Friday, August 23, 2013

Orlando Soccer Stadium Idea Making Headlines

Public subsidy opponents may not oppose public subsidies as much as you think.  It's just that being a watchdog means watching out for the public's investment.

In Orlando, there's great momentum to build an $85 million soccer stadium for a minor-league-but-hopefully-soon-major-league team.  But as upwards of $55 million in public money is being discussed for the deal, Orange County commissioner Pete Clarke is suggesting the city secure a share of ownership in the team in exchange for the money.

So rather than just handing the money off to another entity, the city would become an actual investor and actually benefit from the real profit of a stadium generates (ticket sales, stadium revenues, etc).

Now, since Major League Soccer isn't a bunch of individual businesses, but a single business entity (the league owns the teams and the players' contracts), Clarke suggests instead the city guarantee itself a share of new stadium revenues.

Deadspin called it “the best idea for stadium financing I’ve ever heard.”

And Field of Schemes author Neil deMaus sent the following critique to the Orlando Sentinel:
That looks like a great idea. As I’ve always said, the problem with the current stadium business isn’t that the public is putting up money, it’s that the public is putting up money without getting anything back. If Orlando could get an actual share of the stadium revenues – and it’d have to be gross revenues, mind you, not net profits, since it’s too easy for clubs to cook the books with the latter – then this could actually be an investment, and not just a gift.
Meanwhile, there are other thoughts coming out of Orlando.....alt weekly Orlando Weekly had some tough words for Bud Selig & MLB in its story titled "Stadiums. Don't. Work."
Here’s an idea: Bring (the Rays) to Orlando. Our local leaders have yet to meet a taxpayer-subsidized sports facility they didn’t love.
...
But the economics literature is clear: Taxpayer-subsidized stadiums are losers. Full stop. Anyone who says differently is either lying or woefully misinformed.
...
The economic impact studies teams bandy about – Orlando City (soccer club), for instance, promises a $1.2 billion impact over the next 30 years – are hocus-pocus. They “overstate the contribution that professional sports make to an area’s community. … Specifically, because of sport- and stadium-related activities, other spending declines as people substitute spending on one for spending on the other.”

In the 37 metropolitan areas Coates and Humphreys studied, building a stadium had no discernable impact on the growth rate of real per capita income. Once you factor in the cost of building the stadium, per capita income actually decreases.
Needless to say, the story continues to quote numerous economists who have studied stadiums' (lack of) effects...which will obviously still fall on the deaf ears of some of this blog's readers, who I'm sure are anxiously awaiting the opportunity to debunk the evidence with independent economic impact studies of their own...

10 comments:

  1. There's a great question in the Deadspin post's comment section: "If owning a stadium is such a great investment, why isn't private capital lined up around the block in order to invest and get a piece of the action?"

    Rather sums up public subsidies for sports venues, doesn't it?

    PS: I vaguely recall Muddy Dyer kinda-sorta courting the Rays a few years back. It seems exactly like something he would do, though I can't see the MLB being anything other than a complete failure in this town.

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  2. J Blair, phD, economics.August 23, 2013 at 12:10 PM

    NOAH, why do you continue to beat the hopelessly wrong myth parroted by a relative handful of what I call quack economists. It is not true, as the quacks report and is parroted in the article you quote above, that it is a settled matter of economic fact that "Taxpayer-subsidized stadiums are losers."

    What is true is that there is a relatively small band of determined economists who make this claim over and over and over without ever having proven it. There are dozens of articles which make the claim that it is well established that public financing of sports venues always result in net losses to the region, but there is no article which actually proves that assertion.

    Noah, you continue to parrot this myth without even interviewing one economist (in the large majority of economists) in the school who think that public subsidies of stadiums have been a mixed bag, with some creating net benefits to the public, and some not.

    You continue to pretend that there have not been 87 Federal Court considerations of this question, 86 of which have been answered by impartial intelligent finders of fact to be opposite the myth you parrot over and over like a mascot with an agenda.

    When Neil says, "Anyone who says differently is either lying or woefully misinformed," (a sentiment you have also parroted here many times, Noah), he is pretending. That is simply not true. The predominant view among American economists is that it can make sense for the public to invest in a whole host of infrastructure, including sports venues (which venues include amateur sports facilities, race tracks, Olympic facilities, high school and college facilities, pro sports venues, and mixed use properties).

    Truth is, a majority of economists, together with large numbers of other learned people (public accountants, appraisers, and others involved in measuring economics/finances of various assets) who have concluded that building publicly-owned sports venues as part of a region's offering of amenities can create many economic and non economic benefits to the region, and help to accomplish multiple financial and non-financial goals.

