Wednesday, July 17, 2013

Flashback: 1997! Sports, Jobs, & Taxes

It’s historically the quietest day of the sports year – the day after MLB’s All-Star Game. Which makes this the perfect day for Flashback: 1997!

This look back at “Sports, Jobs, and Taxes,” an essay by economists Andrew Zimbalist and Roger Noll, is dedicated to this blog’s frequent critics who insist a Tampa stadium would pay for itself (regardless of price) and implore me to “stop standing in the way of progress.”

An excerpt on why cities subsidize sports:
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 resources—people, capital investments, and natural resources like land—become more productive…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.
Zimbalist and Noll worked with 15 other collaborators to categorically dispel just about every common belief about stadium economics.
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.

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 year—not much of a return on a $200 million investment.
Since this was written in 1997, Washington got a MLB team and Orioles’ attendance dropped severely.

Zimbalist and Noll also delved into how cities could protect themselves from the vicious competition that leads to bad stadium subsidies. Pay attention to this, Tampa Bay:
In principle, cities could bargain as a group with sports leagues, thereby counterbalancing the leagues' monopoly power. In practice, this strategy is unlikely to work. Efforts by cities to form a sports-host association have failed. The temptation to cheat by secretly negotiating with a mobile team is too strong to preserve concerted behavior.
You don’t need me to tell you there have been dozens of new publicly-subsidized stadiums built since 1997. In fact, Zimbalist/Noll are even resigned to the fact that nothing was likely to stop cities from competing “against each other to attract or keep artificially-scarce sports franchises.”

So is all stadium spending stupid? Not necessarily. We know pro sports teams create what Zimbalist/Noll call “public good.” It’s similar to a concept described here a few years back: fans take great pride in their teams and a franchise’s mere presence provides value.

There’s much more to “Sports, Jobs, and Taxes,” so when you’ve got a little time on your hands – give it a read.

This is also a good opportunity to remind readers that this blog has no agenda other than providing a big-picture look at sports business news – particularly the Rays’ Stadium Saga – and acting as a watchdog for the public.


  1. If the TB Rays, TB Lightning, and TB Bucs had left, or never come to TB, please name me one major business in the TB area that would not be here.

    Please name me one major business in the TB area that has come here because the TB Rays, TB Lightning, and TB Bucs are here.

    And for all of us that are sort of regular folks, let's say that we allocate $2,000 per year to spend on the the Rays, Lightning, and Bucs. If they all suddenly disappear, what do we do with that $2,000? Do we put it under our mattress, or do we spend it elsewhere, like on a better mattress, or at restaurants, or at comedy clubs, or at museums, or at Busch Gardens, or at the Lowry Park Zoo, or at USF games, or at the theater, or at whatver....

    1. Economics 101, regardless where you spent your 2k, it still gets funneled into your local economy unless you spend it with businesses that aren't local like Wal-Mart. So if you like baseball, spend it @ the Rays game, if you like trill rides spend it @ BG, it's all the same...
      LOL, and it's not about "what business has come here because". Newsflash! The Rays, Bucs, and Lightning are the "major business", and secondly, part of their revenue is getting outside businesses & businessmen to spend money with them like how a Super Bowl or an All-Star game does on a grander scale...

  2. I understand as a Red Sux fan from Bahstun that you (Noah), feel like you have a responsibility to knock anything progressive containing Tampa Bay, and it's Major League Baseball team. And to use an article written 16 years ago when sports wasn't what it is these days shows desperation on your part to use anything to prevent progressiveness. Like I have for over a year, I challenge you to come up with a article that details what a new ballpark @ Channelside would do for Tampa. As for your lil' article, who's to say his findings are accurate? It's like 2 people can go to a presidential rally and hear 2 different things. I would argue that the money in sports are way different then they were 16 years ago, it's a global economy these days, and the business of baseball is no different. The cost of going to a game, the revenue from advertising & marketing is astronomical, stadiums aren't built in the boondocks anymore, they're built to be used as a part of a cities local economy. My question is does anyone really think Tampa would pursue the Rays if there wasn't money to be maid? Come guys, don't be naive. If you don't like baseball then I understand you would rather see Tampa invest in something that interests you, or if you just don't like the Rays. Until your cheapshots @ Tampa & the Rays are proved by a true economist to present accurate financial evidence of money the city of Tampa is set to lose in 10-20-30 years from investing in a ballpark, I'll agree to disagree, and feel like most that all this is just another empty attempt to derail progressiveness from another random bitter Bahstonian...

