Category Archives: economic impact studies

Friday roundup: Pandemic could delay Rams and Chargers stadium, drain hotel tax base for Raiders stadium (and kill millions of people, oh yeah)

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And so we come to the close of Week 2 of Coronavirusworld, with still little way of knowing what Week 3 will bring, let alone Week 8 and beyond. (I just now started to write about this far less grim response to Tuesday’s London study, until I noticed none of the authors are infectious disease specialists and the claim that contact tracing can keep infections under control was cited to a single Chinese news story that said nothing of the sort, so maybe stay grim for the moment?) With pretty much all of the sports world now shut down, though — except for Australian Rules Football for some reason — sports journalists have begun looking down the road at longer-term effects of the pandemic, resulting in some useful and some not-so-useful reporting:

Friday roundup: Dolphins owner seeks Formula One tax break, Tacoma okays soccer subsidies, plus vaportecture from around the globe!

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Happy coronavirus panic week! What with stadiums in Europe being closed to fans and stadium workers in the U.S. testing positive for the virus, it’s tough to think of much right now other than what song to wash your hands to for 20 seconds (this is my personal preference). But long after we’re done with our self-quarantines, the consequences of sports venue spending will live on, so to the week’s news we go:

  • Miami Dolphins owner Stephen Ross is seeking a sales-tax exemption for tickets to Formula One racing events at his stadium, saying that without it, Miami might not get a Grand Prix. The tax break is expected to cost the state between $1.5 million and $2 million per event, but Formula One officials say each race would generate an economic impact of more than $400 million, and what possible reason would they have to lie about a thing like that?
  • The Tacoma city council voted 8-1 on Monday to approve spending on a $60 million, 5,000-seat stadium for the Reign F.C. women’s pro soccer team. According to a letter of intent approved by the council, the city will provide $15 million, while the city parks agency will provide $7.5 million more, with perhaps another $20 million to come from federal tax credits for investing in low-income communities. The parks body still has to vote on the plan on Monday as well; given that Metro Parks commissioner Aaron Pointer — who is also a former Houston Astro and a brother of the Pointer Sisters — said he doesn’t see “really any benefits at all” for the city or its parks, it’s fair to say that the vote there will be more contentious than the one in the city council.
  • Brett Johnson, the developer behind a proposed $400 million development in Pawtucket centered around a pro soccer stadium, says he has lots of investors eager to parks their capital gains in his project tax-free under the Trump administration’s Opportunity Zone program, but it might take a while to work out all the details because reasons. But, he added, “My confidence is very high,” and confidence is what it’s all about, right?
  • Nashville’s Save Our Fairgrounds has filed for a court injunction to stop work on a new Nashville S.C. stadium, on the grounds that no redevelopment of the state fairgrounds can take place without a public voter referendum. This brings the total number of lawsuits against the project to … umpteen? I’m gonna go with umpteen.
  • There’s now an official lawsuit against the Anaheim city council for voting on a Los Angeles Angels stadium land sale without sufficient public meetings. The People’s Homeless Task Force is charging that holding most of the sale talks in private violated the state’s Brown Act on transparency; the city’s lawyers responded that “there could be a myriad of reasons” why the council was able to vote on the sale at a single meeting in December despite never discussing it in public before that, though they didn’t suggest any specific reasons.
  • Wondering what vaportecture looks like outside of North America? Here’s an article on Watford F.C.‘s proposed new stadium, though if you aren’t an Athletic subscriber you’ll be stuck with just the one image, though given that it’s an image of Watford fans stumbling zombie-like into the stadium out of what appears to be an open field, really what more do you need?
  • There are some new renderings of the St. Louis MLS team‘s proposed stadium, and once again they mostly feature people crossing the street, not anything having to do with watching soccer. Are the clip art images of people throwing their hands in the air for no reason temporarily out of stock or something?
  • Here are photos of a 31-year-old arena being demolished, because America.
  • The Minnesota Vikings‘ four-year-old stadium needs $21 million in new paneling on its exterior, because the old paneling was leaking. At least the stadium’s construction contractors will be footing the bill, but it’s still an important reminder that “state of the art” isn’t necessarily better than “outmoded,” especially when it comes to new and unproven designs.
  • And speaking of COVID-19, here’s an article on how travel restrictions thanks to the new coronavirus will cost the European tourism industry more than $1 billion per month, without wondering what else Europeans (and erstwhile travelers to Europe from other continents) will do with the money they’re saving on plane tickets and hotel rooms. Where’s my article on how pandemics are a boost to the hand sanitizer and canned soup industries?