    Sports venue investment is best viewed like public investment in zoos, airports, seaports, marinas, public beaches, parks, festivals, libraries, cultural centers, recreation centers, public squares, aquariums, museums.

    It is obvious Noah, that you either have a singular agenda or a limited education which interfere with the stated purpose of this blog. Luckily, you have some readers who are willing to take the time to comment, so that your readers have a more complete and accurate picture.

    APART from all THAT, though. Did you see this article about the use of Eminent Domain to build stadia?

    http://ij.org/seizing-for-sport

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    1. A lot of us been asking the same from NO'ah! It's simply not fair to Tampa, the Rays, or anyone else involved to have someone in Tampa Bay's media continue to make assumptions based on some stadium situations like some stadiums built in the 80's or a ball field built in Gary, Ind., or recent stadiums that haven't had much time to see the projected carryover. Tampa has a chance to possibly better itself for the future through economic development that's anchored by a Major League stadium, and it's also not fair to continue to make assumptions that city investment toward the project isn't in the city's best interest without REAL in-depth economic data support through REAL investigating... I, myself appreciate the efforts of this blog, and the opinions & reasoning's that it's a waste of time & money for the Rays to move to Tampa through this blog, we're just saying it's all opinion based on that the Rays nor Tampa have yet to publicly presented any actually plans on a future ballpark. And who's to say that Tampa in 2025 & beyond won't be structured enough with continued population growth, and it's ever development not just what's already built up Tampa, Westshore, Pinellas co., etc., but downtown's future, out i-4, Wesley Chapel and all parts to the north, Fish Hawk, Riverview, ect. to draw 30k+ with big businesses and wealthy buying expensive seating including luxury boxes? Who's to say that the floated ideas of a "LA Live" like entertainment spot won't work? Who's to say that the citizens of Hillsborough aren't poised to better the whole county in time through the progress of such a project? Though only time will tell as most of us progressives would like to think before any details of plans for a ballpark @ Channelside is revealed that a sports team with one of the lowest payrolls that has had the most wins over the last 5-6 years will get it right, and everyone will be happy when it comes to the new ballpark...

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    2. Tampa also has a chance to possibly worsen itself for the future - which is why its important to ask any and all questions now....and not assume a blank check for a stadium is a wise investment.

      Dufala, you assume the questions I and others make are based on wild assumptions - but if you had read any of the reports from the ABC Coalition or Tampa/St. Pete Chamber Financing Caucuses - you'd realize they are not.

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    3. I understand all that, but if read what "I and others" are saying is that your continued "assumptions" are simply "assumptions" as well, and for someone that is considered a "investigative reporter" within in Tampa Bay's media it's bad journalism. It's not fair to make predictions without facts that are relative to Major League Baseball in Tampa in 2020 or 30! It's like you wouldn't investigate a homicide, and report your opinions of what could of happen, or speculate on the random people that could of been involved based on the past incidences like it in other areas that has been reported by other people, it's bad journalism. Besides, no one in Tampa's gov. or the Rays is talking about a "blank check", again (and actually the Rays haven't said anything but what them & St.Pete have arranged), that's another "assumption". Is there a "chance" that Tampa won't recoup their investment before the end of time for the city of Tampa or the ballpark itself or MLB's existence, of course, but those are "wild assumptions" as well. As for the foreseeable future, I believe like most that if they build it they will come, and if they come they'll be able to pay their mortgage...

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  3. Blame the limited education. But thanks for the in-depth comments.

    I actually agree with many of your points and have written about them here: investment in sports venues can make sense; sports venues can accomplish financial; and there are many non-financial goals stadiums (or stadia, if you prefer) can help accomplish too.

    But there is most certainly a point where the cost will outweigh the benefit. And while nobody knows that exact point, the more we ask about it, the better we are. Oh, and as a life-long baseball fan who lives in Hillsborough County and roots for the Rays, I can tell you I have no agenda other than full disclosure and the full picture on the stadium campaign.

    You seem to be quite passionate about this - I'm not sure what you do for a living, but would you like to write a guest column?

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    1. This comment has been removed by the author.

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    2. "and roots for the Rays", except when they're playing your Red Sox, huh! lol

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  4. "The predominant view among American economists is that it can make sense for the public to invest in a whole host of infrastructure, including sports venues."

    That flies directly in the face of Greg Mankiw's finding that 85% of economists believe "local and state governments should eliminate subsidies to professional sports franchises." (http://gregmankiw.blogspot.com/2009/02/news-flash-economists-agree.html)

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  5. That a purported "economist" would compare public investment in a private business (in this case, sports stadiums) with public investment in libraries, tells us all we need to know about said "economist."

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