  3. Sports 16 years ago weren't what they are today?

    You mean when TV ad dollars weren't as lucrative and when the Red Sox thought they needed a new ballpark to remain competitive?

    You explain how there's all this ad and marketing money that's been infused into MLB....which is exactly why attendance isn't as important as it used to be.

    As for Zimbalist, he obviously knew what he was talking about enough for MLB to hire him:

    1. Andrew might be a baseball savoy economist, but writing about baseball in the mid 90's in Baltimore is still apples & oranges compared to baseball in central Florida in 2020. And, please don't compare try to compare the Red Sox & Fenway Park, and the Tampa Bay Rays & the Trop, again it's apples & oranges, it's like trying to compare Lambeau Field to the old Tampa Stadium. Professional baseball in the northeast goes back over 100 years, and Fenway Park is ground zero of it, where it's downtown in Boston, not Pawtucket like St.Pete is to Tampa. The Tampa Bay Rays needs a new ballpark just like almost every other MLB team had to do to gather greater revenue that the Trop can't produce because of issues like it's location, and luxury boxes. One of these days NO'ah you'll understand it's more beneficial for a new Major League ballpark downtown Tampa then not...

  4. Sports 16 years ago are different than what they are today. Corporate dollars have become king. They buy season tickets. Season tickets help a team establish a baseline budget without much variability. That is why the Yankees tore down a perfectly good stadium and built a replica with more luxury boxes, and are perfectly content with lower attendance figures because of the increased luxury box sales. Sure, you can continue to use 1985 attendance figures as a benchmark for the Rays attendance to "prove" that there's nothing wrong.

    I'd asked you before, what is it you want to see the Rays do? Shut up and play in Tropicana field indefinitely? Or until the end of their use agreement, and then build a stadium where?

    As far as public funding it can come in various forms. Although I too do not like to see much, but I do figure there has to be a happy medium that hasn't been shown yet. Public funding/support can come in multiple forms. Allocating city land at below market value. Allowing the team to keep a portion of their taxes. These are potentially things that don't really cost the city anything (in terms of dollars out the door).

    I find it really amusing that every city seems perfectly happy to build stadiums to lure teams, ie. St. Pete, Quebec City, Markham, but as soon as a city has a team the city won't consider spending a dime to improve their facility or contribute to a new facility. Rays, Islanders, Cubs, Sonics, Oilers.

    Note as soon as the Sonics moved, some public funding magically became available to build a new arena. But while the team was there "screw 'em".

    BTW, are you trying to draw a parallel between Fenway and the Trop? So you think in 16 years, if the Rays can hang on with a little bit of spit and polish, the Trop will be considered one of the crown jewels of baseball?

  5. All the stadium shills on here would do well to note the impact (or lack thereof) that the new Scamway Center has had on downtown Orlando. Church Street is still missing a fair few teeth...

    Publicly funded stadiums are an "investment" to the city in the same way that buying a new car is an investment. What happens when you switch on the engines for the first time? What happens when that car becomes increasingly outdated, as newer models with more innovative designs and better features are introduced?

    What's a more worthwhile investment to a city, in the end: $400-500 million on a sports facility, or the same amount of money on libraries, police, parks and rec, infrastructure, and transit?

  6. Sad how all the mindless Rays cheerleaders here can continue to root for throwing away even more money even when confronted with actual facts in a study detailing what a rotten deal a stadium bribe is for the public. If anything, the business has gotten more insanely off-balance. Salaries, stadium prices, revenue, marketing, TV rights... All of those numbers have rapidly escalated past anything imagined in the 80s.

