Nine out of ten sports economics experts think Worcester’s stadium deal is awful, and the tenth is the guy who helped design it

I’m still unpacking the exact details of the Pawtucket Red Soxletter of intent to move to Worcester and the $100-million-ish in subsidies it would include — I see the team would get to establish a $1-per-ticket surcharge on city-run events at the stadium and use the cash for its own future capital projects fund, for one thing, while the Worcester Telegram notes that the deal would include $5.6 million in future property-tax breaks for the builders of the larger development project. But Grant Welker of the Worcester Business Journal figured out a quicker path to evaluating the deal: Send copies of the stadium documents to ten sports economists and stadium experts (including me) and ask what they thought of the plan. Which led to the sentence of the week, if not the year:

Of those experts, the only one who spoke positively about the deal was the Smith College professor who was hired by the city to judge the economic viability of the offer to the PawSox.

Yep, that’s right: Nine out of ten sports stadium experts agree that Worcester is getting hosed, and the tenth is none other than Andy Zimbalist, stadium skeptic turned sometime stadium huckster, who is the guy who helped Worcester come up with its plan in the first place. Let’s run through a sampling of quotes:

  • Nola Agha, University of San Francisco: “It virtually never works.”
  • Joel Maxcy, Drexel University: “There’s just mountains now of economic evidence that the payoff that’s promised and what actually happens is far different. … If it were a private person, you would never take such a nonsensical bargain.”
  • Robert Baade, Lake Forest College: “The idea that this is going to serve as a catalyst for economic development, which is the hope – and I emphasize the word hope – is misguided. … Your community could think of all other ways to spend the money with better economic return than a minor league baseball team”
  • Victor Matheson, College of the Holy Cross (which is in Worcester): “This is an extraordinarily expensive stadium. … They seemed to be smarter than that. I’m extremely surprised that [the city’s cost] is as large as it is.”
  • Andrew Zimbalist, Smith College: “If you can do something like this that was culturally and socially positive and at least break even, it made sense to go forward.”
  • John Solow, University of Iowa: “There’s a great deal of consensus among sports economists of all political stripes that this is not a good thing for local governments to be doing.”
  • Michael Leeds, Temple University: “I really, really don’t see it. … You’re counting on something [the new development generating enough tax revenue to pay off the stadium] that’s not very likely to happen, and you better have a Plan B in place.”
  • Allen Sanderson, University of Chicago: “Overwhelmingly, the fannies in the stands are local. They’re choosing to spend a day or an evening at the ballpark instead of at the ball or other entertainment options.”
  • Neil deMause, guy with a blog: “Worcester’s city leaders haven’t just outbid Pawtucket, they’ve ladled on goodies like they’re trying to buy Larry Lucchino’s love. Assuming they can get past all the legislative hurdles, it should be enough to get the city a pro sports team, but it’s tough to see spending more than $100 million in tax kickbacks and state infrastructure subsidies on a team that you could buy outright for $20 million as smart bargaining.”

Zimbalist’s argument, it appears, is that while the stadium itself would be a money pit, getting that additional $100 million in hotels and housing and whatnot would generate enough new money to make the whole deal worth it. That assumes, of course, that nobody would be willing to build hotels and housing and whatnot without a stadium — which is a pretty odd assumption, since it’s not the presence of a Triple-A baseball team that’s going to make anyone want to live or even stay overnight in Worcester.

And also, those with long memories will recall that this is the exact same argument that Zimbalist used on a previous paid gig, for then-New Jersey Nets owner Bruce Ratner, in which he determined that a new Brooklyn arena would lose money for the public, but taxpayers would make it back from all the new housing that would go up alongside it. At the time, I also called for a second opinion from another sports economist, in that case Rod Fort of Washington State University (he’s now moved on to the University of Michigan, who noted this:

“I would never have undertaken this exercise. In essence, Andy is trying to forecast 33 years hence, and he’s forecasting housing markets, which there are other people spending all their waking moments on. What you see is assumption after assumption after assumption after assumption.”

