Councilmember credits new sports venues for D.C. not being like Detroit, which is lousy with new sports venues

Somewhere in the middle of this mess of a World Series media cycle — after the assistant GM berating female reporters scandal but before the booing of Donald Trump and flashing of Gerrit Cole — the New York Times ran a puff piece on Washington Nationals fans that came down to “86 years since a World Series, Baby Shark, our troubled times, blah blah blah.” But Pat Garofalo, in his Billionaire Boondoggle newsletter, noted one paragraph that stood out as exceptionally evidence-free:

When the ballpark opened in the Navy Yard neighborhood 11 years ago, the area was struggling to move past decades of drugs and violence. It was a wasteland of car repair shops, garbage truck parking lots and asphalt factories. But the ballpark led the way for restaurants, condos and hotels, and Audi Field, home of Major League Soccer’s D.C. United, down the street.

We’ve covered the Stadium Catalyst Fallacy in this space before: Look at a sports venue, look at development taking place around it, and declare “mission accomplished.” But when you have a sports facility being built in a neighborhood that is already ripe for development — which was absolutely the case in D.C., if only because there are few sites anywhere in the District that aren’t being eyed for development — then, as Garofalo notes, “We can’t know for sure what would have happened in the alternative universe in which the Nationals never came to D.C. and Nats Park was never built.”

Then Garofalo digs up another recent quote about the Nationals’ alleged economic windfall for D.C. that is even more bizarre:

“Where would we be without the arena, the convention center and hotel, the ballpark, Audi soccer stadium,” Evans asks and answers, “We’d be Detroit, a city still struggling in every respect.”

That’s D.C. city councilmember Jack Evans, the godfather of Nationals Park, in a recent Washington City Paper article about how the stadium deal “nearly fell apart.” (The article doesn’t really explain that bit, but if you want the fuller recap, it’s covered both in the later chapters of Field of Schemes and here on this site as well.) Notes Garofalo:

What a weird comparison for Evans to make: Detroit also has publicly-funded sports stadiums, as well as convention centers and hotels. The chief difference between the cities is that Detroit’s main industry — automaking — went bust, and D.C.’s — the business of government — didn’t. No soccer field or convention center changed that.

I would suggest that we all point and laugh at Jack Evans for being a doofus, but presumably everyone is already pointing and laughing at Evans’ ongoing ethics scandals, so to double down would be cruel, if fun.

Friday roundup: Ex-D.C. mayor says his $534m Nats stadium expense was worth it, Clippers arena stymied by car trouble, MLS franchise fees to go even higher

Shouldn’t posting items more regularly during the week leave less news to round up on Fridays? I’m pretty sure that’s how it’s supposed to work, but here I am on Friday with even more browser tabs open than usual, and I’m sure someone is still going to complain that I left out, say, the latest on arena site discussions in Saskatoon. I guess lemme type really fast and see how many I can get through before my fingers fall off:

 

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

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: Team owners rework tax bills and leases, Twins CEO claims team is winning (?) thanks to new stadium, and other privileges of the very rich

Tons more stadium and arena news to get to this week, so let’s dive right in without preamble:

Nationals cite “security” to force fans to pay for bag checks and lockers

The Washington Nationals have become one of the few MLB teams to ban bringing backpacks in their stadium, apparently because D.C. has special dangers that require special security theater measures, and also because they can’t figure out how to do a bag search like every other stadium everywhere. But never fear! The Nats will also be offering storage lockers for your verboten bags, at the low, low price of $2 an hour:

Medium lockers (10-by-15-by-22 inches) will be available for $2 per hour, charged in six-minute increments. Large lockers (15-by-15-by-22) will be available for $3 an hour. Binbox’s rental fees will be capped at $10 and $15, respectively, each game. The Nationals will not make money off the locker rentals…

Lockers will be available two hours before the scheduled first pitch until 90 minutes after the game. Reserving lockers is not an option, and every bag will be inspected by a third-party security staffer before being placed in a locker.

Okay, so apparently they can figure out how to do a bag search — so long as it’s by a third-party security officer who is paid by your bag fees.

This is stupid on a great many levels: briefcases and other items capable of carrying contraband are still allowed; security experts point out that creating long security lines outside just creates easier targets for any potential terrorists; the Nats will be giving out drawstring bags, so if you’re really in a pinch it should be straightforward enough to empty the contents of your backpack into one of those, then roll up your backpack and put it in as well. But it’s not stupid on the level of making fans pay the cost of something — bag searches — that normally the team would cover, which is indeed a remarkable innovation. I can’t wait for the first team to announce that all fans who aren’t season ticket holders need to visit the privately run ticket scanning security check station, or that if you want to throw out your garbage at the game, you need to buy access to the waste disposal lounge. The possibilities are endless!

