July 16, 2010

Stadium economic impact claims: The legend continues

Another week, another passel of underdocumented articles claiming the economic benefits of building sports stadiums. First, from Sunday's Delaware County Daily Times:

For many [Chester] city residents, the epicenter of this revival is the freshly completed stadium of Major League Soccer's newest franchise, the Philadelphia Union. ...

A Local 845 carpenter, [Kyle] DeGraphenreed said the Union's home, PPL Park, will provide tremendous economic impact, first and foremost by bringing tons of jobs to the city. Chester residents obtained 260 of the 491 "game-day" positions offered during a recent career fair at the stadium.

"The reality is jobs will bring money for the people, and crime will go down," he said. "Crime will go down."

The change is already evident to DeGraphenreed. City businesses have put up new signs, dilapidated housing has been torn down and new developments and homes are being erected.

DeGraphenreed said he recently had to put his car in reverse when he drove past a new apartment complex on Third Street.

"When did that get built? I was amazed at how fast they were building stuff, cleaning stuff up," he said. "I'm like, wow they are really serious about turning this whole thing around."

So to recap: There's a citywide redevelopment plan that's replacing old buildings with new ones — back in the day this used to be known as "urban renewal," but somehow that term ended up with bad associations — and 260 local residents got game-day jobs. Each MLS team plays 15 home games in a year, so that means the game-day jobs are the equivalent of about 15 full-time jobs — at hot-dog vendor wages. If that's all it takes to bring down crime, the city should have skipped building a stadium and just hired a couple of dozen municipal hot-dog vendors.

And, of course, the most notable recent trend in Chester, aside from city businesses putting up new signs, is a shooting spree that left the city under a dusk-to-dawn curfew. But crime will come down soon. Surely tomorrow.

On to San Diego, where the Regional Economic Development Corp. has issued a glowing report on the city's return on investment from building the Padres' Petco Park:

Through sales, property and hotel occupancy taxes, the city will receive a 7.6 percent return, far ahead of the 1.7 percent first projected by promoters, said the report, developed for the EDC by Conventions, Sports & Leisure International, a research and consulting firm in Texas.

Though the report calls this "return on investment," the reality is actually far murkier: The taxes in question are for a "ballpark development area" that was drawn around the new stadium, within which a large number of hotels and other development has since been built. But there are two factors that aren't taken into account by the study: the "but-for" question (the Gaslight District was actually starting to draw development interest even before the Padres landed there, one of the reasons the team chose it for their stadium site), and the substitution effect, wherein at least some of the tax revenue now being generated around the stadium would have been generated elsewhere in the city otherwise (if fans had spent their entertainment dollars on something else — like, say, Padres tickets at their old ballpark).

To give the San Diego Union-Tribune credit, it does cite critics of the study, including Vladimir Kogan, author of an upcoming book on San Diego's fiscal crisis, who says, "This report is largely useless because it combines the economic impact of the ballpark with the convention center expansion that took place over the same period." But the headline is still the official line: "Ballpark's 7.6% return tops forecasts."

Sports economist Mark Rosentraub, meanwhile, is quoted as saying that even if some tax revenues were just relocated, Petco Park is a success because it's "a model of how you can use a stadium to rebuild an entire neighborhood." Not mentioned in the article: Rosentraub served as a paid consultant to MLB and the Padres during the campaign for the new stadium.