In short: Housing economics is complicated (for starters, new residents come with new costs for things like schools and other public services, not just new tax revenues), and Andy Zimbalist is not a housing economist, but that hasn’t stopped him from telling cities that they’ll be fine sinking money into stadiums and arenas so long as there’s a housing component, and Worcester just took the bait. Presumably it’s bait that city officials knew Zimbalist was going to offer, and that’s exactly why they hired him, but that still doesn’t make the whole thing stink much less.


11 comments on “Nine out of ten sports economics experts think Worcester’s stadium deal is awful, and the tenth is the guy who helped design it

  1. More on this folly from the Wall Street Journal: http://m.wbjournal.com/article/20180821/NEWS01/180829995/1002?platform=hootsuite

  2. Neil – Can’t help but notice all the quotes in your bullet list are from employees of educational institutions (except you :-)). “Stadium experts” are not a diverse bunch are they. Not a good look that these opinions are all coming from the ivory towers of our nation.

    I don’t disagree necessarily with what they are saying just that it is so easily derided as coming from academics that don’t live in the real world. It shure would be nice to get some sources from non-academic institutions.

    Thanks and keep up the good work.

    • also interesting that the guy talking about academics can’t spell *sure correctly. Oh, well.

      • Economists who don’t work in academia typically aren’t free to comment, since they work for firms that only take positions on behalf of clients or are otherwise constrained in their public speaking. I guess there are some at think tanks as well, but do you find those less “ivory tower” than colleges?

        For example, Geoffrey Propheter, who I interviewed here a couple of months ago, had the same perspective on sports stadiums when he was working for the NYC Independent Budget Office as when he was in academia before that, but any of his statements had to go through the press office. (That’s not a criticism of IBO or its press office, btw, just the way things have to be when you’re working for a city agency.) Now that he’s back teaching, we were able to have a wide-ranging interview.

        Anyway, I guess the University of Iowa can be happy now that it’s representative of coastal elites or something. Finally they’ve hit the big time!

    • Wel the problem is that experts in society are mostly either academics, or paid by corporations. And the ones who work for corporations don’t have free time to respond to press requests, or if they do mostly are goin to just repeat the line of the organization. That pays therm. Who is this roster of experts in society who are not academics you are thinking of?

    • “‘Stadium experts’ are not a diverse bunch are they. Not a good look that these opinions are all coming from the ivory towers of our nation.”

      Yes, anti-elitism is a real problem.

      • Keith – See Neil’s thoughtful response to my post and consider trying to do something like that in the future.

        Your posted response makes me feel like I was and idiot to post a comment in the first place.

  3. Would be interesting to see what role retail is supposed to play in providing tax receipts to pay off the stadium. Many residential buildings and hotels need high end retail on the first floor to be viable, but keeping high end retail in mid-sized cities is becoming an increasing challenge. If regional folks aren’t willing to drive downtown to buy a book or a watch, retail won’t survive. Cities like to dream of a solid retail sector because it adds tax without needing schools–but this is becoming harder in the internet age.

    These days, a lot of good commercial space goes to low-employment, low-gross uses like personal services and telecommunications sales. That does little to assist with jobs and giving the center city a “sheen” of success. Nor does it raise much in taxes to pay off the ballpark.

    But this is what politicians do–remember the economy of 20 years ago and try to recreate it, regardless if anyone actually wants it.

  4. Worcester just got played big time by the PawSox. Amateurs vs. Big League Pros,
    with an assist from Andrew Zimbalist who used to work for the Red Sox.

    If you want the lowdown on Zimbalist’s amazing change of heart, read his book: “May the Best Team Win”.

    On page 125, Professor Zimbalist states: “there are very few fields of economic research that produce unanimous agreement. Yet every independent economic analysis on the impact of stadiums has found no predictable positive effect on output or employment. Some studies have even concluded that there is a possible negative impact.” Professor Zimbalist then goes on to explain why.

  5. Now Zimbalist is all for one of the worst minor league stadium deals ever. Of course, he was all for the PawSox Providence stadium swindle which was more than twice the price of the WooSox stadium.