    The pro-stadium arguments are pretty amazingly self-defeating. I'm sorry, but you want to compare Fenway to the Trop? Fenway is over 100 years old. The very fact that they didn't expect new stadiums every 7 years is the reason Boston has such a historic park.

    As for the dishonest idea that a city should keep spending money on improvements to stadiums once built: The Cowboys shiny new stadium was originally estimated to cost $650 million, but actual cost was roughly $1.15 billion. With a 'B'.Is that not ENOUGH of an investment??? How much more non-existent money should a franchise be able to bleed out of people to fill the pockets of multi-millionaires? And that ignores the coverage the cities provide for traffic services, security, parking, etc.

    And please give us a break on the idiotic idea that MLB is a "big area business". The average pro sports team only employees a small front-office staff and a whole lot of crappy retail jobs that are low paying and usually contracted out. I know everyone craves a job slinging hotdogs for a "big company" like the Bucs and the lavish salary it pays.

    Maybe you guys can put down your pom-poms, get a life and go visit one of the numerous cities that thrive without whoring out for the money-hungry league owners. I visited Austin last month and it's got a booming downtown, lots of tourism...and NO PRO TEAM. Maybe you can explain how a city can thrive without having the super-important lifeblood of a pro-team?

    1. LOL, your comment is "amazingly self-defeating" with a lot of negativity & NO substance. It's even funnier when non-sports fans think they understand the financial aspects of sports by watching more FoxNews then sports it self. A MLB team staffs over 300+, and that's not including stadium operations staff, which all would mostly live in Hillsborough co.. Plus, it's not like an investment on a ballpark gets barried in a back yard in Kansas, a lot of the money gets funneled through the construction workers of the stadium back into Tampa's economy. Also, you would see a huge boost in Hills. co. charities which helps redirect taxes to other needs like roads. It promotes helps promote Tampa on a globe scale which is a big benefit of why advertisers advertise with pro teams. You'll see a big boost in real estate & commercial real estate around the park like Vinnik's go-ahead plans to build along Channelside dr. plus the plaza, along with the hundreds (if not thousands in time) condos & businesses that are already plotted along Meridian Ave. ahead of the Rays arrival (though you probably never been down there), which all helps boost all the real estate values of the real estate already around the area of Channlside. Which also translates into the construction & after completion of construction jobs of all the newly spouted small businesses, not including more jobs for the businesses already running in the area. And that's all just the tip of it, not including having over 10k people come to Tampa from outside of Hills co. 81+ days a year spending on average $50 a person, add that up! Yes some profits goes to the team to help pay good players to play good to win to help attract fans to come spend, it's a cycle, but ask all the business owners downtown Tampa if they would be comfortable seeing Tampa invest in a ballpark, and better business adds jobs around the park not just the 300+ staff & gameday "hotdog sliggers". And also add about a $100 million dollar shot-in-the-arm from a All-Star game...
      As for Fenway, when you do it right the 1st time, you don't have to keep building, they built a natural field downtown, unlike the stadiums of the 70's & 80's where they were dull multi-purpose places with concrete fields, and a lot of times with roofs (like the Trop) normally in the boon-docks. And, though you don't know this being a NON-sports fan, Fenway also went through over 15 renovations. A ballpark in downtown Tampa will last as long like most stadiums built these days...
      And as for "Austin", they don't need a "PRO TEAM", they have the #1 school for annual revenue from their sports, that's how "you can explain how a city can thrive without having the super important lifeblood of a pro-team"...
      Look, I understand being the type of person still driving his 1980's boxy Buick simply because it still runs, but in 2013, but it's more economical to invest in the future then not...
      Thanks for playing Paulus...

    2. Your logic is often baffling.

      How would Hills. co. charities see benefits, "which helps redirect taxes to other needs like roads?"

    3. I bet my "logic" is a lot more accurate then your non-logic approach...
      Did you add up the #'s yet or did you finally find a local economist to debunk your articles?

    4. Still waiting on your numbers!

      But you could always try this local economist: