The Dim-Post

September 11, 2012

Cough

Filed under: economics — danylmc @ 8:11 am

How timely – the Atlantic has an column up about the risky economics of sports stadiums. (Stadia?)

Time after time, politicians . . . approve public funds, selling the stadiums as public works projects that will boost the local economy and provide a windfall of growth.

However, according to leading sports economists, stadiums and arenas rarely bring about the promised prosperity, and instead leave cities and states mired in debt that they can’t pay back before the franchise comes calling for more.

“The basic idea is that sports stadiums typically aren’t a good tool for economic development,” said Victor Matheson, an economist at Holy Cross who has studied the economic impact of stadium construction for decades. When cities cite studies (often produced by parties with an interest in building the stadium) touting the impact of such projects, there is a simple rule for determining the actual return on investment, Matheson said: “Take whatever number the sports promoter says, take it and move the decimal one place to the left. Divide it by ten, and that’s a pretty good estimate of the actual economic impact.”

Others agree. While “it is inarguable that within a few blocks you’ll have an effect,” the results are questionable for metro areas as a whole, Stefan Szymanski, a sports economist at the University of Michigan, said.

One economist expands on the topic at ThinkProgress:

The main problem, I think, with the public financing of sports stadiums isn’t that they happen, but that they happen so often because of how they are sold to taxpayers. Developers, team owners, and other interested parties love to sell stadiums as a major economic investment that will spur so much growth that they will ultimately pay for themselves. But as Matheson and other economists told us for the piece, that simply isn’t the case. These stadiums come at a huge cost, and the public money that is spent on them is diverted from funds that would otherwise pay for public services — firefighters, police officers, public pensions, roads and bridges, or any number of things that we use but don’t notice in everyday life.

If taxpayers knew the real cost of stadiums, they might choose to keep paying for police officers, firefighters, and other public services instead of spending $4 billion on professional sports facilities. Or maybe they wouldn’t. Maybe fandom is such that we would still prioritize a sparkling new arena or stadium even while we’re cutting those services. The point is, we don’t know, because we never get that discussion.

We should make the politicians who sign off on these projects sign pledges that they’ll never accept free hospitality at the stadiums they’re pledging taxpayer money for. Then see how urgent these projects are.

 

32 Comments »

  1. “… the Atlantic has an column up about the risky economics of sports stadiums. (Stadia?)”

    Wot – no Wikipedia?

    “Although most dictionaries provide for both “stadiums” and “stadia” as valid plurals, etymological sticklers sometimes apply “stadia” only to measures of length in excess of 1 stadium. (That the “stadium” measurement is used only in historical contexts perhaps explains the sustained use of the archaic plural.)”

    Comment by Andrew Geddis — September 11, 2012 @ 8:41 am

  2. My attitude to sports generally is that it is play time for adults. I’m happy to play various sports (basketball was my fave until my knees packed it in after 30 years of it) and I really enjoy it. But I’ve never been able to sit down by myself and watch sport on the TV….for free. I’ll watch with people as a social occasion. I’ll attend a live event on the same basis. Rarely. I haven’t ever seen any value in spending much money on watching sport. Especially professional sport. It feels too much like stroking the aphids for their cash….all wrapped up on parochialism (local teams) or patriotism (national sides). For these reasons, I’ve not seen any sense in using public funds to build sports venues. If they are as wildly profitable as their promoters claim, surely it would be a certainty for private investors. I can see the great big stadium is a community assets where we can all go in our tens of thousands and share something in person. But I’d rather the money was spent on public transport to get there (or anywhere) in the first place…or health care or subsidies for less well off families to pay school “donations” or buy those silly uniforms they think kids need to wear to school…..when they don’t really.

    But there it is. None of this is really rational…and on that basis I embrace stadia whole-heartedly. We’re going to spend mountains of money on adult play times anyway…..you may as well stand on the beach and try to stop the tide coming in….so I generally don’t whine about it.

    Except just this once.

    Comment by Steve (@nza1) — September 11, 2012 @ 8:53 am

  3. And what did they say about convention centres inside stadiums?

    Comment by alex — September 11, 2012 @ 9:02 am

  4. A solution for Christchurch and Dunedin could be to upgrade the Southerner line to allow fast trains, and have the Crusaders & Canterbury share the new Dunedin indoor stadium as a home ground with the Highlanders and Otago. Cheaper than building a new stadium in Christchurch and better utilisation of the Dunedin stadium.

    Comment by cctrfred — September 11, 2012 @ 9:26 am

  5. We need to reintroduce older sports that don’t require such massive public infrastructure.

    Bear baiting.

    Comment by Gregor W — September 11, 2012 @ 9:41 am

  6. @cct – Upgrading the rail line might even have flow-on benefits beyond just sport.

    Comment by alex — September 11, 2012 @ 9:46 am

  7. “there is a simple rule for determining the actual return on investment,Matheson said: “Take whatever number the sports promoter says, take it and move the decimal one place to the left. Divide it by ten, and that’s a pretty good estimate of the actual economic impact.”

