Pro sports facilities are an 'investment': Yeah, right
Nobody believes sports economic impact studies. So why do them?
Debate over the future of pro basketball in our region just took a familiar turn: the release of the economic-impact study.
The Sonics study (summary PDF, full report PDF), like previous ones done on the Mariners and the Seahawks, is intended to bolster arguments for public funding of sports facilities.
The argument goes like this: Vast sums of money can be attributed to "economic activity" associated with the team. Certain jobs and tax revenues can be attributed to that "activity." Therefore, public dollars to build the facility is an "investment."
According to the City of Renton, a new study by Berk and Associates has found that a new Sonics facility "shows potential for more than $400 million in annual economic activity and 5,800 jobs statewide."
The report, paid by the team and the City of Renton, also says state and local governments could reap up to $340 million in taxes over 25 years. Renton alone would get $20.5 million during that time.
The Sonics want $300 million in public funding for a proposed $500 million facility in Renton.
Much as I love the team, and want them to stay, it's hard to find anyone who completely believes these studies.
A study for the Seahawks, for example, claimed that some "economic activity" could be attributed to the team by a fan at home watching a commercial.
Despite all the impressive spreadsheets and tables, the studies are less about economics than public relations, giving supporters a patina of science to their arguments. Supporters quote top line estimates and let critics pour through the appendix to find qualifiers and assumptions. In 1995, supporters of a new stadium for the Mariners said losing the team would cost King County $115 million a year in economic activity. Turns out that number was an estimate of total economic activity attributable to the team, but only half that number was "new money" – or money that wouldn't be spent here if the team didn't exist.
Look for Sonics advocates to quote that $340 million tax-revenue figure – never mind that the figure is based on stacked assumptions of playoff games, unspecified "high-impact" conventions, and a National Hockey League franchise here.
My favorite line in the Sonics report is this: "It is important to note that this is not a comprehensive cost-benefit study, as the cost implications of the project are not part of the review."
Exactly. It's just numbers. But quote them at will.
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Comments:
Posted Fri, Apr 6, 9:58 p.m. inappropriate
SKAROOO THAT: I agree with the commentators comment. These studies are bullshit. Public funding my *ss. Why don't the players and the coach put up their own money to build their own damn stadium. With their million dollar a year salaries they can afford it. Screw the public? again? I don't think so.
Posted Fri, Apr 6, 11 p.m. inappropriate
Free investments: If these stadiums will pay for themselves, lets build four or five new parks! There will next to no unemployment because of the job generation, lower taxes because of increased revenues to the State. No need for a rainey day fund that for sure!
Posted Fri, Apr 6, 11:20 p.m. inappropriate
Private Financing is Possible: I believe the Denver facility was financed with private money, and I don't understand why the Denver model isn't adopted by the Sonics. Also note that the Rose Garden in Portland was financed by Allen's group, then bankrupted but recently repurchased by Allen. The Trailblazer financial model did not work without control of the arena. It is unreasonable for the Sonics to assume the same type of control as the Trailblazers and Nuggets (parking revenue, concessions revenue etal) in a facility financed by the public.
Posted Sat, Apr 7, 7:58 a.m. inappropriate
5,800 jobs?: I wonder what would be the distribution of the 5,800 jobs statewide? I would think that most of the "jobs" would be very local and not many would be created in Clarkston or Omak or Ilwaco. The claim that the Renton arena would create jobs far and wide suggests that the study was developed with politics in mind.
Posted Sat, Apr 7, 9:07 a.m. inappropriate
No public funding for Sonics: The Sonics and their ownership run around with an aroma of entitlement that would make a welfare cheat look saintly. It is time to start a new national trend, one that sends sports teams packing unless they pay their own costs.
In the meantime, the public funds we have to allocate should go to education, health care and other essential human needs.
Posted Sat, Apr 7, 1:56 p.m. inappropriate
RE: Private Financing is Possible: Art Thiel's column in February was probably the best piece written so far about private financing of arena's in the Pacific Northwest.
http://seattlepi.nwsource.com/basketball/305418_thiel28.html
If the Sonic's ownership would put up over 70% of the funding, I do believe there would not be a problem with the public picking up the other 30%. However, when you as a owner are not willing to put up over 50% of a project, as much as I want the Sonics to stay, as well as other sports teams and events to come to the area, I just can't agree to fund it. I would love to see a new arena built in Renton. I just can't accept the current deal that's on the table.
Posted Sat, Apr 7, 2:10 p.m. inappropriate
berk and bologna: Thank you for reading the commissioned Berk and Associates report for us.
Isn't this the consulting firm that gets hired by governments to product slick (but boring) power point presentations and glossy covered thick reports that are supposed to convice us something they don't want us to question - Seattle Monorail and Port of Seattle are two that come to mind.
Thank you Mr. Corr and keep up the good work. patricia stambor
Posted Sun, Apr 8, 11:05 a.m. inappropriate
Yep, Berk IS baloney (but baloney pays well): Patricia is correct. Berk & Associates is a handy go-to local consultant for quickie "analyses" justifying the latest rip-off of local taxpayers. (Hey, it's a fast-growing market, you know!)
What I like to do is compare the projected economic impacts of professional stadia with, say, the Port of Seattle which is associated with *real* commerce and family-wage jobs, including an array of supporting professional services.
The PoS often cites its impact as upwards of 275,000 jobs and $8 billlion in commerce, producing $500 million in state and local taxes. (I'm drawing upon '94 data, as I used it in Olympia to argue against the Seahawks stadium funding in '97.)
PoS thus had a hundred-times larger economic impact than the Seahawks were arguing they had. But the Port wasn't looking for a hundred-fold larger grant of public monies, which would have been a shocking $40 BILLION (one hundred times the $400 million the Seahawks were seeking for their new stadium). Maybe the Port is too modest?
I don't know the particulars re: the Sonics arena, but you can apply the same approach.
BTW: Did Berk's study indicate whether those 5,800 jobs were full-time - or just part-time jobs like those in the food concessions, on the aisles or behind the brooms? It's an important difference.
Posted Mon, Apr 9, 6:17 a.m. inappropriate
Berk & Associates' logic is absurd: Following Berk & Associates' "logic", taxpayers should give the Port of Seattle a $40 BILLION new 'arena'. (This more concisely restates the jist of my previous post.)
Posted Tue, Apr 10, 5:49 p.m. inappropriate
What Will It Be Used For in 10-15 Years?: Why is there no concern about what the facility will be used for in 10 to 15 years when we could still be paying for it and it is, like Key Arena - expanded and renovated just 13 years ago, considered obsolete?
Posted Fri, May 30, 9:34 a.m. inappropriate
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