The Virginia legislature has put off voting on a $300 million Washington Commanders stadium subsidy as the legislative session winds down because it doesn’t have enough votes to pass because team owner Daniel Snyder is a douche, and what’s a self-respecting (if nobody-else-respecting) owner to do? Commission an economic impact statement promising billions of dollars in new tax revenue and leak it to the Richmond Times-Dispatch, that’s what! The paper didn’t include a link to the actual report, so let’s see what they said about it:
According to the study, which was prepared by JLL Sports & Entertainment and obtained by The Times-Dispatch, the direct economic impact of the stadium would be $24.7 billion in Virginia, and the project would support 2,246 jobs by 2033.
“Direct economic impact,” as has been discussed here ad infinitum, is a BS term; College of the Holy Cross economist Victor Matheson probably explained this most succinctly when he said, “Imagine an airplane landing at an airport and everyone gets out and gives each other a million bucks, then gets back on the plane. That’s $200 million in economic activity, but it’s not any benefit to the local economy.”
As for job creation, there’s no indication whether any of those are part-time jobs or what, but even if they’re all full-time equivalent jobs, the cost to Virginia would still be more than $100,000 per job created, a figure that economic development experts would call pretty lousy.
The study estimates $3.04 billion in tax revenue generated over the projected 30-year life of the stadium and surrounding development.
No explanation at all of how this number was arrived at or whether it’s $3.04 billion in present value or added up over time where 2052 dollars are counted the same as 2022 ones, but let’s reverse-engineer it a bit and see if it makes a damn bit of sense. Three billion dollars in revenue over 30 years is $100 million a year in tax money. The main sources of taxes from a pro sports team are income taxes on players and sales taxes on fan spending; some chunk of both of those would be expected to be cannibalized from spending on other things in the state, as Virginia residents choose to go to NFL games instead of something else locally, but let’s ignore that for the moment as well.
The NFL’s average team payroll is currently just under $200 million a year. The top Virginia income tax rate is 5.75%. Assuming all players live in Virginia year-round — which is extremely unlikely, but let’s set that aside for now too — the presence of the Commanders would result in about $11.5 million a year, a figure that would rise over time as salaries do, but still not enough to come close to $100 million a year.
So, what about sales taxes? Virginia has a 5.3% sales tax rate, so to generate $88.5 million a year in sales taxes, Commanders fans would have to shell out $1.67 billion a year in spending on NFL games. The team is reportedly looking to build an NFL-smallest 55,000-seat stadium, which at eight home games a year would mean 440,000 tickets sold per year, meaning each fan would be responsible for spending, let’s see … $3,795 per game to make the numbers work out right.
(There would also be additional development surrounding the stadium, but that would really be expected to cannibalize existing spending, since 357 days a year it wouldn’t even be used by football fans, so probably wouldn’t move the needle much on the above figures.)
Clearly something is very wrong here, but this report was conducted for the Commanders by a respected consulting firm that surely wouldn’t just come up with any old numbers in order to make their client’s stadium plan look good —
JLL also helped with The Battery project in the Atlanta area, a mixed-use development that has inspired the Commanders’ plans.
Oh. Those guys.
Dan Snyder lets his just-off-the-Beltway sports palace go to rot, so he buys up land off constantly congested I-95 and begs the Commonwealth of Virginia for a stadium subsidy. That in itself was enough to unite blood-red Prince William County with true-blue Alexandria, Arlington, and Fairfax in opposition.
Don’t forget that Snyder planted the news of his land purchase with ESPN just as D.C. news stations follow up on reports that the NFL is “counting votes” to get rid of him.
D’oh! Never realized Prince William County had gone true blue both last year and the year before.
I would believe a new stadium “would generate $3B in taxes” well before I’d believe that it could “transform Dan Snyder into [a] human being.”
lol
SNAP!
One of the reasons Jack Kent Cooke left RFK was that it was the smallest NFL stadium seating about 55K. Hence building Raljon.
So now after 24 years or so Snyder wants to leave FedEx and move into a stadium that seats 55K?
RFK is still there, as far as I know.
Since DC United left I do not think there has been any event inside the stadium, although the parking lots have had some. DC has been talking about demolishing the stadium since 2019, as far as I know nothing has happened.
A few years ago a soccer blogger snuck in and basically found the press box and other places have not been touched since the last DC United game.
RFK is slated for demolition next year. Currently condemned for asbestos issues so no public events are allowed inside.
Good to know. I have some good memories of that place. But it seemed to be worse after the Nats came and went.
Jack Kent Cooke overestimated his massive waiting list for season tickets, especially once the team started to regularly suck and the prices for tickets skyrocketed. And they found the real money maker were the luxury boxes and club seating, not the seats for the regular people.
I was living in DC when the stadium was built. The only Washington Commie (sorry, I have been waiting to make that joke) I ever went to was in 1999 when my then girlfriend (now wife) won club seats (though I have been to FedEx for soccer, though not in over 20 years)
I think the real overstatement was the club seats. There were a huge number of them back when it opened. I think Cooke overstated the amount of people willing to go for the club seats as they would be outside the season ticket waiting list. The club section was extremely expensive even by late 1990s standards. The law firm I was at back then was considering buying club seats until they saw the prices.
As I recall, the club seats sold very poorly but as they were not considered to count toward attendance for the blackout rule, the games were still on local TV. And you would see on the second level vast stretches of empty seats.
Add to that how hard it was to get to the stadium. Driving was a nightmare but even once you got there it apparently took a long time to get into a spot. Public transport should have been a viable option, but the shuttle buses from Landover to the Stadium were a disaster. My one time at a football game there (admittedly in 1999) the stands were half empty in the first quarter as people were struggling to get in, and half empty in the fourth quarter as people were leaving early to beat the traffic.
Compare that to RFK where you took the Metro and had a short walk or was able to use an expressway spur that ran right to the outer parking lots.
Most sports teams have found that over the last 20 years. As recently as 2007/08 Washington lead or was near the lead in NFL attendance, with crowds regularly topping 80,000.
A 92,000 seat stadium was likely never necessary given the fan support the team had (or workable given sightline issues). But there’s no denying that this franchise once had a level of support that the entire league envied. And now, it sells fewer tickets at the ‘new’ stadium than it did at the old one.
That has little to do with the old owner and a lot to do with the current one.
I understand the “cannibalization” idea with these deals, but in this case, the spent on the NFL in Virginia is money that might otherwise have been spent in Maryland or DC.
Has that issue been studied?
Well, presumably more Virginians would go to Commanders games in Virginia than in Maryland, so there’s some level of substitution there too.
JC Bradbury specifically mentioned studies of this issue in our recent interview – JC, if you’re reading this, do you have a link handy?
The only way those numbers make any sense is if they’re including the impact of the mixed use development as well. And it would be bad enough to subsidize the stadium, but even worse to subsidize that. Thank goodness Maryland and DC are not playing Snyder’s game.
I spent $3,500 at a Bears game once. But only because I agreed to buy another fan’s Acura. Did not see any other fans approach that level of expenditure that day.
Every fan gets an Acura! Sounds great.
Alright! Let’s see that’s… more than $215m in economic impact for every single Bears home game (not counting the crappy hot dog or warm beer you might have also purchased) from car sales alone!
Looks like the next Bears stadium will have to include a publicly funded showroom in order to maximize revenues. With all revenues going to the McCaskey family, of course.
The “study’ does not account for state tax apportionment for the 8+ games the players play on the road. The localities outside of the Commonwealth may require the payers to report a proration of income earned (and tax due) when playing in that jurisdiction. Not all of the tax will flow back to VA.