It’s time for bad economics theater, Oklahoma City edition! Take it away, Greater Oklahoma City Chamber of Commerce:
Since the OKC Thunder came to town in 2008, Oklahoma City metro’s gross domestic product has grown by 41%, which significantly outpaced other similar-sized metropolitan areas that do not have an NBA team, supporters say.
Nope, that’s not how you do a proper correlation! For that, the chamber’s hired consultants from Applied Economics would have had to look at things like whether the pace of growth picked up from previous years once the Thunder arrived, to try to determine if that GDP growth is due to the team’s presence. Plus, if you’re arguing that this is a reason to spend $850 million in public money to build a new arena, it doesn’t even matter how much the Thunder affect economic growth unless they’d leave without one, which nobody is saying they would.
The study finds an estimated annual impact of $590 million, supporting more than 3,000 jobs. The study also estimates the impact of construction of the new arena, which would generate more than $1.3 billion during the construction period and support more than 10,000 jobs.
As usual, that’s not really economic impact, it’s just economic activity, which is totaling up any spending that takes place by anyone who goes into the arena, even if it’s money that would have been spent somewhere in town anyway. (There’s also probably a large multiplier built in: If the arena is in use 150 nights a year, which seems about right from looking at its calendar, then you’re talking about at least $200 in spending per ticket sold, which would be a lot.) And as for that $1.3 billion during the construction period, yes, spending $900 million on an arena is going to mean at least $900 million in money being spent, though the local goverment spending that same amount of money on something else — or even just returning it to taxpayers to let them spend it — would have an impact, too.
But don’t just listen to me, an economics journalist. While the chamber was presenting its consultants’ figures, outside the opposition group Buy Your Own Arena was holding its own press conference with economists from Oklahoma University, who said … okay, seems like most of the press preferred the scene inside, where there were probably snacks, but one quote did sneak into one local TV report:
“There’s a lot of research that says that shows that these sports arenas don’t pay off for host cities, and that’s not a positive return on investment,” said Cynthia Rogers, Economics Professor at The University of Oklahoma.
So what do the real impact numbers for Oklahoma City look like? Fortunately, we have Geoffrey Propheter’s 2012 paper on the impact of NBA arenas, which found:
Propheter did note that a handful of cities (Atlanta, Boston, Chicago, Denver, Indianapolis, and Oklahoma City) appeared to see income gains, but this was likely the result of “income transfers from the suburban area around the central city” — i.e., the same money was being spent in the region, it was just being spent downtown instead of at the local Olive Garden.
And Propheter later elaborated:
Oklahoma City, he notes, does show a correlation between building the Ford Center and an increase in resident income, but because it also built a whole ton of other downtown development at the same time, it’s impossible to say whether the arrival of the Thunder caused it or not.
So to recap: Oklahoma City landed the Thunder in 2008 after spending $89.2 million to build an arena and another $103.5 million to upgrade it, and the team was popular and the city continued to grow. This, the local chamber of commerce now argues, is why the city has to spend $850 million to tear down its 21-year-old arena and build a new one. Make your own selection of which logical fallacy is being applied here, there are lots to choose from.
Honestly, based on the quotes it sounds like OKC has benefited from the arena. If it’s part of the downtown revitalization and it’s bringing money into the city from the suburbs, that’s a win for the city.
Additionally, you are incorrect. They are not tearing down the old arena, it will be kept around for events.
Did the city benefit from the arena, or did an NBA team locate there because it was a fast growing metro area with oil money? The population was growing 1-2% a year for decades before the Thunder got there.
If the old arena isn’t being knocked down, then the new arena won’t be hosting as many events due to a cheaper option being nearby.
There is no way a city the size of Oklahoma City will have enough events to populate two arenas. If they don’t tear it down right away, they will soon.
We’ll see. I want to see how ASM Global handles scheduling across both.
There are many venues across the OKC metro that stay very busy year round, and I’m curious to see if some of that can be diverted into the old arena.
