Mike Madden of the Washington City Paper has penned an analysis of the $290 million D.C. United stadium proposal, which he notes is better than the Washington Nationals deal (because it’s hard to be worse), but still not necessarily a good deal for the city. And, adds Madden, the beneficiaries aren’t exactly America’s neediest:
Financially, D.C. United could afford to cover the whole $300 million tab on its own. The team’s primary owner, Erick Thohir, is the biggest media mogul in Indonesia; he also owns the Philadelphia 76ers basketball team and is reportedly negotiating to buy a majority stake in Italian soccer power Inter Milan. California venture capitalist Will Chang, one of Thohir’s partners, is a part-owner of the World Series–champion San Francisco Giants. Neither of them needs a handout from District taxpayers.
Even with recent budget surpluses, the District still has needs that go unfunded. Finding $8 million to keep the city’s libraries open on Sundays, for instance, took years. Why is a soccer stadium a better investment than increasing affordable housing, building more public parks, expanding efforts to control flooding in Bloomingdale, or any other item on city government wish lists lately? If the land swaps and development involved make so much sense as a real estate proposition, why wouldn’t private investors want to finance it all themselves, to make potential windfall profits down the line? And if selling the Reeves Center to a private developer makes sense as part of the stadium deal, shouldn’t the city just sell it on its own and keep the money?
Madden, incidentally, is a D.C. United season ticket holder. But he shows that it’s possible to separate rooting for a team on the field and rooting for its owners when they sit down to negotiate subsidies.
It’s better than those do-gooder projects because a vibrant sports team stimulates local productivity. Not saying that government priorities should always be evaluated that way, but that’s a legit argument.
Ben, can you provide a single study that shows that “a vibrant sports team stimulates local productivity”? I’ve been looking for one for 15 years, and haven’t found any.
http://www.ajc.com/news/sports/gwcca-breaks-off-negotiations-with-church-on-stadi/nZBYZ/
Giving rich guys money stimulates the economy?
Really? Is this an extension of Dubya’s argument that estate taxes penalize the most productive sector of society, the upper one percent? I don’t even think the upper one percent believes that.
Subsidies for the wealthy might, under certain carefully controlled circumstances, lead to investment in new businesses and result in additional employment. But unless the multiplier effect is >>1 (which it rarely is when the wealthy syphon off funds for their own use straight off the top), the money would be better used providing direct subsidy to those who need it.
If you give $5m to a guy who already has $20m, that money is likely to stop circulating (immediately upon entering his pocket), or at least to be spent outside the district (vacations in Tuscany, a new Audi R8 or 911GT3 etc). If you divide that $5m among 5,000 people who live on less than $10k a year, virtually all of that money will be spent in the local area. Local merchants who sell shoes, clothes, groceries (and yes, maybe local casinos, liquor stores and other non-essential vices too) will see an upswing in their businesses.
Is that somehow less important than making the already rich even more wealthy? Or catering to the economic needs of stadium design and construction companies (most of whom will take 70-75% of the money they earn straight out of the community)?
I’m fine with subsidies being used to create jobs… but when the sums are all done, each $20k p/a job created better not have cost $150k in subsidy. If you can spend $5-8k and create ongoing employment that pays someone 2-3 times that amount per year, that is stimulus. If you spend $100k to create a 1-3 yr temporary job that pays the worker $15k annually, you have wasted your money. And mine.
“It’s better than those do-gooder projects because a vibrant sports team stimulates local productivity.”
The idea that building parks and improving flood control are “do-gooder projects” is…interesting. Sounds more like the kind of things that governments are expected to do with tax money. Unlike, you know, subsidizing a project that might – if we cross our fingers, close our eyes and click our heels three times – be enough of an economic stimulus (or, as you hope, a contributor to the public psyche) to not be a net negative.
Neil,
This one is biased, but it’s one example: http://www.sjredevelopment.org/ballpark/SJStadiumReportfinal.pdf
What prompted my reply was a trip to Denver with my brother. He went in about ’99 and this was his first trip back. He said the growth around Coors Field is incredible. It took a few years because I think the park opened in about ’95, but it would take an extremely educated person (i.e., a person without much common sense) to argue that Coors Field and the Rockies didn’t stimulate the overall productivity of the Denver area.
John Bladen,
If you choose to, you have a long career as an academic economist awaiting you. (That is not a compliment.)
Ben: That’s not a study. It’s a list of anecdotal examples, for most of which there’s no way to tell which way the causality runs. (Are rents up in SoMa because of AT&T Park, or did the Giants choose to build there because it was a booming neighborhood?) To do a real study, you’d need to compare similar neighborhoods that did and didn’t build sports facilities, and see how they fared.
Not to mention the example about Harrison spurring local development is pretty hilarious if you’ve been to Harrison lately.
Neil,
I’m unsure if I’d trust your definition of a study, because it would have an intrinsic anti-stadium bias. Those types of studies are suited for academia, and academic economists are by and large people who ended up where they are because they have a bias against supply-side economics. And stadium subsidies are built on the premise that supply-side is real.
In any case, it seems to me an impossible argument to say that vibrant sports teams are not a net positive for productivity. There are just so many people that work more hours, take fewer vacations, etc. in order to support their habit of spending money on big time sports.
Well, if you assume the hypothesis, alrighty then!
If the argument is I put too much stock in anecdotal “evidence”, then Guilty As Charged.
Ben,
Your point falls short on (at least) two points. Really, what we are talking about here is opportunity cost of money, which presumably (when talking about large amounts of public funds) should probably be looked at with a metric more rigorous than “my friends find it fun.”
1. Even if you assume that the public should build sports stadiums, the question immediately becomes “what kind”. If we assume that people REALLY like watching NFL games, then why is a stadium basically like a large high school stadium not enough? The quality of the football is not improved by the concourses or the luxury boxes. If you retort that people are attracted by the quality of the stadium accomodations or the food, then its not very clear why stadiums would be a better way to spend money than, say, having infrastructure to support a booming restaurant district (which stadiums generally don’t).
2. As Neil points out, there isn’t much of a correlation between stadiums and doing well as a city. Buffalo has kept its teams and has struggled for decades, LA lost two and continues to dominate certain economic sectors. Tampa has never really become “wealthy” despite all of its (mostly bad) teams. The bigger trend over the last 20 years is that urban areas with a core walkable downtown have been generally better positioned to gain (especially young) residents and jobs. Colorado has been a population-gaining state for years–is that because of baseball too, as you say it was in Denver (with a team that has been mostly mediocre at best)? As I’ve said, talking about a DC renaissance because of the Nationals completely ignores the explosive real estate market there.
People over 35 generally don’t consider sports entertainment as the most important factor in their lives (and I still go to a lot of sporting events). Using economics and scientific method to test the claims of less than thoughtful people like civic-cheerleading sportswriters seems more than welcome.