then carved out a lucrative career as a consultant who’ll say nice things about your stadium project for the right price. His change of heart, according to the Providence Journal, was prompted not by his own paychecks but by the realization that “demographic changes have drained cities of people and new tax-generating opportunities,” which, uh, Mark? The Great Inversion? Millennials? Any of this ring a bell?