Milwaukee and Portland kept their old arenas immediately next to new areas. Metro OKC and Milwaukee are roughly the same size? Milwaukee built a 3rd arena and tore down the middle age arena, but has kept the old one.
To clarify, I’m not arguing in favor of a new arena. I’m just pointing out that if a new arena is built (with or without public funding), OKC seems large enough to keep the old arena operating.
Yeah, maybe. I guess just because it’s dumb to have two arenas doesn’t mean OKC won’t go ahead and do that, fair point.
From 1990 through 2020, OKC population has grown from 444,000 to 681,000. The % considered White Non-Hispanic has dropped from 73% to 50%. This might be the last chance for the Thunder owners to get a big handout from city government.
What does the white non-Hispanic population have to do with it?
I’m with Neil on this one. I don’t see your point.
Yes, OKC has a large, fast growing, prosperous Latino population. So?
My point is that demographic shifts lead to changes in demographics of the city council and mayors. Different demographics may have different priorities than paying hundreds of millions of dollars to benefit the Bennett/Gaylord family.
(Looks at recent decisions made by the mayors of Baltimore, Detroit, New York, etc.) Um, that would be nice to think, I guess…
Oh God, not this again.
Look, I know it’s popular among the left wing to think Latinos are little lapdogs that will automatically line up and vote for whatever you like. And as they become the dominant demographic, all your left wing dreams will come true.
Sorry, that’s just not the case. Actually, I’d say the OKC Latino population is quite on the conservative side of many issues.
First, I never said Latino, you did. Second, I never said anyone would vote for whatever I like. I said they would vote for whatever they like. Third, the conservative position would be to not spend hundreds of millions of dollars on a project that benefits mostly one or two families. It would be to not spend the money to keep local taxes low.
What’s all this talk about “people” “voting”?
As Rudy Giuliani said (paraphrasing, I don’t have the original handy) when explaining why he was opposed to a public referendum on a new Yankees stadium, “It’s called leadership.”
Considering that OKC had to make road improvements for the NBA finals already show the impact. Also every visiting fan from outside the OKC area bring in spending and give people a reason to not fly over Oklahoma.
The actual economic numbers that Propheter examined show that they’re not bringing in very much new spending. And, more important, how would they bring in an additional $850 million worth by moving from one part of town to another?
The article was obviously meant to sway opinions to not vote for the new arena, but didn’t provide any real facts about why not to…other than we wouldn’t know the impact the Thunder have unless they left. Seriously, what was their argument for not building it? Also economic activity is also an economic impact. I guess people should ask do they think the city has improved since 2008 and if having the Thunder has significantly contributed to the improvement. I think they have and I hope the new arena is built. It does bring in a steady stream of income from Oct to May, longer if they make a run in the playoffs.
Economic activity is not economic impact, for exactly the reasons Neil explained
Economic activity is just the amount of money that moved around a given place at a given time.
Economic impact refers to how a particular decision – a team coming or going – would increase or decrease the total size of that economic activity.
And tons of research shows that adding sports teams just displaces as much economic activity as it adds, so it doesn’t really help much.
Your argument is that the article should prove a negative. That’s not how it works. The onus is on supporters of an arena to suggest why spending $1 billion dollars of public money will be a benefit to the population of Oklahoma City and will provide value in return. It is the supports who have failed to make an adequate case for this spending, particularly when you consider the vast amounts of funds and opportunity costs of using those funds elsewhere rather than to enrich a small number of stakeholders.
All this is in light of the fact that OKC has a perfectly suited arena that isn’t old and doesn’t need replacing to host NBA events. If you don’t agree then please enlighten us as to why the arena is deficient in being able to perform this mission.
Attendance was good when the team was flourishing from 08-09 to the start of the pandemic, but has fallen precipitously to the bottom 20% of the league with only a slightly increase this season. If the reason attendance is due to team performance as the track record suggests, then how will a new arena help when the only guarantee is that tickets will cost fans more to attend in person there?