Anyway, Nats fans are really mad, and my guess is it will eventually quietly go away when mass chaos results and nobody can get to their seats (and more important, begin buying hot dogs) until the third inning. Or maybe the Nats will offer fans a way to subscribe to a service that lets them bring in backpacks without being checked based on their fingerprints proving that they’re good people. The possibilities are endless!

D.C. councilmember facing pay-for-play charges, could be too in jail to help with Washington NFL stadium

Washington, D.C., has put close to a billion dollars in public money into sports stadiums and arenas in recent years — for the Nationals, D.C. United, and a Wizards practice facility that doubles as a Mystics home court — and at the center of pretty much all of the spending campaigns is city councilmember Jack Evans. And Evans, according to a Washington Post report, is now in super-hot water, which I will hand it over to Deadspin to explain because they do it so much pithier:

The paper alleged Evans received an estimated $100,000 in stock from a private company just before introducing “emergency” legislation that would have directly benefited the gift horse firm. The story said the D.C. Board of Ethics and Government Accountability began looking into Evans’s play-for-pay behaviors earlier this year. The ethics board suspended that investigation and released no findings, which according to the Post typically happens “in deference to law enforcement investigations.”

Uh oh.

Serious uh-oh. The private company in question is billboard company Digi Outdoor Media, and it gifted Evans with the $100,000 in stock in October 2016, one month before Evans introduced emergency legislation to legalize large digital advertising signs that the company wanted to install. Digi had earlier worked with Evans on legislation legalizing large fabric ads on the sides of buildings, and had given the councilmember $50,000 in checks earlier in 2016, in what Evans said was a retainer for future consulting work. (Evans says he ended up returning both the checks and the stock.)

If Evans goes down in flames, notes Deadspin’s Dave McKenna, it will be nothing but bad for Washington NFL team owner Daniel Snyder’s attempts to get a new stadium on the RFK site:

In keeping with his no-billionaire-left-behind reputation, Evans was viewed as the leader among D.C. politicians in putting together a package to beat whatever Maryland and Virginia lawmakers were going to give the bumbling but moneyed Skins owner. One source with ties to the D.C. council tells me Evans’s package calls for the city to turn over the choice real estate to Snyder for free, and to take care of new road and parking lot costs, and Snyder would dip into NFL coffers and maybe even his own bank accounts to finance the actual stadium construction. I was at an election night function last month and saw Evans holding court and boasting about how the plan to turn over the federally owned, city-controlled parcel of land to the most despised man in the Nation’s Capital (yes, even in the Trump era) was all but signed, sealed and delivered.

“It’s a done deal,” Evans said, according to one of the folks in the court. So done, in fact, that Evans also said the city was already planning that the stadium building project would be “announced in March” of 2019.

Maybe not, now.

I would also be remiss if I didn’t note McKenna’s excellent disclosure at the end of his article that “Jack Evans once called me to berate me for writing that Nationals Park was being built with public funds; the dumbass argument Evans made repeatedly during his phone tirade was that all the money used to build the stadium, a tab that eventually hit about $1 billion, would come from new taxes implemented specifically for that project, and therefore those tax revenues can’t be called ‘public money.’ Huh?” Hey, I’ve heard that argument before! If it turns out that Evans had a hand in killing my Washington Post op-ed way back in 2012, then full disclosure here that I had reason for animosity towards him, though honestly I think any D.C. resident or person concerned about not lavishing public dollars on wealthy sports team owners has plenty enough reason already to be excited to see him hoist on his own $100,000 petard.

Friday roundup: D.C.’s ballpark boom, Rays’ stadium “ingenuity,” and other logical fallacies

You know how the New York Times now offers The Week in Good News, to remind you that not absolutely everything is awful? This is not that, not at all, though it does include a nice oblique shoutout to this site:

  • I think at this point just about every reader out there has emailed or tweeted me about this Washington Post article on development around the new Nationals stadium, variously headed “Ballpark Boomtown” or “The promise: Nationals Park would transform the city. Did it?” or “Nationals Park brings growth, worries to Southeast Washington.” The hook is that construction is booming around the new stadium — one former local opponent is even quoted as saying “Nats Park has been a tremendous boon to the region and the city and even to our neighborhood” — so doesn’t this disprove the idea that sports venues don’t create economic growth? The short answer: It’s hard to say from the anecdotal stories in this article, as it could be that the stadium sparked development that otherwise wouldn’t have happened, or it could be that it redirected development that otherwise would have taken place elsewhere in crane-happy D.C. (a point made in the article by economist Dennis Coates, who says, “This is not income growth; it’s redistribution”), or it could be that the Navy Yard would have gotten developed with or without the stadium. I’ve been poring over the big lists of logical fallacies and cognitive biases and haven’t yet found one that exactly describes the tendency to only look at what did happen thanks to a decision and not what would have happened without it; if this doesn’t have a name yet, the Stadium Catalyst Fallacy has a nice ring to it.
  • The city of Louisville and the state of Kentucky are projected to end up spending more than $1 billion in up-front costs and interest payments on the University of Louisville’s KFC Yum! Center, and while that’s not the best way to determine public costs — really you want to translate future payments into present value, and include not just arena debt service but operating costs and what have you as well, a calculation that this Louisville Courier-Journal article doesn’t attempt — holy crap, one billion dollars is still an acceptable response. (Sports marketer Jim Host, who helped devise the arena plan, has his own response — “If you allowed yourself to be deterred by the negative aspects, nothing would ever get done” — which probably belongs somewhere on that logical fallacy list as well.)
  • Andrew Barroway, who bought half of the Arizona Coyotes in 2015 for $152.5 million and the other half in 2017 for $120 million, and who has complained that his team “cannot survive” without a new arena because of annual losses that are “not sustainable,” now wants to sell half the team for $250 million. Just think on that one for a while.
  • MLB commissioner Rob Manfred thinks Tampa Bay Rays owner Stuart Sternberg will get a new stadium built, despite not having any idea how to pay for one, thanks to his “creative ability and persuasive ability in terms of getting something done,” while Tampa Bay Times columnist Ernest Hooper says “with ingenuity, solutions can be found” — like how about building school offices into a stadium and selling off school administrative buildings, huh, didja think of that one, smartypants? “There always will be naysayers who dismiss every idea and every project with cynicism,” writes Hooper — hey, it’s the Jim Host Fallacy!
  • Another Tampa Bay Times columnist, Daniel Ruth, had a far more acerbic take on the Rays’ stadium plans, boggling at the $892 million price tag for what would be MLB’s smallest stadium at a time when “public transportation is barely above the level of rickshaws.” Then he closed with the suggestion that Tampa could build “a museum dedicated to the history of architectural renderings of all the stuff that’s never happened,” called “the Field of Schemes Institute of Higher Chutzpah.” Which is a lovely thought and much appreciated, but shouldn’t it really be the Field of Schemes Center for the Study of Vaportecture?
  • Finally, huge thanks to everyone who kicked in toward the summer FoS Supporter drive — your generosity toward a site that delivers a daily dose of reminders of the world’s injustice remains a wonder to me. In appreciation, here is a video of my own cat leaping headlong into a seltzer box. Don’t ever say I don’t provide any good news here:

Washington Post doesn’t understand basic stadium economics, free agent spending, Twitter

If you read this site at all regularly, you should already be familiar with Betteridge’s Law of Headlines. So you know what to do when you see this in the Washington Post:

Could the Nationals’ spring training project be affecting their offseason spending?

The genesis of this story appears to be that Jim Bowden, former GM of the Washington Nationals who is now an ESPN analyst, tweeted that the team may hold off on signing free agents this winter because they “are way over budget on [their] Spring Training Complex, making [their] decision difficult.” A Nats spokesperson immediately countered that “one has nothing to do with the other,” but still, Washington Post story.

Basing an entire article on one stray remark from a guy paid to come up with bulk-size opinions on camera is bad enough, but this report also displays a stunning failure to understand the concept of sunk costs. Think of it this way: You’re about to buy a new computer because you’ve determined it will increase your productivity and allow you to earn enough money that it will pay for itself. Then you find out that your roof has a leak, and you need to spend more than you thought to repair it. Unless you’re short on cash — which is unlikely since you have a net worth of $5.4 billion — you’d be foolish to skimp on one investment just because another cost arose that you’ll need to pay regardless.

For the Nationals to cut back on free agent spending because their spring training complex is running over budget, in other words, they’d have to be incredibly stupid. Which isn’t to say it’s impossible — teams all the time set “budgets” for payroll based on little more than how much the next guy is spending, even though player salaries are sunk costs as well once you’ve signed them. But taking it this seriously is a sign that the Post not only is jumping to write articles based on off-handed tweets, but has a serious misunderstanding of economics. Good thing there isn’t anything happening soon that’s likely to exploit those weaknesses.

