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HOW HE SEES IT Stadium deals aren't always homeruns



Published: Tue, June 28, 2005 @ 12:00 a.m.



By CHARLES ZEHREN

LONG ISLAND NEWSDAY

Let's go Yets!

From a purely economic perspective, that's the best cheer we could hear this summer from New York fans.

For building one stadium that the Mets and Yankees could share would achieve wide-scale cost efficiencies, enhance profitability and preserve valuable fiscal resources.

After all, more use is better, theorized Robert Baade and Richard Dye in the August 1988 edition of Economic Development Quarterly, noting that same-city teams rarely play home games on the same day.

Scan the economic literature stretching back decades and you'll quickly find dozens of similar findings supporting the argument that the taxpayers of New York City and its suburbs have little to gain in terms of aggregate income and employment from the building of new homes for our football and baseball franchises.

"Sports teams are not reliable economic engines," concluded a seminal April 1998 report compiled by the city's Independent Budget Office. "Studies on the economic impact of teams suggest that they do not generally yield increases in jobs, population or income for metropolitan areas."

As you mull over the proposed $400 million-plus taxpayer bill for the new stadiums, keep in mind that we are playing a zero-sum game. Any public dollar spent on supporting stadiums -- including revenue from taxes on ticket sales or player salaries -- will offset other city spending priorities, tax cuts, and moves to eliminate structural budget deficits. Money spent by suburbanites at the ballpark will be money not spent at other entertainment venues in the metropolitan area.

As Baade and Dye also told us, stadium jobs as well as those at nearby retailers and restaurants are for the most part low-paying, low-skill and part time.

From a classic utility standpoint, the stadiums will be losers. They will be open for business only about 90 days a year, and most city residents won't be able to afford tickets.

Overselling stadiums

Consequently, taxpayers should cast a jaundiced eye toward any stadium deals that public officials routinely oversell as catalysts for economic development.

Research concludes that the teams will benefit from the "novelty effect," which typically extends attendance increases for seven to 11 years. But it also indicates that to make their deals work, George Steinbrenner and Fred Wilpon will raise ticket prices and sell blocks of corporate luxury seats and expensive -- Trump-inspired -- personal seat licenses.

Even if they can't afford to go to the games, fans will be happy to know that after building new stadiums, owners often spend freely on marquee players to enhance ticket sales and bolster multimedia deals.

Yet as Roger Noll and Andrew Zimbalist pointed out in their 1997 critique, "Sports, Jobs & amp; Taxes: The Economic Impact of Sports Teams and Stadiums," the "number of people who actually attend games is remarkably small."

By last week, the Yankees and the Mets were proposing to spend at least $800 million and $600 million to $700 million of their own, respectively, to pay off tax-exempt bonds and finance the stadiums. The city and state said they are good for $245 million and $150 million, respectively, on infrastructure for the teams.

Such a financial commitment benefits the Yankees and the Mets and puts the city within striking distance of breaking even. (Last week Zimbalist characterized the Yankee deal as "pretty generous" for the city.) Contributing state money shifts some of the burden away from city taxpayers to fans from Long Island and Westchester who have disposable income to buy tickets.

Escalating costs

Still, costs are sure to escalate as they always do and there's little empirical evidence that those millions will multiply and bolster the local economy, the analysts say.

The largest portion of the teams' budgets are salaries, and most players do not live year-round and spend their money in New York, according to the budget office report. Player development takes place outside the region, and much of the money the fans spend winds up in the pockets of vendors and manufacturers based outside of the region, if not out of the country.

A decade ago, budget office analysts found that the Mets and the Yankees combined accounted for only 0.09 percent of the city's economy and 0.06 percent of its tax revenue. Since then, player payrolls have surged, the city economy has grown from about $356 billion to about $500 billion, while annual tax collections have risen from $18 billion to $30 billion. But Doug Turetsky, a spokesman for the Independent Budget Office, says the analysis still holds. Shea and Yankee stadiums remain a small portion of the local economy, he says.

Among the greatest potential gains to New Yorkers, Noll and Zimbalist say, may come in the form of "externalities," or benefits accruing to people who are neither buyers nor sellers of the production of the game.

That could mean reduced crime, increased civic pride, community unity and even grist for the TV and the newspaper industries, which seek profits by rewarding professional sports with the sort of free media attention that Sen. Chuck Schumer could only dream about.

Still, studies have found "little discernible difference" between metropolitan areas with teams and without, the budget office reported. "If the Mets and Yankees left tomorrow, New Yorkers would simply move on and shift their spending to other forms of entertainment."

Let's go Yets!

X Zehren is a business columnist for Newsday. Los Angeles Times-Washington Post News Service




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