People should look at Arlington, tx and Oakland, CA on how they reacted to similar situations.
Huge boon?? … really?
And what I mean by really is, it’s going to cost tax payer dollars but be beneficial?
Fix the roads before you even think of another grift.
Curious why Seattle is not mentioned. They lost their team to us when they did not build an arena. What happened to them after that?
In terms of economic impact? That’s a good question, let me ask Propheter.
Geoff points us to this study by Brad Humphreys et al that found that condo values near Key Arena went up more than otherwise expected after the Sonics left, which isn’t proof of larger economic impact but definitely isn’t a sign that the local economy was relying on them:
https://www.sciencedirect.com/science/article/abs/pii/S0166046217301175
The writer is speaking in generalities and completely neglects to consider where OKC was prior to and after the arrival of the Thunder. I worked in the City Attorney’s Office in the late 80s when the idea of MAPS was first conceived by Mayor Ron Norick. Prior to MAPS 1, OKC was struggling to compete with other cities throughout the country who were similarly sized. Our visitor numbers were shrinking at an alarming rate and we had been downgraded as a tourist/visitor/convention site. Mayor Norick’s vision took OKC from a third rate city to a destination in less than 20 years. The arrival of the Hornets from New Orleans confirmed that OKC had evolved since the original MAPS project and was now capable of becoming a big league city. The first MAPS project was also connected to the arrival of Bass Pro Shop downtown as there was a lot of public discussion about the City essentially “footing” the bill to bring BPS into OKC. Many opposed using taxpayer dollars to subsidize a private business (sound familiar?). Mayor Norick’s vision worked and OKC is where it is today, as both a tourist destination and home of an NBA franhise because City leaders at the time understood that to grow, OKC would have to commit time, energy and MONEY. As a result, OKC no longer has a downtown that is a ghost town after dark but rather has become a vibrant growing city that for other cities became and still is a standard bearer for how to thrive.
https://twitter.com/rauscher_emily/status/1494492753295814663?lang=en
I am a native Oklahoma Cityan who grew up at Northeast 6th and Laird. That is less than a mile from Bricktown and the downtown entertainment district. I used to go to Mid-South (Wrasslin) Wrestling at the Myriad as well as other events that were held there. My father subcontracted at the Bricktown Brewery and the Spaghetti Warehouse. My late father-in-law did concrete work at the Bricktown Ball Park, the canal, and the Ford Center. I was up close and personal with the blight that was the fringe areas of downtown. Those who have no experience with that do not know to what extent having the Thunder here has really shifted the culture and image of our city. Not just downtown, but throughout the city and even the state. I also remember when the Oklahoma City Calvary won the CBA championship and very few people cared. Maybe that’s the space that the objectors want to occupy.
I have no doubt that having the Thunder has been fun and made people in OKC feel good (at least if they like basketball, and in the years when the Thunder aren’t painful to watch). The question on the floor, though, is whether that’s worth $850 million, and the economic data shows a resounding “What have you been smoking?”
Exactly. And no one is saying the die-hard fans can’t continue to support these franchises. Just pay the full $$$ to go see your team.
When you need everyone else to subsidize your hobby, it’s still just a corporate-welfare wealth transfer.
I lost my job speaking out against this awful deal, these are brutal, sick people. Clay and the Chamber are over the deadliest jail in America, a place the DOJ is looking at right now with their limited resources…. how people can just let this idiot extract more $$$$ for the sake of extracting more $$$ is awful to see. I know as well as anyone how much money is flowing out of OKC, and how the soul of the city has been eviscerated over the past few years. It’s just not fun anymore. Wish a few outsiders other than Neil would help us out, but no one cares anymore it seems. I sent out an email to Ralph Nader to see about getting on his podcast, I met him here via a ol’ City council pal and we had a nice chat about the penn square bank days, etc….but I don’t have much hope right now…..