September 04, 2009
Report: A's stadium benefit to San Jose would total only $65 million
Oy, the headline writers. The city of San Jose issued its economic impact study on a potential new stadium for the Oakland A's yesterday, and to read the headlines you'd think that the conclusion was that San Jose would be raking in $130 million a year in new revenue if the A's came to town.
But what the news reports call "economic benefits" is actually economic activity — in other words, the total amount of dollars spent in the city's confines. But if A's fans are buying $100 Bobby Crosby jerseys (I can't believe even Crosby's mother has one of those) in San Jose instead of Oakland, most of the money goes the same place: Into the pockets of the A's owners. The only added benefit to San Jose is whatever it skims off in sales tax, and the salary of the salesperson who actually sells the shirt.
Read the actual report, and it provides those numbers, though most of the news coverage chose not to highlight them. The key numbers are on page 25, where the report projects the arrival of the A's would bring 980 new jobs (many of which would no doubt be part-time, though it doesn't say); and on page 33, where it says that the total new tax revenue for local government would be worth about $100 million in present dollars over 30 years. And on page I-8, it also — and I give it props for doing so, since it's rare in an economic impact study — compares this to the return from doing nothing, calculating that if the land were instead allowed to have office and retail development built there local government would collect about $35 million in present value tax benefits — meaning the net value of an A's stadium would be $65 million.
So, is it worth it? We don't know, because we have no idea what the city would be spending — the general expectation is that San Jose's primary contribution would be to buy 23 acres of land for the stadium and hand it over to the A's owners, but no one's saying what that would cost. (Downtown land was bringing offers of $20 million an acre four years ago, but that was in bubble money.) It's also worth noting that we haven't yet seen a proposed lease between the A's and the city, so it's conceivable there could be other hidden costs.
Let's say, though, that the city could get the land for a relative bargain price of $2 million an acre. Then San Jose would be looking at $46 million in costs, vs. $65 million in benefits (though some of the benefits, it's worth noting, would go to county agencies, not the city). And guesstimating the 980 jobs would translate into maybe 500 full-time equivalent jobs, that would be roughly $100,000 in expense per job created — pretty lousy as far as job creation goes, but in line with what most other stadium projects have generated.
Look at $2 million an acre, then, as the tipping point: If San Jose can get that price or lower, then a new A's stadium could be the next Pac Bell Park, where public costs were actually kept low enough that the modest public benefits of a stadium were worth the subsidy; more than that, and it's just throwing money down a hole. And that's assuming, of course, that A's owner Lew Wolff gets permission from MLB to move to San Jose at all — and that he can then afford the price of buying out the San Francisco Giants' territorial rights on top of building a $461 million stadium. But those are questions too complicated to get into in a headline.
Another solid point from this Economic report is that all of the figures are based on a conservative 24,000 fan a game average as well. When you look at what other teams are drawing in newer stadium, even the struggling ones 24,000 is a realistic number to be using as a baseline.
Posted by Dan on September 4, 2009 12:19 PM
Just stop Neil! This will be good for SJ through and through. One job is better than no Job! One dollar is better than no dollar! San Jose and it's downtown have benefited greatly from the Sharks and HP Pavilion. The same will happen when the A's set up shop at Cisco Field. Oh yah, repeat after me...PRIVATELY FINANCED BALLPARK, PRIVATELY FINANCED BALLPARK...
Posted by Tony D. on September 4, 2009 12:35 PM
Just stop Neil! This will be good for SJ through and through. One job is better than no Job! One dollar is better than no dollar! San Jose and it's downtown have benefited greatly from the Sharks and HP Pavilion. The same will happen when the A's set up shop at Cisco Field. Oh yah, repeat after me...PRIVATELY FINANCED BALLPARK, PRIVATELY FINANCED BALLPARK...
Posted by Tony D. on September 4, 2009 12:36 PM
Oops! Posted twice. But again, two is better than one!
Posted by Tony D. on September 4, 2009 12:38 PM
another pipe dream! most of the jobs will be low-paying, most of the money spent will be inside the stadium and the taxpayers will be fleeced again...
besides, the giants own 15% of the s.j. giants with options to increase to 51% and have the area in their territory. it'll cost the cheap a's more to buy the giants out than to build the place.
Waitaminute. I'm pretty sure that they have people selling the Bobby Crosby shirts right now; it's not $100,000 per job "created" at all, but $100,000 per job "moved south a few miles." From the point of view of the city itself, unless the people selling the shirts actually live in San Jose, there's no benefit there.
Posted by David Nieporent on September 4, 2009 02:39 PM
MLB will never overturn the Giants territorial rights to the South Bay ... the price to pay off the Giants would be astronomical.
A's belong in Sacramento.
Posted by jack m. on September 4, 2009 03:02 PM
A couple of things... The Giants don't "own" territorial rights in the sense that someone "owns" a house. The price to buy them out would be something similar to the deal struck in Baltimore which guarantees franchise value/media revenue. Not some huge one time payment. I honestly don't know why the media revenue would need to be protected as the two already compete for the same households regardless of MLB territories. But that is really up to MLB.
Note that the deal in Baltimore was not even agreed upon until after MLB had announced the Expos were moving to DC. The same thing could happen in this case... If the owners (3/4ths of them anyway) see it as a benefit to themselves to move the A's 40 miles away from the Giants and make the entire Bay Area a shared market (like LA, Chicago and NY) there is nothing the Giants can do about it.
And lastly... Where does the "23 Acres" in Downtown San Jose come from? The City's redevelopment agency has been purchasing separate plots to create a 14 acre parcel, where are the other 9 acres? I am not being facetious, just wondering if I missed something in the report when I read it?
Posted by Jeff August on September 4, 2009 03:41 PM
The Giants-A's territorial rights issue is not parallel to the Orioles-Nationals one: The Orioles did not have territorial rights to D.C., only TV rights, which are a different thing. (Every county in the U.S. is designated as some team's TV territory, but there's plenty of unclaimed territorial rights space.) I think it's pretty clear that Selig isn't going to sign off on an A's move to San Jose until the Giants are appeased, though he might well be a major factor in leaning on them to name a price.
As for the acreage, the report gave 23 acres as the 2007 proposal and didn't give a revised acreage, so I assumed that was still valid — eyeballing the map, though, it looks like it's indeed around 14 acres. My bad, then, and I'll revise the entry to make this clear.
Posted by Neil on September 4, 2009 09:02 PM