Friday roundup: More Carolina Panthers stadium demands, D-Backs explain Vancouver move threat, and giant soccer robots

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Good morning, and thank you for taking a break from your coronavirus panic reading to patronize Field of Schemes. Please wash your hands for 20 seconds with soap and water, and we can begin:

Friday roundup: D-Backs, Angels hedge on new stadium plans, NJ demands 76ers repay 0.5% of tax breaks, and other foolishness

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Another busy Friday where I need to squeeze in the news roundup when and where I can! (Also, yeah, New Yorkers already knew this about Mike Bloomberg, who also was responsible for this.)

The Wile E. Coyote of stadium consulting takes on Brewers’ stadium, gets crushed by anvil

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I (and you, if you read this site regularly) didn’t have to go much beyond the headline on this Milwaukee Business Journal story — “Miller Park has delivered $2.5 billion impact to Wisconsin, study shows” — to figure that it’s probably nonsense, for all the usual reasons: economic “impact” doesn’t really mean anything, most sports spending is just cannibalized from other local entertainment spending, and most economic impact reports are garbage. But you will be glad if you do, as I was, because then you will discover who wrote the report that was responsible for the rose-colored headline:

An independent study released by the Metropolitan Milwaukee Association of Commerce Monday shows Miller Park has generated $2.5 billion in economic output since 1999. It officially opened in 2001.

Miller Park and the Brewers delivered valuable exposure to the city during the 20-year period, according to the study performed by Conventions, Sports & Leisure International, including $131.8 million in media value. It also brought in out-of-state dollars, which include visiting teams and fans, and fans from across Wisconsin who do not live in Milwaukee or Milwaukee County.

Oh hell yeah, it’s everybody’s favorite incompetent cartoon supervillains, CSL! In this case, they were hired by the local chamber of commerce — surely a disinterested body if ever anyone has seen one, even if the Brewers are a member — to show how the people of Wisconsin’s gift of $310 million to one Bud Selig for a new stadium was totally worth it.

The chamber allows for downloading the full study by clicking on the “Download the Full Sudy” (sic) button on its website, so let’s see what the report has to offer:

  • “Cumulative net new impacts to the State … “totaled approximately $2.5 billion in total output, $1.6 billion in direct spending, $263 million in new taxes, 1,835 total annual jobs, and $1.2 billion in personal earnings.”
  • 86% of Brewers game attendees were from the state of Wisconsin. Of the others, 95% said their main reason for going to Milwaukee was to see a Brewers game.
  • That $2.5 billion in “total output” over the last 20 years comes from $448.2 million from construction, plus $152.5 million a year from new spending by fans who otherwise wouldn’t be spending in town.
  • The $152.5 million a year, in turn, is an estimate based on a multiplier effect (in essence a calculation of how much spending generates more spending when the places you spend your money then turn around and pay workers who then spend that money, etc.) applied to $99.4 million a year in actual spending.

Let’s do a smell test on that $99.4 million a year. If 14% of Brewers game attendees are from out of town, and they sell maybe 2.7 million tickets a year, that’s 378,000 people. To generate $99.4 million, each and every one of those people has to spend $263 per game, meaning no doubling up on Airbnbs. And, of course, these need to be people who would not have gone to see the Brewers if they were still in their old stadium.

And, of course, that’s just total money changing hands in the state of Wisconsin, not actually money that Wisconsin taxpayers get back in their pockets. To see that, we have to take a look at CSL’s estimates for net new tax revenue:

  • “Over the course of the previous 21 years, it is estimated that the operations of the Team and Ballpark have generated approximately $262.9 million in net new tax revenues to the State, $25.2 million to the County, and $24.3 million to the City.”

Another way of look at this then, is: In exchange for $310 million in cash in 1999 dollars, if you squint and make a lot of optimistic assumptions about out-of-towners and how much they’ll only spend if offered a new stadium to visit, the state of Wisconsin has gotten back $292.4 million in tax revenue, over the course of 21 years, meaning taxpayers have taken a loss on the deal, we’re just not sure how bad of one. That would arguably be more honest, but it also wouldn’t get CSL more chamber of commerce contracts if it made that the headline, so of course it didn’t play that up!

