Meet the Wile E. Coyote of the sports stadium racket

Thanks to everyone who responded to my latest funding appeal by blowing past the 10-new-supporters goal in just a little over 24 hours! As promised, you’ve unlocked an unpublished article that fell victim to the assassination of Deadspin, on a subject that’s long deserved a deeper dive: the most bumbling sports stadium consultant of all time, and how they still manage to keep clients happy because in the stadium-lobbying game, it’s not about what the Acme Corporation puts in the box, it’s all about the packaging.

For Montreal baseball fans, last year’s World Series win by the Washington Nationals had to be aggravating: The club that took home its first title in its 50-year history, after all, spent 34 of those years plying its trade in French Canada, before it was rudely ripped from its home by an unholy alliance between a league seeking to threaten its players union with lost jobs and one of the most hated owners in pro sports.

As is the case in most cities left outside MLB looking in, Montreal has a group of local owners pressing for a Nouveaux-Expos, and last winter they tried to boost their chances with a study of their city’s viability as a big-league market. The resulting report did the trick nicely, placing Montreal 12th among the 27 existing baseball municipalities in TV market size, 15th in metro population, and 18th in median household income, comfortably in range as a feasible MLB expansion or relocation candidate.

Unfortunately, as the Montreal newspaper La Presse discovered when it asked some actual economists for comment, the study’s authors, Convention, Sports & Leisure, had committed une erreur méthodologique grave. They had neglected to adjust for U.S.-Canadian exchange rates, which when taken into account bumped Montreal all the way down to second-worst in MLB, ahead of only Cleveland. CSL replied that it had intentionally ignored exchange rates in order to measure local “purchasing power”; La Presse replied in turn that in that case, MLB should really expand to Japan, where the average income is 5.6 million a year — so long as you don’t bother with whether that’s in dollars or yen.

If you’ve even casually followed the world of sports stadiums and similar development projects, you’ve probably come across CSL’s name, likely under similarly embarrassing circumstances. CSL’s greatest hits include: releasing an economic impact study of a new D.C. United soccer stadium that massively overstated new revenues from the project; issuing a report on the impact of the San Diego Padres’ stadium that credited the new building with spending by attendees of an unrelated convention center; and releasing a paper on a possible MLS stadium in Louisville that admitted it would lose money for the public, but argued that if taxpayers won’t fund money-losing projects, who will? With this kind of track record, it’s all too appropriate that the “Learn more about CSL” link on the company’s website leads to a page reading: “Sorry. This video does not exist.”

Yet despite its track record of flubs, CSL continues to pick up high-profile accounts: It’s conducted studies of nearly every football and baseball stadium and basketball and hockey arena in the U.S. (Its financial analyses of a new baseball stadium in D.C. helped grease the skids for the Expos’ relocation as the Nationals, something that Montreal baseball backers apparently didn’t hold a grudge over.) The company has likely been aided in its efforts by some friends in high places: Though founded in 1988 by a pair of refugees from Coopers and Lybrand, another economic consulting firm, since 2011 the company has been owned by Legends Entertainment, the concessions-and-marketing behemoth launched by none other than the owners of the Dallas Cowboys and New York Yankees. It’s a cozy association that has led some to wonder if CSL’s reports should be branded with asterisk, especially when the company conducted a glowing report on the economic impact of the Los Angeles Angels at the same time Legends was bidding on the team’s concessions contract.

This is a problem for pretty much all consultants, actually—even those that aren’t wholly owned subsidiaries depend on sports team owners and their development partners to underwrite their fees. But CSL has taken the handwaving to another level. Heywood Sanders, a public administration professor at the University of Texas at San Antonio and author of Convention Center Follies, says that in the world of convention centers—an industry that like sports venues relies heavily on public cash and puffed-up claims of economic benefits—CSL “has a track record of overly optimistic and inaccurate forecasts.”

None of these clients appear to be bothered by CSL boasting a record of screwups so laughably oblivious that they seem designed by a hapless cartoon supervillain. (CSL itself didn’t dignify my request for an interview with a response.) Take the D.C. United soccer stadium, for example: When the Washington city council was preparing to vote on the project in 2014, it hired CSL to prepare a report to help make the $181.5 million public cost go down easier. According to the 406-page study, though D.C. would be committing to the largest MLS stadium subsidy in history, it would still turn a profit of up to $109.4 million thanks to the resulting new revenues.

These numbers turned out to be wrong—spectacularly so, when the consultants who issued the report were forced to walk it back just one week later. “We want to be clear that the $71.4 million in land exchange proceeds is not intended to convey net new benefits to the District,” wrote Convention, Sports & Leisure International in a letter to the D.C. council chair. This meant that nearly two-thirds of the projected benefits were, in fact, just the city selling land to help pay for the stadium; and if the rest of CSL’s projections were off by even a sliver, D.C. could end up with zero return on its investment, or worse.

Other errors, though, may become apparent only over time, and then only if you know where to look. Sanders is intimately familiar with CSL’s reports for convention centers, if only because they issue so damn many of them. “They do this all the time,” he says, noting that CSL issued studies advocating for convention center expansions in Seattle, Los Angeles, and San Diego within a few months of each other in 2014 and 2015.

