Convention center funds may be diverted to football stadium, sports complex

[stjr]

Fine...then do a full, comprehensive cost-benefit analysis....I think you might be surprised at the "positive" outcome....the tough part will be putting a value on all the intangible benefits.

Well, some people have already made such studies, Tufsu, and it appears the answer may not be what you want to hear.  There does appear to be agreement on the difficulty of valuing intangibles, but as to the hard economic impacts on a community, stadiums for teams do not rank well as good community investments.

Here are a couple of quick excerpts on the subject expressing a counterpoint to your opinions:

Fear on the part of public officials that they will be held responsible for losing a team is not the only motivation for stadium deals. Subsidies to sports franchises are also justified in terms of economic development. As with other forms of government-assisted investment, proponents of publicly funded stadiums have tried to make the case that these sports palaces are job generators.

This is a difficult case to make. A professional sports team does not operate on a continuous, year-round basis. Each sport is limited to its season, and half the games are played out of town. The most egregious example is football, with games played only once a week for five months. A stadium devoted exclusively to professional football will be in use only about ten days a year.

Then there's the question of the quality of the jobs created. Aside from the small number of athletes with astronomical salaries, the jobs directly associated with stadiums tend to be part-time, intermittent positions with low wages and few benefits. Hawking hot dogs and beer or cleaning up after the fans go home is not a sure-fire route to prosperity. The construction of stadiums does generate better-paid work for masons, carpenters, electricians and the like, but this is of limited duration. The construction jobs evaporate once the stadium is built.

For these reasons, subsidy supporters tend to focus on the indirect job-creation impact of stadiums. Team owners pay consulting companies to write reports--or get government agencies to do it for free--estimating how much new economic activity will be generated at bars, restaurants and other establishments catering to the stadium crowds as well as the impact of their expanded payroll and purchasing on other businesses.

These reports usually involve some dubious assumptions. For example, in a 1999 report on the expected economic impact of a new stadium in Boston to replace Fenway Park, C.H. Johnson Consulting Inc. assumed that visitors coming to the new facility would spend 20 percent more outside the ballpark than those who visited Fenway. The report's rosy scenario, which included an increase of more than 3,000 jobs, may have had something to do with the fact that the analysis was commissioned by the Greater Boston Convention and Visitors Bureau and the Greater Boston Chamber of Commerce.

Economic projections also tend to overlook jobs that might be eliminated as the result of a new stadium. For example, construction of the much celebrated Camden Yards baseball stadium in Baltimore required the dislocation of a group of manufacturing businesses that together employed about 1,000 people. In sum, the projections made by team owners and their paid consultants in support of stadium subsidies are little more than vague or arbitrary promises about job creation and economic stimulus.

If we go beyond anecdotal information to more formal academic analyses, the results are no different. The conclusion of the overwhelming majority of studies is that stadium subsidies do not pay off in terms of economic growth or job creation. The limited number of jobs that might be created come at a high cost to taxpayers--often well above $100,000 each.

This theme of subsidies as a bad investment for cities permeated the most extensive scholarly volume on the subject: Sports, Jobs and Taxes, a 500-plus page anthology published by the Brookings Institution.In their opening chapter, Roger Noll and Andrew Zimbalist conclude that new sports facilities "rarely, if ever, are worthwhile. Sometimes they can be financially catastrophic."

In another chapter of the volume, Robert Baade and Allen Sanderson analyze economic trends in ten metropolitan areas where new stadiums had been built. Overall, they find that professional sports teams tended to "realign economic activity within a city's leisure industry rather than adding to it." In other words, all that public subsidies accomplished was to help shift spending from other forms of entertainment to the stadium, with little in the way of net employment gain. "Professional sports," they write, "are not a major catalyst for economic development."

Who Benefits?

If taxpayers are footing the bill and the local workforce is not enjoying a boon, who is benefiting from stadium subsidies? The obvious winners are the owners of the teams that inhabit the stadiums erected at public expense. These owners are hardly in need of public assistance. About two dozen of them appear on the Forbes list of the 400 wealthiest Americans, with a net worth of more than $750 million each. Paul Allen, owner of the Seattle Seahawks and the Portland Trail Blazers, is said by Forbes to be worth $20 billion, making him the third richest person in the country.

http://www.goodjobsfirst.org/corporate_subsidy/professional_sports.cfm

From the Brookings Institute on one of the studies cited above:

The economic rationale for cities' willingness to subsidize sports facilities is revealed in the campaign slogan for a new stadium for the San Francisco 49ers: "Build the Stadiumâ€"Create the Jobs!" Proponents claim that sports facilities improve the local economy in four ways. First, building the facility creates construction jobs. Second, people who attend games or work for the team generate new spending in the community, expanding local employment. Third, a team attracts tourists and companies to the host city, further increasing local spending and jobs. Finally, all this new spending has a "multiplier effect" as increased local income causes still more new spending and job creation. Advocates argue that new stadiums spur so much economic growth that they are self-financing: subsidies are offset by revenues from ticket taxes, sales taxes on concessions and other spending outside the stadium, and property tax increases arising from the stadium's economic impact.

