Back when Worcester was approving its $70 million subsidy (which eventually rose to more than $150 million) for a new minor-league baseball stadium to lure the Pawtucket Red Sox to town, and the city’s economist-for-hire Andy Zimbalist argued that it was worth the cost because of all the housing development that would come with it, I spoke with a couple other economists who’ve studied the impact of sports development projects to see what they thought of this line of thinking. What they said at the time:
“It really does depend,” says [University of San Francisco economist Nola] Agha. “There’s a list a mile long of cities where it hasn’t worked. And there’s a really short list where it has.” Her question for Worcester echoes that raised over a decade ago in Brooklyn: “Is this development guaranteed? Is it going to happen regardless of if there’s a stock market crash or interest rates go up?”
[College of the Holy Cross economist Victor] Matheson is less concerned about whether the tax revenues will roll in, saying Worcester is, like many urban areas since the recolonization of cities by young professionals, booming: “I don’t think this is going to be an El Paso, where they promised all this development and it still hasn’t come.”
Interest rates haven’t gone up, though they may soon, and gentrification hasn’t stopped being a thing. But the promised Worcester development is already starting to be scaled back: The Cove, a mixed-used housing project that was originally supposed to include 318 apartments, has been cut back to 173; and a planned pair of hotels totaling 262 rooms have been sliced in half to a single 125-room hotel. The hotel developer, Madison Properties, blamed the hotel world being “a lot different today” thanks to the pandemic, while a Cove developer blamed the high price of steel.
Worcester officials say they still expect the new developments to provide enough taxes to pay off the stadium costs — which is not the same thing as providing enough taxes to provide a net positive return for the city, given that residential taxes are normally supposed to pay for things like schools for the new kids who move into the new housing — but if it doesn’t, Matheson worries that the tax increment financing district may have to be expanded to cover more of the surrounding area, after already being expanded once in 2020 after ballpark construction costs went up when it unexpectedly turned out hills exist. This is the template for what subsidy expert Greg LeRoy once referred to as TIFs “eating the lunch of the general fund,” as the district where taxes are siphoned off to pay for development gets larger and larger, leaving less to pay for normal city operations.
Or, it could turn out that the development eventually happens more or less as originally projected, and then the only question is whether Worcester spent $150 million on a baseball stadium in order to get a bunch of housing that someone would have eventually built anyway, because the eastern Massachusetts housing market is so crazy hot. So many ways this Worcester Red Sox stadium glass can be half-empty, you need a scorecard to keep track!
Neil, I thought Zimbalist was a good guy who wrote books like yours, poking holes in the stadium game. Has he turned to the dark side? Am I misremembering?
Click the link for the archived Deadspin article above, that provides most of the backstory.
Thanks!
Money talks. Ethics walks.
Professional sports stadia and black holes…. the bigger they are the more they feed on everything around them.