Or we could call up a legit economist, like the Wisconsin politics site The Center Square did, and see what they have to say about the CSL report:

“I refer to [CSL’s] approach as a ‘benefits-only analysis’ because it’s fundamentally one-sided; it never counts the negative economic impact of the taxes needed to fund the subsidy in the first place. And, unsurprisingly, it’s pretty easy to make arguments in favor of an idea if you ignore the cost,” said Dr. Michael Farren, a Research Fellow at the Mercatus Center at George Mason University. “At the end of the day, peer-reviewed academic research consistently finds that subsidies, especially stadium subsidies, don’t work very well to create economic development, and may even reduce it in the long-run.”

Really, Keith Law’s response is probably the best. But if you want the hard, cold numbers to back up your kneejerk derisive laughter, feel free to reference the above.

Meet the Wile E. Coyote of the sports stadium racket

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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.

D.C. and Houston both predict World Series windfall from visitors from opposing city, what could possibly be wrong with this logic?

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With the World Series underway, Washington, D.C.’s tourist bureau has estimated that the city will see a $6.5 million windfall from hosting games, partly from added Nationals fan spending and partly from spending by visiting Houston Astros fans:

“We are going to be welcoming business that we would not have without the World Series here,” McClain said. “You can really feel the excitement throughout the city, whether you are watching with folks at local restaurants and bars or just walking down the street seeing all the Washington Nationals gear that people are wearing.”…

“New York is closer, and so people can make that decision to come to D.C. closer to the times of the games. … If it’s Houston, it’s really just a distance thing, in terms of people having to take flights here, and so that just becomes a little bit more limiting in terms of the visitation estimate,” McClain said.

Houston, meanwhile, is excited for the $9 million windfall that the Greater Houston Partnership estimates the city will receive thanks to visiting Nationals fans:

“It’s wonderful hosting the World Series because it gives us an opportunity to show businesses and people outside of Houston what a great place this is,” Jankowski said. “It gives an image of a winning team, a winning season and enthusiastic sports fans. Houston needs images like that — not the images we saw with [Tropical Depression Imelda].”

Okay, so here’s the thing about baseball games — in fact, about all sporting events: Only one of the two teams can be the home team. Depending on how long the World Series goes, Houston will host from two to four home games, and Washington from two to three; and each time fans from one city travel to the other, they leave their home city. So while there may be an influx of big-spending Washington fans in Houston for tonight’s Game 2, there will be that many fewer people spending money in Washington tonight (and, perhaps more the point, that many more Washingtonians returning to town tomorrow with drained bank accounts); and vice versa for Friday’s Game 3 in Washington. “Let’s boost our local economies by first us sending you a bunch of our fans and then you send us a bunch of your fans!” sounds more like a design for a perpetual motion machine than a legitimate economic argument.

There is some positive impact from a World Series game, obviously: A few locals probably do increase their spending somewhat instead of just reducing their other entertainment spending by the same amount, and there are visiting media crews and whatnot who rent hotel rooms and eat dinner the same as baseball fans do. But the numbers are fairly marginal: A 2005 study by economists Victor Matheson and Robert Baade determined that “any increase in economic growth as a result of the post-season is not statistically significantly different than zero,” though they also guesstimated the economic impact at $6.8 million per home game, which is actually quite a bit more than the D.C. and Houston studies are promising.

I just got off the phone with Matheson, who says that the issue is the $6.8 million figure wasn’t statistically significant, so “the answer could be zero,” or could be more. He added that any actual positive impact could come in the form of fans traveling into the city from the suburbs to see games — “you want to be in a Houston sports bar rather than a Galveston sports bar to watch the game” — or from, say, expatriate Astros or Nats fans driving down from Philadelphia to D.C. for games and bringing their spending with them. So the ultimate economic activity numbers being put forward by the D.C. and Houston groups may not be too far off, even if their explanation of them is kind of nutty.

In any event, though, that’s all “economic activity,” which Matheson once memorably defined to me as: “Imagine an airplane landing at an airport and everyone gets out and gives each other a million bucks, then gets back on the plane. That’s $200 million in economic activity, but it’s not any benefit to the local economy.” So really the lesson here for journalists and sports page readers alike is twofold: Take the claims of tourism booster agencies with an enormous grain of salt, and always ask what the tax revenue impact will be, not just the economic activity impact. Or just use your basic brain skills and understand that you can’t make two glasses of water more full by pouring them back and forth into each other, and you can save time on reading news coverage at all.