Unfortunately, these arguments contain bad economic reasoning that leads to overstatement of the benefits of stadiums. Economic growth takes place when a community's resourcesâ€"people, capital investments, and natural resources like landâ€"become more productive. Increased productivity can arise in two ways: from economically beneficial specialization by the community for the purpose of trading with other regions or from local value added that is higher than other uses of local workers, land, and investments. Building a stadium is good for the local economy only if a stadium is the most productive way to make capital investments and use its workers.

In our forthcoming Brookings book, Sports, Jobs, and Taxes, we and 15 collaborators examine the local economic development argument from all angles: case studies of the effect of specific facilities, as well as comparisons among cities and even neighborhoods that have and have not sunk hundreds of millions of dollars into sports development. In every case, the conclusions are the same. A new sports facility has an extremely small (perhaps even negative) effect on overall economic activity and employment. No recent facility appears to have earned anything approaching a reasonable return on investment. No recent facility has been self-financing in terms of its impact on net tax revenues. Regardless of whether the unit of analysis is a local neighborhood, a city, or an entire metropolitan area, the economic benefits of sports facilities are de minimus.

As noted, a stadium can spur economic growth if sports is a significant export industryâ€"that is, if it attracts outsiders to buy the local product and if it results in the sale of certain rights (broadcasting, product licensing) to national firms. But, in reality, sports has little effect on regional net exports.

Sports facilities attract neither tourists nor new industry. Probably the most successful export facility is Oriole Park, where about a third of the crowd at every game comes from outside the Baltimore area. (Baltimore's baseball exports are enhanced because it is 40 miles from the nation's capital, which has no major league baseball team.) Even so, the net gain to Baltimore's economy in terms of new jobs and incremental tax revenues is only about $3 million a yearâ€"not much of a return on a $200 million investment.

Sports teams do collect substantial revenues from national licensing and broadcasting, but these must be balanced against funds leaving the area. Most professional athletes do not live where they play, so their income is not spent locally. Moreover, players make inflated salaries for only a few years, so they have high savings, which they invest in national firms. Finally, though a new stadium increases attendance, ticket revenues are shared in both baseball and football, so that part of the revenue gain goes to other cities. On balance, these factors are largely offsetting, leaving little or no net local export gain to a community.

One promotional study estimated that the local annual economic impact of the Denver Broncos was nearly $120 million; another estimated that the combined annual economic benefit of Cincinnati's Bengals and Reds was $245 million. Such promotional studies overstate the economic impact of a facility because they confuse gross and net economic effects. Most spending inside a stadium is a substitute for other local recreational spending, such as movies and restaurants.Similarly, most tax collections inside a stadium are substitutes: as other entertainment businesses decline, tax collections from them fall.

Promotional studies also fail to take into account differences between sports and other industries in income distribution. Most sports revenue goes to a relatively few players, managers, coaches, and executives who earn extremely high salariesâ€"all well above the earnings of people who work in the industries that are substitutes for sports. Most stadium employees work part time at very low wages and earn a small fraction of team revenues. Thus, substituting spending on sports for other recreational spending concentrates income, reduces the total number of jobs, and replaces full-time jobs with low-wage, part-time jobs.

A second rationale for subsidized stadiums is that stadiums generate more local consumer satisfaction than alternative investments. There is some truth to this argument. Professional sports teams are very small businesses, comparable to large department or grocery stores. They capture public attention far out of proportion to their economic significance. Broadcast and print media give so much attention to sports because so many people are fans, even if they do not actually attend games or buy sports-related products.

A professional sports team, therefore, creates a "public good" or "externality"â€"a benefit enjoyed by consumers who follow sports regardless of whether they help pay for it. The magnitude of this benefit is unknown, and is not shared by everyone; nevertheless, it exists. As a result, sports fans are likely to accept higher taxes or reduced public services to attract or keep a team, even if they do not attend games themselves. These fans, supplemented and mobilized by teams, local media, and local interests that benefit directly from a stadium, constitute the base of political support for subsidized sports facilities.

From: http://www.brookings.edu/articles/1997/summer_taxes_noll.aspx

[north miami]

Go ahead with the attempt to "save" the Jaquars............additional provocative chapters.
Everything is different now.

[tufsu1]

stjr....I am well aware that the direct economic benefits of stadiums and pro teams do not outweigh the costs....in fact, I did a study on the effects of the Camden Yards baseball stadium in Baltimore about 15 years ago.

But a FULL, comprehensive analysis that would include all the indirect costs and benefits (including those intagibles you mentioned) would likely reveal a much different result.

[mtraininjax]

Every professional sports team is a business, first and foremost. How an NFL teams stays in business is beyond my comprehension. I just saw where the Dallas Cowboys gave a guy 40 MILLION guaranteed money with an 84 million dollar contract. Their new stadium cost 1 BILLION to build.

The numbers in professional sports are staggering these days. There was a good article on NCAA sports in the paper today, discussing ways to return the football events back to their ametuer status, of course, the NCAA did not say how much football was worth to them over a season.