D.C. council brags on Twitter about how much stadium money it threw at Nationals owners, um

Thanks to Deadspin (and a couple of Twitter followers) for pointing this one out:

Boom! Nice snappy comeback, D.C. city council social media person, noting how your local politicians gave MLB everything it asked for in stadium funding without even trying to negotiate a better deal, then kept ladling on more and more money as costs went up, eventually arriving at a figure of more than $700 million, then the largest MLB stadium subsidy in history (but since surpassed by the New York Yankees, depending on how you count federal tax breaks). Now that’s something to brag about.

Adds Deadspin:

This past weekend, the District handed over city land to D.C. United, as part of an agreement for a new soccer stadium that will see the city shell out $150 million.

The D.C. council hasn’t tweeted proudly about that one yet, either because D.C. United is in fifth place and may miss the playoffs, or because the councilfolk are just so darn humble.

No, the Nationals stadium isn’t a success just because business tax receipts are up, sheesh

Of all the examples of economic innumeracy that are brought to bear around stadium deals, confusing tax revenue raised for a project and tax revenue raised by a project is one of the most common. You’d think the concept would be simple enough: If you raise sales taxes, say, and they come in faster (or slower) than expected, that doesn’t make whatever you do with those sales taxes any better or worse of a deal, whether it’s building a stadium or setting the bills on fire to see if the Secret Service arrests you.

In his Washington Times column on Tuesday, sports columnist Thom Loverro starts out almost getting it right, declaring that thanks to the business tax, ticket taxes, and ballpark sales taxes on the Nationals stadium coming in faster than expected, “if city officials wanted to, they could pay off the 30-year mortgage on the $691 million ballpark — a $585 million debt now down to $395 million — 10 years early.” Then he wrote:

The cries of financial ruin and tax nightmares that ballpark opponents carried at the time into the debate against paying for the new ballpark ring hollow now, as the city’s coffers are overflowing with ballpark revenue.

I don’t actually recall anyone predicting financial ruin as the result of tax revenues falling short — and, besides, they easily could have, if the Washington economy had zigged instead of zagged. But, yes, better for the money you expected to arrive to actually arrive, instead of ending up with an e-pulltab fiasco that requires additional taxes to make up the shortfall. “Overflowing with ballpark revenue” isn’t quite accurate, but surely Loverro doesn’t literally mean—

The ballpark has been a gold mine for the city

Okay, that’s just plain wrong — or at least, plain wrong if all you’re doing is describing tax receipts. Let’s examine why:

  • By far the biggest portion of the Nats stadium debt — more than half the public total — is being paid off by that tax on large D.C. businesses. D.C.’s local economy is booming, and that’s good! But that’s still money that, if the tax surcharge had been passed for any other purpose, could be going to pay for something else — the fact that D.C. is collecting money faster to turn over to the Nationals isn’t a plus.
  • Increased in-stadium sales taxes are generated by actual stadium business, so this is a plus. It’s not as big a plus as stadium proponents would like you to believe, though, as some of that money would have been spent in D.C. anyway — so if Nats fans are spending more on hot dogs, that generates more sales taxes at the stadium, but less sales taxes wherever they would be eating if they weren’t at the game.
  • The new ticket tax surcharge is completely new, so more money there actually is coming from the team, yay! That’s also by far the smallest share of the money, though, less than 10%, so less yay.

In short, this is all good enough news, but doesn’t say squat about whether the stadium has been a fiscal success for D.C. — we have no idea whether tax revenue is up as a result of the stadium, just that tax revenue is up, period, so with more money sloshing around, there’s more to hand over to the Nationals more quickly. An equally accurate headline would have been “D.C. spending more money on Nationals Park debt each year than anticipated,” but that would have sounded like more of a downer.

I don’t entirely blame Loverro: It’s clear that this story was entirely prompted by D.C. councilmember Jack Evans (he’s the only person quoted in it, and the only source for the tax revenue figures), who never met a stadium deal he didn’t like, so would presumably be putting a positive spin on the Nats deal even if it had to be funded by selling public monuments. (“Who really visits the Jefferson Memorial anyway, amirite?”) It’s still a grossly misleading article, though, plus a single-source story where the source has a vested interest in making the project look good to make himself look good, so, yeah. Bad columnist, no donut.