Yesterday it was stadium consultant John Moag saying that a new Chargers stadium in San Diego would generate $600 million a year in new economic activity — a figure that, as one FoS commenter noted, would require every fan in attendance to spend $1,200 per game. Today, it’s the Los Angeles Economic Development Corporation, a local business-dominated non-profit, asserting that a new stadium in Carson for the Chargers and Oakland Raiders would generate $500 million a year in new spending:
“An NFL franchise has very, very little net economic impact on L.A.’s economy,” said Victor Matheson, an economist who studies sports at College of the Holy Cross in Worcester, Mass.
Oh, sorry, I skipped right to the economist pointing out that no stadium in history has ever shown that kind of economic impact after the fact. My bad!
I’ve explained in detail before why these kinds of “economic impact” numbers are garbage, so I won’t go over that again. Suffice to say that LAEDC projects the actual amount of new tax revenue for Carson to be far lower — about $8 million a year — and since that’s all in property and sales taxes, there’s no way to tell how that would compare with using the site for another project that would be active more than ten days or so a year, let alone with what additional traffic, police, fire, etc., costs a new stadium would accrue. It’s entirely possible that the total would be above zero — assuming Carson isn’t asked to kick in anything, which still isn’t a sure thing — but nine-figure headlines are still just clickbait.
My house generates 300-400k in economic every year using this math. My wife and I are both professionals, and then when we buy groceries at the local store those employees get money to spend. The economic impact of my residence is nearly endless!
Where is my subsidy? After all if I didn’t live in this house I would likely be living on the moon. I certainly wouldn’t live in some other house in this community.
It is hack analysis. The sad part is that the former head economist at LAEDC, the late Jack Keyser, was a very smart, ethical, and stand up guy. He is rolling over in his grave.
You subsidy is the mortgage interest tax deduction.
Neil,
You’re write up should follow EVERY article in every paper or new conference about stadium financing.
Juvernal: That comment should be on the attached write-up.
Both brilliant.
Sean: That’s assuming he owns. Renters buy groceries too!
Can I just point out that one of the craziest pieces of that $500 million per year report is that it claims these figures are the impact on the state economy… when the only way Carson ends up with two teams is if it steals them from Oakland and San Diego, which are, last I checked, part of the same state they are claiming will receive huge benefits.