As any semi-regular reader of this site already knows, there is a lot of bad journalism going on out there around sports stadiums and arenas. But once in a great while comes an article that reaches new, heretofore-unseen levels of badness, and one can only marvel at the human ability for innovation.
One such article ran yesterday on the site of Washington, D.C.’s WUSA TV station, under the headline “Can sports stadiums be good business for taxpayers?” (An accompanying video report is linked at the top of the web item.) Not a promising start, but at least you’d expect a routinely bothsidesed piece along the lines of “some team owners and politicians say yes, people who’ve actually studied it say no.” But WUSA ups the ante with this key cluster of paragraphs:
[University of Maryland Baltimore County economist Dennis] Coates has studied and written papers on the impact of professional sports venues on local economies for years.
“I mean, maybe they break even,” Coates said when asked if local government’s make back what they invest in stadium and arena construction. “But that’s highly doubtful.”
But data obtained by WUSA9 revealed that’s turning out not to be true of Nationals Park. According to the DC Office of the Chief Financial Officer, the District is ahead of schedule repaying the bonds it took out to help build it.
A little more than halfway through the deal, the District has paid back 67% of the debt thanks to excess revenues generated from all the growth in Navy Yard. In fact, $102 million of that excess revenue is being funneled to D.C.’s general fund over the next five years.
That, to put it bluntly, is not how taxes work, or at least not how the conjunction “but” works. And it’s especially not how the taxes that are being funneled into paying off Nationals Park work. More than half of that money is coming from a new tax surcharge on D.C.-area businesses, and while it’s nice that those businesses are doing well and tax revenues are up, it’s hardly money “generated from all the growth in the Navy Yard”: If D.C. had passed the same tax and put the proceeds into the general fund, it would now have an extra $300 million or so to spend on schools or roads or something.
More than half of the remainder, meanwhile, is coming from sales taxes on tickets and in-stadium concessions sales, a large chunk of which is certainly being redirected from other spending that would have generated sales tax revenues for the general fund. (Unless you think that nobody who goes to Nats games would have set foot in the city otherwise; given the proximity of suburbs outside the city limits, the cannibalization effect is likely less in D.C. than in some other cities, but it’s still going to be significant.) So again, “the District is ahead of schedule repaying the bonds” is just a sign that it’s siphoning off tax revenue from the general fund faster than expected.
Coates appears to be on vacation and thus not immediately able to respond, and the foremost Twitter guardian against terrible economic reporting, J.C. Bradbury, is busy dragging The Oklahoman editorial board for writing that giving $850 million to the Thunder owners for a new arena is “more nuanced than dollars and cents,” sure, that’s another strong contender for worst journalism of the week, though at least that didn’t claim to be a news article. But really we don’t need any fresh takes on this, because we covered all this seven years ago, when a Washington Times sports columnist made the exact same argument — prompted by then-D.C. councilmember Jack Evans, who spearheaded the push for the Nats stadium subsidy in the first place — and it was equally nonsensical then.
In the end, this all ends up being a variation on the Casino Night Fallacy that any money that is somehow touched by a development deal somehow becomes money attributable to that deal, even if it’s tax money that the government could have otherwise pocketed to use on something else. For a conceit that was come up with by an unheralded Odd Couple scriptwriter — okay, actually Lowell Ganz, who is Hollywood comedy royalty even if he also was co-creator of “Joanie Loves Chachi” — it has proven surprisingly strong at explaining one way in which people can be convinced to get things entirely wrong. I can only hope that one day it will make its appearance on my favorite Wikipedia page, without which I would never have known what a Chewbacca defense is.
Also not all development down at the Navy Yard is due to the Nationals stadium. I’d say most of it isn’t related to the stadium at all if you look at the history of how things have developed down there. Nats Park was only put there because it happened to be the one large plot of land the city controlled because they cleared it for other reasons long before the Expos decided to move
That happens a lot unfortunately. City planners and politicians decide to put a stadium where development is already scheduled (or even under way), thus allowing the stadium proponents to talk about all the money that is flowing to the city from the stadium… even when significantly more money would be flowing to the city/region without the stadium.
Regrettably, we seem to be in a societal position where the closure of schools, police stations and libraries is an acceptable price to pay to funnel welfare dollars to billionaires.
Wow! Kudos to you Neil for getting in the casino night fallacy, a Joanie loves Chachi reference, and the Chewbacca defense!
A very fun read.
The thing is that this prepares the justification for keeping the taxes in place for a new NFL stadium at the RFK site.
The Nats aren’t going to like Washington FC taking their money. They didn’t get in this business to share.
And depending on the timeline the NFL team wants to follow the RFK site might be out anyway. It takes an act of Congress to prevent the city’s lease from expiring in 2034 and right now Congress is in no position to do literally anything. And there is way less resistance in getting money from Virginia while Youngkin is in charge. Wait to late and that offer is going to be off the table and they couldn’t’ even use it to bargain with DC or maybe Maryland.