    Is this an expert economists way of saying “divide by 100”?

    Comment by PPCM — September 11, 2012 @ 9:49 am

  8. of course, when Dunedinites were marching in the streets to protest on precisely these grounds, it fitted so well into traditional stereotypes of Dunedinites that nobody took any notice

    Comment by kahikatea — September 11, 2012 @ 10:40 am

  9. What was the final price for the RWC? London Olympics?
    Corporate welfare, politicians egos.

    “4.A solution for Christchurch and Dunedin could be to upgrade the Southerner line to allow fast trains, ” have you any idea how much a fast train service costs? And to be used how often?
    Here’s another solution: govt’s should just say “no thank you” when these people come knocking. (Well, they could just as easily say “fuck off, not getting taken in this time”)
    The National Convention Centre self-funding thing is the perfect solution… well except for the fact that it will be funded out of the misery of the gamblers’ families.

    Comment by Clunking Fist — September 11, 2012 @ 1:36 pm

  10. (A little bit of me wants to say “And libraries/opera/ballet: stop funding those, too”!)

    Comment by Clunking Fist — September 11, 2012 @ 1:37 pm

  11. “The National Convention Centre self-funding thing is the perfect solution”

    well….. except for the bits that arent self funding.
    Which is one of the major problems with such ideas – “wont cost you anything!” ……. “just dont read the fine print that specifies you need to pay us a multi milliion dollar subsidy whether we make money or not”

    Comment by framu — September 11, 2012 @ 1:57 pm

  12. (A little bit of me wants to say “And libraries/opera/ballet: stop funding those, too”!)

    When it still costs $100+ per decent seat to go to the opera/ballet, it does make me wonder just where the fuck the money does go.

    Libraries though – hands off!

    Comment by Gregor W — September 11, 2012 @ 3:39 pm

  13. Yeah! Stay away from libraries! Those actually give enormous value for money and have no good way to self fund.

    Comment by Flynn — September 11, 2012 @ 4:49 pm

  14. “Those actually give enormous value for money ” I’d like to see the research please. I suspect you will find that few people go near one, so our rates go towards subsidising the few. Just like a stadium really.
    “and have no good way to self fund” see Fatso or your local DVD store for a model that can work. Once all (most?) books and periodicals are digital, we won’t need libraries in their current form, which will save a lot of money. Have you seen how fancy the Wellington Central library is? And how the folk using it are mostly wierdos. (Joking! Mostly.)

    Comment by Clunking Fist — September 11, 2012 @ 6:09 pm

  15. If it’s anything to go by, Montreal’s Big Owe – built in 1976 for the Olympics the same year – took 30 years to break even.

    Comment by DeepRed — September 11, 2012 @ 6:46 pm

  16. Is there a difference between convention centres and stadia (stadiums, whatever)?
    Highly paid professionals get to ponce around to adoring /hateful cries from from people who do not have lives.

    Why do we not promote theatres, opera centres, whatever centres to promote whatever the performers do?

    Anyone for tennis, or tiddlywinks or chess or 5 day cricket tests?

    Actually I am partial to 5 day cricket tests but I am damned if I can figure out a sound economic argument to to build a cricket ground

    Comment by peterlepaysan — September 11, 2012 @ 7:50 pm

  17. “Those actually give enormous value for money ” I’d like to see the research please. I suspect you will find that few people go near one, so our rates go towards subsidising the few. Just like a stadium really.

    Actually, I work in a library. So it’s an area I’ve actually paid attention to and even went and got an extra diploma in and I can assure you that a) libraries are heavily used. b) they are used more by people with lower income and get even MORE heavily used when there is a recession and people can’t afford movie tickets or buy their own books or are trying to retrain.c) they are the best value for money you can get for mass education/community engagement/internet access.

    Typically, the people that say ‘close the libraries’ are the ones that don’t need them much, or don’t realise they need them. Specifically: well off people who don’t read much or buy their own books.Anyone with kids that read usually has trouble keeping them supplied with books and will head to the library for a new stack each month. A lot of people can’t buy new travel books every time they’re considering going somewhere. People who are building their own homes, sewing craft projects, doing genealogy, learning to cook, doing assignments, trying to get ahead on study for a course, all head to the library.

    Take a quick look at what’s been happening in the UK with the immense community resistance against the government if you don’t think people care about their library.

    “and have no good way to self fund” see Fatso or your local DVD store for a model that can work. Once all (most?) books and periodicals are digital, we won’t need libraries in their current form, which will save a lot of money. Have you seen how fancy the Wellington Central library is?

    I have visited that library, actually. It’s very nice, and I note, still has a lot of books in it. But the digital vs. print argument is a false one that most libraries aren’t panicking about anymore;
    1. a lot of people don’t want digital, they want an actual book, and some books just don’t work as ebooks (picture books for example!). Libraries are there to provide access in ways that people actually use.
    2. That assumes that people can actually ACCESS the ebooks, and as I already mentioned, a lot of library users can’t afford to buy books, so why would they magically afford an ereader? Much less have the internet access to use it properly?
    3. Ha, cheaper? Not really. It’s still all over the place and then there’s the troubling issue of pricing structures; most ebook and periodical packages are basically rented access. Libraries can’t just buy them and be done, they have to continue paying and renewing and have to take all the crap just to get the good stuff – currently there’s a major boycott going on in the US academic area over certain database packages.