Friday roundup: Clippers broke public meetings law, Vegas seeks MLS team, Buccaneers used bookkeeping tricks to try to get oil-spill money

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Any week with a new/old Superchunk album is a good one! Please listen while reading this week’s roundup of leftover stadium and arena news:

  • The Los Angeles County District Attorney’s office has determined that Los Angeles Clippers owner Steve Ballmer violated open meetings laws by hiding information about the team’s proposed new Inglewood arena’s location and scope when formally proposing it in 2017, even replacing the name “Clippers” with “Murphy’s Bowl LLC, a Delaware Limited Liability Company (Developer).” Unfortunately, the DA’s office noted, it’s too late to do anything about this because the violation wasn’t reported in time, but don’t do it again, I guess? In related news, NBA commissioner Adam Silver says he supports the team’s arena plan, even though Ballmer is being sued by New York Knicks owner James Dolan, who also owns the nearby Forum and doesn’t want the competition, and who was apparently the main reason for all that secrecy on the part of Ballmer. It’s all enough to make you feel sympathetic to Dolan, until you remember that he is an awful person.
  • Las Vegas Mayor Carolyn Goodman has announced she’s looking at building an MLS stadium in her city, because “We have not become the pariah anymore, and there is no end to this. It’s so exciting,” which would almost make sense if MLS had previously steered clear of Vegas because of gambling or something and also if MLS were currently about to put a franchise in Vegas, neither of which is the case. The stadium, if it’s ever built, would go on the site of Cashman Field, where the USL Championship Las Vegas Lights FC currently play, and would be paid for by some method that the developers “would have to present” to the city council, according to the mayor’s office. It’s so exciting!
  • The owners of the Tampa Bay Buccaneers tried to get $19.5 million in settlement money from the 2010 Deepwater Horizon disaster on the grounds that the team lost revenue that summer compared to the following summer when it was banking extra NFL checks that the league was stockpiling in advance of a player lockout. Amazingly, that’s not what got the claim rejected — it was only nixed when it turned out the Bucs hadn’t even stockpiled that revenue at the time, but rather did so retroactively on its books when it realized it could use it as a way to try to get oil spill settlement cash. It’s such a fine line between mail fraud and clever.
  • Inter Miami owners David Beckham and Jorge Mas have agreed to pay a youth golf program $3 million to clear out of the way of their proposed Melreese soccer stadium and move, you know, somewhere else, so long as it’s not on their lawn. This is not a ton of money in the grand scheme of things, but it is worth noting that Beckham and Mas are sinking a whole lot of money into this stadium and a temporary stadium until this one is ready and the old new stadium site that they say they’re not building a stadium on anymore; this can either be seen as a laudable commitment to private funding or a dubious business investment or, hell, why not both?
  • The Portland Diamond Project group has gotten a six-month extension on its deadline to decide whether to build a baseball stadium at the Terminal 2 site, and is paying only $225,000, instead of the $500,000 it was originally supposed to be charged. That seems like bad negotiating by the Port of Portland when they had the wannabe team owners over a barrel, but I guess $225,000 just for a six-month option on a site that probably won’t work anyway for a team that probably won’t exist anytime soon is nothing to turn up your nose at.
  • When the headline reads “New A’s stadium could generate up to $7.3 billion, team-funded study predicts,” do I even need to explain that it’s nonsense? If you want a general primer on why “economic impact” numbers don’t mean much of anything, though, I think I addressed that pretty well in this article.
  • The Los Angeles Rams‘ new stadium is reportedly set to get $20 million in naming rights payments for 20 years from a company that lost hundreds of millions of dollars last year, which is surely not going to result in a repeat of the Enron Field fiasco.
  • A reporter at the Boston Bruins‘ 24-year-old home arena was startled by a rat on live TV. Clearly it’s time to tear it down and build a new one.

Friday roundup: Vikings get $6m in upgrades for two-year-old stadium, Sacramento finds rich guy to give soccer money to, CSL screws up yet another stadium study

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No time to dawdle today, I got magnets to mail, so let’s get right down to it:

  • The Minnesota Vikings‘ two-years-and-change-old stadium is getting $6 million in renovations, including new turf, and taxpayers will foot half the bill, because of course they will.
  • Billionaire Ron Burkle is becoming the majority owner of the USL Sacramento Republic, so now Mayor Darrell Steinberg wants to give the team “tens of millions of dollars” in infrastructure and development rights and free ad signage so that he can build an MLS stadium. “The richer you are, the more money we give you” is the strangest sort of socialism, but here we are, apparently.
  • Concord, an East Bay suburb until now best known as “where the BART yellow line terminated until they extended it,” is considering building an 18,000-seat USL stadium. No word yet on how much it’ll cost or how much the city will chip in, but they probably first need to wait to see how rich the team’s owner is.
  • Not everyone in Allen, Texas wants to live across the street from a cricket stadium, go figure.
  • Everybody’s favorite dysfunctional economic consultants Convention, Sports & Leisure have done it again, determining that Montreal would be a mid-level MLB market without bothering to take into account the difference between Canadian and American dollars. (Once the exchange rate is factored in, Montreal’s median income falls to second-worst in MLB, ahead of only Cleveland.) CSL explained in a statement to La Presse that it wanted to show “the relative purchasing power” of Montrealers, and anyway they explained it in a footnote, so quit your yapping.
  • The Milwaukee Brewers are going to change the name of their stadium from one corporate sponsor to another, and boy, are fans mad. Guys, you know you are free to call it whatever you want, right? Even something that isn’t named for a corporation that paid money for the privilege!
  • Local officials in Maryland, Virginia, and D.C. are still working on an interstate compact to agree not to spend public money on a stadium for Dan Snyder’s Washington NFL team, though passage still seems unlikely at best, and the history of these things working out effectively isn’t great. Maybe it’ll get a boost now that team execs have revealed that the stadium design won’t include a surfboard moat after all. Nobody respects the vaportecture anymore.
  • The libertarian Goldwater Institute is suing to force the release of a secret Phoenix Suns arena study paid for by the team and conducted by sports architects HOK, but currently kept under lock and key by the city. (Literally: The study reportedly is kept in locked offices and is only allowed to be accessed by a “very limited number” of people. Also, a citizen group is trying to force a public referendum on the recently approved Suns arena subsidy, though courts have generally not been too keen on allowing those to apply retroactively to deals that already went through. And also also, one of the two councilmembers who voted against the Suns subsidy thinks the city could have cut a better deal. Odds on any of this hindsight amounting to anything: really slim, but maybe it can help inform the next city to face one of these renovation shakedowns, if anyone on other city councils reading out-of-town news or this site and ultimately cares, which, yeah.
  • Oakland Raiders owner Mark Davis and Los Angeles Rams owner Stan Kroenke signed agreements to cover the NFL’s legal costs in any lawsuit over those teams’ relocations, and they’re both being sued now (by Oakland and St. Louis respectively), and NFL lawyers are really pricey. Kroenke is reportedly considering suing the league over this, which I am all for as the most chaotically entertaining option here.
  • Wilmington, Delaware is being revitalized by the arrival of a new minor-league basketball team, so make your vacation plans now! Come for the basketball, stay for the trees and old cars! Synergy!

Braves owners say money pit of stadium is made up for by other stuff that isn’t a money pit, if your head hurts, that’s as intended

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I’ve gotten used to newspapers running headlines that contradict not only reality but the stories they themselves head, so when I saw yesterday’s Wall Street Journal headline “Atlanta Braves Owner Says County Wins Big From Development Near New Stadium,” I assumed most of it was probably wrong. And it is, undeniably: The only thing the Braves “owner” — not specifically identified, but probably actually CEO Derek Schiller, since he’s quoted directly later in the piece — says is that (in the WSJ’s words) “taxes and other income generated by the site are helping offset some of the county’s costs incurred by the Braves’ controversial $672 million suburban stadium,” which isn’t exactly the same thing. (The article also notes that the Braves are turning a tidy profit on the sale of three apartment buildings near the new stadium, which is very much not the same thing.)

The article does, however, reference a September study from September by Georgia Tech’s Enterprise Innovation Institute, done on behalf of the Cobb County Chamber of Commerce, which claims that public debt service on SunTrust Park come to $9.5 million a year, while the stadium has generated $18.9 million a year in new tax collections and “other benefits.” That really would be winning big. So is it true?

The report (and some executive summaries) can be found here. It is, just in terms of readability, horribly written — the numbers in the charts bear no obvious relation to those discussed in the accompanying text — but here’s the best I can understand it.

In terms of public costs of the new stadium:

  • Debt service on Cobb County’s $300 million stadium debt is $22.5 million a year, of which the Braves owners pay $6.1 million in rent, leaving $16.4 million a year for taxpayers to pay off.
  • $10 million a year is paid off by two Cumberland Special Service District funds (SSDs), wherein businesses “tax themselves in order to contribute to the stadium project.”
  • The county is putting in $1.2 million a year to a stadium capital maintenance fund, and spending an extra $970,000 a year on public safety and other additional operational costs of the stadium.

