It asserts they will expound on the “reasonableness and achievability” in something they allege is a 3rd party analysis of the baseball stadium and Health, Wellness and Athletic Center proposal.
However, the ERA analysts admit no market analysis exists to show that using characteristics of Camden, New Jersey, and Fargo, North Dakota, baseball stadiums are even a tiny bit reasonable.
Accept the assumption, even if they are false assumptions, and everything flows from them.
With the wrong premises, logic will lead to incorrect conclusions.
It happened in city X, in city Y, so it could happen in Crystal Lake.
And when the bonds can’t be repaid, the board members will say,
In ERA’s initial 3rd party review, the authors talked about projected attendance in terms of “capture rate.”
I can’t even find the term in the second report.
So what is a “capture rate?”
If the population of the market area is 300,000, a 50% capture rate would mean than annual attendance is estimated to be 150,000.
The first report
“..assumes the team will achieve capture rates comparable to the highest captures in the Frontier and Northern Leagues.”
There is no reference to “capture rate” in the second report, but it is still a relevant concept.
The first report puts it in terms of the market place, but the second ignores the market.
Five teams in Chicago market have capture rates ranging from 5.9% to 52.6%, according to page 9 of the first report.
When you take the market out, use of the terms “reasonable and achievable” in nonsensical. Just because it is reasonable and achievable somewhere else doesn’t mean it will happen in Crystal Lake.
In ballpark feasibility studies, all revenue streams flow from attendance.
ERA looks at other teams, but, as ERA points out, “It is not known if the other teams’ reported figures represent paid or actual attendance.”
Remember, it is common practice for teams to give away tickets as promotional items.
So, ERA is reporting unaudited numbers. No one, except maybe the investors, look at gate receipts.
Take ERA’s minor league attendance figures with a grain of salt, maybe piles of salt the size that should have been stockpiled for this winter.
Likewise, ERA’s comments on audience attendance growth from year to year need to be closely examined.
“The assumed 30 percent attendance growth over the first five years…is fairly aggressive, but achievable, particularly considering the relatively low projected attendance rate for 2009.”
What team has achieved that attendance growth rate without expanding its stadium?
River City’s Rascals, located in suburban St. Louis on the Missouri side of the river, had a stadium built specifically for the Frontier League team. It has been around the longest.
River City’s average daily attendance in the first year (1999) was 3,611. In 2007, the comparable figure was, 2,095. (The 2007 figure is right in the table on page 5.)
That’s a 42% decrease.
So, where’s the growth found?
How does this fit into the “reasonableness and achievability” predicted by Economics Research Associates?
It isn’t even mentioned.
Let’s examine three of the Frontier League teams that ERA considers comparables. Look at the attendance figures for 2005, 2006 and 2007 on page 5.
Not one team cited in the ERA report is shown growing at the rate projected by MCC baseball promoter Pete Heitman.
It’s not even close. No wonder the table isn’t lined up so one can easily figure that out.
Here are daily attendance figures for 2005, 2006 and 2007 for three of the teams listed.
Suburban St. Louis Gateway Grizzles went from
4,235, then decreased to
In Washington, PA, Wild Things attendance for the three years were essentially flat:
Suburban St. Louis River City Rascals:
Obviously none increased 5% a year over the two-year period.
How about Rockford?
That’s close by.
You should know that a new stadium for Rockford was financed completely with private money, opening in 2006.
One would assume that the incentive not to lose money (or make money) would be stronger for entrepreneurs than for elected officials. Elected officials, of course, can keep coming back to the taxpayers to get non-referendum taxes; investors can’t…or maybe they can, if they are Pete Heitman.
Average daily attendance that first year in the new stadium was 2,463, higher than 2,065, an increase of 398 per game.
The stadium cost $7 million. It cost $17,588 to garner each new fan (on a daily basis).
The second year in the new stadium, attendance did not go up much—twelve fans per game.
Let alone EquityOne’s Mark Houser’s forecast a 10% increase in attendance during its second year. (See page 5.)
At least Rockford’s new stadium was financed completely with private money.
They weren’t using other people’s money, like the MCC team.
No wonder ERA didn’t emphasize Rockford’s problem.
There is no example of any team anywhere (unless major, major capital improvements have been put in) that has the attendance growth and, therefore, the revenue growth as sustainable as the promoters’ plan suggests.
Taxpayers have a 20-year repayment obligation, so why do the ERA consultants concentrate on the first five years’ performance, which history shows are a team’s best years?
Why has ERA ignored the next 15 years?
ERA does conclude,
“…we would not expect for this to continue indefinitely, as attendance would stabilize and potentially decrease (after the five-year projection period). This would directly affect the growth of team and facility revenues” (see top of page 7).
Heitman has attendance increases every year for 25 years, a minimum of 5% per year.
ERA hints that a 5% attendance increase is unrealistic–even as soon as the 6th year–but refuses to point out how this will negatively affect the ability to repay the bonds…which it will.
In fact, ERA doesn’t address anything beyond fifth year as far as financing goes, other than to say that attendance might decrease (see top of page 7).
Internet fantasy baseball would cheaper and probably as much fun.
More tomorrow and the days to follow.
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Senior Economics Research Associates staffer Richard Starr appears on top. Below is associate David Stone.
Below, baseball promoter Pete Heitman appears above his buddy Mark Houser in the pictures in this article.