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December 14, 2004
Boon to bust in Indy
It's time for today's Adventures in Journalistic Innumeracy! Today's guests are Matthew Tully and John Fritze of the Indianapolis Star, who dutifully report that a study conducted by PricewaterhouseCoopers for the city of Indianpolis finds that a new Colts stadium would be a "boon" for the city, since it would "pump an additional $30 million into the economy each year."
Okay, but what does that mean? The $30 million is in what economists call "economic activity," which just means money spent within city limits - even if the Colts just raise ticket prices 10%, that's a 10% increase in "activity." The important figure from a fiscal standpoint is how much new tax revenue will come from all this spending - i.e., what's the public's cut of the take?
The Star reports this number, but it's relegated to the bottom of a sidebar:
Taxes: A new stadium could generate $8.5 million in local and state taxes, compared with $7.3 million now.
So that's an increase of - journalists, dust off your calculators - $1.2 million a year in tax revenue. From a project that would cost an estimated $700 million, or something like $40 million a year in bond payments. Can you subtract $40 million from $1.2 million? Hint: The little dash in front of that number means it's a
The Star reporters further note that the stadium is projected to create 400 new permanent jobs; they fail to note that at $700 million in public expense, this would amount to $1.75 million per new job created, which would set an all-time record for the worst job-creation ratio in economic development history. You maybe want to rewrite your lede now, guys?
Posted by Neil deMause
hi. i was googling around, looking for some analysis of stadium economics in washington, because today's newspaper reports focused on the politics, and i found this site. thanks for putting it out there. but i wish you didn't use such a snarky tone ("Hint: The little dash in front of that number..."); it just suggests an agenda. i'm looking for some sources that provide honest analysis, not ideology. it's not obvious to the average idiot like me that there's a giant swindle going on; would you consider writing for us less knowledgeable readers?
Sorry - I try not to snark at readers, but it's hard not to get cranky at journalists after reading one too many uncritical regurgitations of official press releases. ("Sky Is Green, Says Ernst & Young Study.") As for more basic explanations of why the stadium game is a scam, I hope to get a FAQ together someday, but for now your best bet is to look at some of the articles I've written ( and are two I'd start with), or of course our book.
thanks for the recommendations. did you see today's wp article, suggesting that the dc councilwoman's opposition to the stadium costs was whimsical, contrary? it's here:
I don't know that I'd characterize the article that way - clearly Cropp didn't decide to throw in the "private financing" monkey wrench until the last minute, but then, she didn't know what MLB's response would be to her previous requests for modifications to the deal until then, either. See my latest post for more on this: http://www.fieldofschemes.com/news/archives/000952.html
Oy - I also just noticed that MovableType apparently decided to eat the URLs of my "recommended reading" articles above. (Apparently angle brackets are verboten in comments.) To try again, they are: http://demause.net/skydome.html and http://www.orlandoweekly.com/news/story.asp?ID=2956
Finally! You have the ONLY voice available in Indianapolis that questions the $800 million Colts/Convention Center project!
Have you made contact with our new Gov. Mitch Daniels? I've known him for years, and I sure would love to have your most succinct argument against this Indy boondoggle. I'd like to persuade him to take a hard look inside Mayor Peterson's and Jimmy Irsay's secret deal they accounced at a Colts game in December.
Nobody, and I mean NOBODY HERE IN INDY IS QUESTIONING THE EXPENDITURE!!! All they're arguing about is HOW to raise the $800 million. NOT WHETHER to raise it.
This is nuts!
If Jimmy has to have natural turf to stay in Indy, then why can't we buy a bunch of Grow Lights??? If he has to have 2,000 more seats and more Skyboxes... hey, let's do it for a few million! Not $800 million.
The convention center expansion that's linked to the Colts stadium argument is a smelly red herring. I checked the convention center bookings through Feb. 2006 and you can count on one hand the number of events that come close to using the existing space. 400 jobs? I don't think so. It's worse than your calculator figured.