That would seem to come to $8.6 million in remaining annual public costs, but the report says it’s $9.5 million. (The difference may be because of added cost of things like building that damn pedestrian bridge, but it’s not clear — like I said, this thing is horribly written.) This is almost exactly what the Atlanta Journal-Constitution came up with in its own calculation, so that checks out.

(There’s still one big problem here, which is that the analysis assumes that the SSD money — which is a tax surcharge on local businesses — would only come in if the stadium were built. But we’ll come back to that in a second.)

On the benefit side:

  • $817,000 in sales taxes on ticket and concession sales to out-of-county residents
  • $905,000 in hotel and sales taxes from fans who traveled more than two hours to the game, on the assumption they came specifically for the game, stayed overnight, and spent the average that an overnight Atlanta-area visitor did on food and lodging
  • $89,000 in sales tax on Braves employee spending (no source given for this, other than the LOCI™ computer model)
  • $270,000 in taxes on taxable office property in the tax-exempt stadium, including copiers and ice-making equipment

That all leaves SunTrust Park as a $7.4 million annual loss to the county, which over 30 years would be cost taxpayers about $100 million in present value — not as bad as at first feared, but also nothing like “winning big.”

Ah, but that’s just the stadium! The big benefit of the stadium, according to the report, is actually the development that the Braves owners built next to it, plus the “halo effect” of rising property values on adjacent land. This is probably best presented in a chart from the report:

In short, the Braves’ stadium remains a money pit for taxpayers, but they’re building a whole lot of other stuff that’s not a money pit, so yay, win!

The problem here isn’t one of math, but one — really two — of logic. Yes, building a stadium at a public loss next to a mixed-use development project that’s a bigger public gain is a net public gain. But who the hell said anybody had to build the stadium? If people in Cobb County are clamoring to live and work and eat in a new fake urban district in the suburbs, by all means give it to them, but unless you think they’ll only do so if there’s a baseball team playing next door 81 times a year, don’t shackle it to a money-losing stadium.

Also, if Atlanta suburbanites were indeed hankering for more places to walk around and pretend they’re in the city without actually being in the city, there’s every indication that somebody would have given it to them somewhere — just not necessarily in Cobb County. Yesterday’s WSJ article even notes that Cobb may just be benefiting by stealing economic activity from other parts of the metro area:

“We have friends in Buckhead,” one of Atlanta’s upscale neighborhoods, said Mike Plant, chief executive of the Braves Development Corp. “We hear from them. They’re not real happy.”

So basically, what we have is that the Braves owners built a stadium that is costing taxpayers lots of money, but they also held out the carrot of an accompanying development that would steal enough revenue from neighboring areas to put the final numbers in the black — if you assume that nobody ever could have been convinced to build development there without a stadium. This is indeed an exceedingly common gambit, dating way back to the Brooklyn Nets‘ money-losing-arena-plus-a-bunch-of-development plan, and dating right up to the Worcester Red Sox‘ similar minor-league stadium project. It relies on the fact that it’s nearly impossible to say if a mixed-use development would have been built “but for” the accompanying subsidies — so if you attribute all the new taxes being paid to the subsidy, any new development looks like free money.

All of this makes it very, very hard to determine exactly where the Braves stadium falls in terms of historically bad sports subsidy deals, which is precisely the point. Ancillary development projects bring in new revenues, yes, but more importantly they muddy the waters of determining who’s paying what — still nobody, including me, has a good number for how much that Nets arena is costing New Yorkers — and justify handing over public cash to a baseball team that was turning a tidy annual profit even before building new apartment buildings next to its new stadium and selling them for a 22% return on investment.

If the Braves stadium is the wave of the future, in other words, it’s less a revolution in figuring out how to absolve taxpayers of stadium costs than a revolution in how to confuse taxpayers about who’s paying for what. They’ve already succeeded in confusing the Wall Street Journal — tomorrow, the world!

[ADDENDUM: Atlanta-area sports economist J.C. Bradbury responded to this report on Twitter last month — something I missed because Twitter is but a blur passing before my eyes — and came to similar conclusions: “The report isn’t as bad as many I’ve read, but it’s estimated $18.9 mil impact isn’t correct.” He also raises questions about whether the SSD taxes are really “businesses taxing themselves” or just taxes that the county could have levied on businesses and used for other purposes, which is an excellent point that is beyond the scope of this post, because it’s long enough already, but maybe another time.]