Appearing before the McHenry County College Board Monday night was McHenry’s Steve Stanek. In his post at Chicago’s Heartland Institute, Stanek has undoubtedly done more research on baseball stadiums and convention centers than anyone at the college
Here’s what he said:
Thank you for putting me on your agenda. And thank you to Donna Kurtz who surprised me with a phone call a couple of weeks ago and invited me to meet you and discuss this stadium issue. Because I’ve already sent you a lot of material, I promise to be brief.
Many years ago I was a student here at MCC. Several weeks ago Regan Foster from the Northwest Herald called me for an article she was writing, and I told her I love MCC – and I meant it.
The affection I feel for MCC is why I have been peppering you with letters and economic research papers and inviting you to contact the researchers themselves. I believe this stadium deal could do economic harm to the college and the region.
As you know from my letters, I am research fellow at The Heartland Institute, a free-market policy group in Chicago. I am also managing editor of Budget & Tax News, a monthly publication that covers budget, tax and economic development issues. The publication goes to all Congressmen and Senators, all state lawmakers, and about 9,000 municipal officials in the 350 largest cities.
In doing this work I regularly read economic reports and economic development studies by people who work independently of business groups, industries or specific businesses. I also regularly speak with researchers themselves.
A humorist named Artemus Ward once joked,
“It ain’t so much the things we don’t know that get us into trouble. It’s the things we do know that just ain’t so.”
The researchers I am talking about believe in the truth behind Ward’s jest and devote themselves to sorting out what’s so from what ain’t so.
These researchers regularly disagree over other things like the minimum wage or income tax cuts or the economic impacts of illegal immigration. Yet they overwhelmingly agree the promised economic benefits of sports facilities usually are overblown.
Your own consultant, Economics Research Associates, has an issue paper by Steven E. Spickard, a senior vice president there. Spickard wrote, and I quote:
“[F]or economic development purposes, sports stadiums and arenas are not particularly effective at creating jobs and income.”
Spickard studied major league sports facilities and some of you may be thinking, well, we’re talking about a minor league stadium. But Spickard’s analysis holds true for minor league facilities, and many others have included minor league facilities in their studies and have reached the same conclusions.
Just two months ago, Harvard University Professor Judith Grant Long testified before a Congressional subcommittee in Washington, DC. She said her research showed professional football, baseball, basketball and hockey have received subsidies totaling $18.5 billion since 1990.
Here’s what she said about that:
“There is absolutely no evidence that $18.5 billion in public benefits have been generated since 1990 to compensate.”
And I have already sent you a research article by Adam Zaretsky, an economist for the U.S. Federal Reserve, who wrote,
“Has financing a sports stadium ever been the best alternative? Research shows ‘No.’”
Entire books have been written about this.
Field of Schemes: How the Great Stadium Swindle Turns Public Money into Private Profit.
Sports, Jobs, and Taxes: The Economic Impact of Sports Teams and Stadiums
by Professors Andrew Zimbalist of Smith College and Roger Noll of Stanford University.
The professors write:
“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.”
Tomorrow – Convention Centers
While I certainly disagree in this instance of the baseball stadium (more so because this particularly Minor League is bankrupt as it is – there’s no guarantee the team would stay in operations), I think you’re analysis here is a little flawed, Cal.
Coincidentially, part of my graduate studies that I began at the University of Nevada was on a History of Sports course, for which my research topic happened to be on just this subject – the economic impact of sports stadia on local economies. Funny enough, I in fact read quite thoroughly the Zimbalist and Noll paper.
Much of the research you cite is flawed, primarily because it’s comparing apples and oranges. Many of the sports stadia used in these studies are using data collected for suburban, multi-use facilities – e.g., Veterans Stadium in Philadelphia – where they had no specific purpose other than to host games for any different number of sports (and the occasional Rolling Stones concert). They were very often built in economically successful area of metropolitan areas that were in little need of economic development.
By comparison, many of the sports stadiums today are single-use, downtown stadiums – built with community development in mind. Such examples would be Coors Field in Denver Colorado (I know this because I grew up around there – prior to Coors, the area was a haven for drugs and gang activity). There are many others.
Little by little, emerging research is suggesting that sports stadia are actually creating economic activities because of their focused yet comprehensive development plans for both the stadium and the community. I don’t think the Crystal Lake ballpark fits within that concept (suburban, not comprehensive to the community, etc) so therefore it’d be a failure.
I’ll dig up that old paper and find many of those sources for you, too.
Stadiums and convention centers are zero sum games. Looking at development around a ballpark and claiming that the ballpark was an economic success is folly.
Think about who attends games. These aren’t new visitors to the community, and therefore they aren’t drawing in new dollars. People have relatively fixed entertainment dollars to spend, and a ballpark redistributes that spending from existing venues (movies, restaurants, etc) to the ballpark.
Don’t forget the importance of the “but for” test: But for the ballpark, would these dollars have been spent in the region anyway? When it comes to ballparks, that answer is almost always “yes”.
I’m a little less dismissive of conference and convention centers. Yes, the center itself often requires a subsidy (almost always, in fact). That’s why the private sector doesn’t build them. That said, successful centers draw new visitors and dollars into a community that wouldn’t be captured otherwise (of course, there is a displacement effect to consider). Businesses can’t capture this positive externality, but governments do through sales taxes related to convention activities (room rentals, car rentals, food & beverage, etc).