Convention centers, like sports stadiums, typically receive public money on the grounds that bringing more out-of-towners will pay off by bringing fresh spending money to the local economy. And while there may be a better case for convention centers for that in the abstract—though hard numbers are hard to come by, the percentage of conventioneers who travel from other cities is at least likely higher than that of sports fans—building a new or expanded convention center only makes sense if it will result in expanded attendance.

That’s what CSL promised to Philadelphia and Washington, D.C. in a pair of studies in 2003. According to Sanders, the firm forecast that an expansion of Philadelphia’s convention center would boost annual hotel stays by 56%; for D.C., it projected that a brand-new center would result in a whopping 103% jump. Instead, after hundreds of millions of dollars in expense by each city, hotel stays went down, by 26% in Philly and 23% in D.C.

This isn’t unusual for the convention center industry, where an increasing number of cities are chasing a smaller and smaller number of conventions, with the unsurprising results that unless you’re Las Vegas or Orlando, bigger buildings are only likely to result in more unused space. Still, says Sanders, CSL continues to pump out reports showing positive projections for “almost every proposed convention center building project.”

Of course, sometimes the numbers won’t do what you want no matter how much you waterboard them, which can require more extraordinary measures. In 2016, CSL issued a “feasibility study” on a new $30–50 million stadium for the Louisville City F.C. soccer franchise that included some extremely dire economic projections:

In other words, by investing a mere $30–50 million in a new soccer stadium, Louisville could reap the benefits of … $2.7 million in new tax revenues. Spread over the next 20 years.

You might be tempted to think that this would be one scenario where CSL would finally dust off the “INFEASIBLE” stamp. But no, CSL helpfully explained, the sea of red ink that would accompany a Louisville stadium was a feature, not a bug:

The net income from operations will not be able to fund a material amount of stadium project costs, which is typical of most soccer-specific stadiums that have been built for teams in USL, NASL and other similar leagues. Historically, the development of soccer-specific stadiums has generally involved varying degrees of public-private partnerships.

And really, that’s all that studies like those issued by CSL are designed to do: not so much present a disinterested evaluation of a potential project as to provide cover for team owners and elected officials who want a 400-page rationale for what they were hoping to do in the first place. A friend of mine who once worked on economic impact assessments likes to compare them to the old Calvin and Hobbes strip where Calvin was assigned a science presentation about bats, and, disdaining anything that might be considered research, began with the premise that bats are giant bugs. When Hobbes objected that Calvin was just making up facts, Calvin replied that he had a “secret weapon” that would guarantee a good grade: a clear plastic binder to put his report in. Economic consulting reports are the clear plastic binders of the development-subsidy world.

But what failed for Calvin with his teacher has gone over way better with elected officials and much of the media that cover stadium deals. In the case of CSL’s overblown D.C. United study, for example, the Washington Post endorsed the project and cited the study’s figures, even as its own business reporter was reporting on its flaws. And while Washington’s city council balked briefly at the expense, they then went ahead and approved the spending anyway.

And that’s the true litmus test of the work done by the CSLs of the world: However bad they are at the job of producing valid economics numbers, they are very good at generating numbers on government checks. If Wile E. Coyote could only land the roadrunner in the end—or enable his billionaire clients to do so—nobody would be questioning his methods.

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4 comments on “Meet the Wile E. Coyote of the sports stadium racket

  1. I’m not sure where you’re getting your information from but hotel stays have been up for years in Philadelphia. If they were down, it’s probably because the city was becoming a violent hellhole during the Street administration. It’s a really stupid and oblivious comparison for you to make.

    I agree with the premise of this post but that was a really bad example to use. Hotel stays went down because the city was in a huge decline that started being noticeable in the ’70s. The city lost thousands of jobs in the ’90s and early ’00s alone. It had nothing to do with the Convention Center or any other project.

    1. Yeah but the point remains a convention center isn’t going to boost hotel stays 50 or 100% unless you are building it in a town of 6,000.

      This kind of accounting always reminds me of the garbage put out by my land grant university’s Economic Impact Group. They will do things like project that every single person who attends the zoo is from out of town, stayed in a hotel for 2 nights, and only came to town because of the zoo. Really EVERYONE?

      All that to justify a tens of million dollar subsidy showcased around improving an exhibit that was then removed a year after the subsidy was approved anyway.

      Or there is a new small niche museum that wants funding and they project 10,000 guests a day at $10 a pop on average for years. They didn’t do that on the first day, and Generally did a couple thousand on weekends at ~$45 a head with scores of discounted tickets also given out. The thing was pulling in like less than 10% of projections I want to say.

      Other than a few testy meetings and editorials and letters to the editors, nothing is one, nothing changes. Gotta keep those political donors an construction unions happy! Plus I won’t be here in 5 years anyway.

  2. Laughing out loud at the great Calvin & Hobbes science presentation analogy.

    Especially as I was helping my 2nd grader last night on her science fair project which was due today. Her secret weapon is stickers on the presentation board instead of clear plastic binder. In all seriousness though she actually did the empirical research.

    CSL certainly has a good economic model as being a “fixer”. Does the Pulitzer have an award category for economic fiction?

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