    Re: charging. It’s a dumb idea (though a popular one among people that don’t actually use libraries).
    1. DVDs and CDs usually do have rental fees. However, they are NOT allowed to compete with the actual stores, and funding goes straight back into that specific collection. Essentially, they’re extras.
    2. People simply don’t want to, or can’t afford to, pay for books. Usage drops dramatically and it disproportionately effects all the people with no money, i.e. the ones who use the library most and benefit the most from it.
    3. If usage drops then voila, that 30.000 books a month doesn’t turn into 30,000 dollars of revenue, it becomes much, much less. Add in all the infrastructure around it (checkouts involve money already take twice as long) and suddenly the library isn’t making enough to cover costs ANYway.

    Google ‘value of libraries’. There’s a ton of stuff out there.

    And while you’re at it… http://www.wcl.govt.nz/about/services/library-value-calculator.html

    Comment by Flynn — September 11, 2012 @ 9:04 pm

  18. For the record, having now sidetracked the thread: I agree that the stadiums are basically rip-offs. They’re very single use structures usually subsidizing a specific company and still costing people a lot to actually use. They are nothing like libraries except that people gather in them and that public money goes towards them.

    Comment by Flynn — September 11, 2012 @ 9:06 pm

  19. Oh, and it’s not just book use. It’s kids reading sessions and internet access and study space and research help. Go near a library near a school in a low socioeconomic area around exam time and I guarantee it will be full of students who cannot study easily at home, or buy the resources to study from. The computers are heavily used by people who don’t own a computer, or have to share it with a family, and don’t necessarily have internet access and very frequently don’t know how to use it or speak English very well (so many people need help just setting up an email account or using Word). These people are often trying to write CVs and apply for jobs, study, try and contact family or other acquaintances or government services that require them to go online…

    And here are just a couple of random links on public library ROI (my internet is hanging, or I’d find you a dozen more)
    “In Florida: for every $1.00 of taxpayer dollars spent on public libraries, income (wages) increases by $12.66
    In South Carolina: In return for an investment of $77.5 million, public libraries pump $347 million into the state’s economy”
    http://www.inthelibrarywiththeleadpipe.org/2009/are-you-worth-it-what-return-on-investment/
    http://www.lrs.org/public/roi/

    Comment by Flynn — September 11, 2012 @ 9:23 pm

  20. that’s it in a nutshell, innit: the people that say ‘close the libraries’ are the ones that don’t need them much, or don’t realise they need them.

    Comment by petronious — September 12, 2012 @ 8:00 am

  21. oh yeah: DOWN WITH STADIA!

    Comment by petronious — September 12, 2012 @ 8:01 am

  22. Woah. Librarian smack-down. Go Flynn!

    Comment by James Shaw — September 12, 2012 @ 10:31 am

  23. “Librarian in call to Save Libraries Shock”
    Being the parent of children who can never get enough to read, we visit the library most weeks. But that doesn’t mean that rates are the best way to pay for them.
    Do libraries pay royalties to the authors/directors of books/DVDs? Or do they have an exemption under law?
    I have found the folk who are enthusiastic about libraries are also enthusiastic about me having to give 20% of the proceeds to the artist’s estate when I sell on a piece of art.

    On digital books, you are not wrong. Only part wrong: it will get to the point that no novel will be printed due to the cost. (LOL, just think of the CO2 released when books are printed and transported, then returned for destruction when unsold.) “Coffee table” books and textbooks will survive much longer. I’m not sure about newspapers and magazines: they may stumble on for a bit.

    Comment by Clunking Fist — September 12, 2012 @ 1:46 pm

  24. Bent Flyvbjerg has written extensively about this behaviour. Google him.

    Comment by Christopher — September 12, 2012 @ 2:07 pm

  25. “Do libraries pay royalties to the authors/directors of books/DVDs? Or do they have an exemption under law?”

    It’s not library-funded but New Zealand authors do get a small sum based on the availability of their books in New Zealand libraries – it’s called the Public Lending Right: http://www.authors.org.nz/wawcs0137981/idDetails=165/Public-Lending-Right-formerly-known-as-The-Authors-Fund.html

    As I always wonder, how would you pay for libraries if not by rates? Given that many people who can’t afford to buy books also can’t afford to pay rates?

    Comment by Tui — September 12, 2012 @ 3:43 pm

  26. “I have found the folk who are enthusiastic about libraries are also enthusiastic about me having to give 20% of the proceeds to the artist’s estate when I sell on a piece of art.”

    Really? Because I really, really like libraries (paid for by general rates) and I also think that having to pay royalties from the future sales of an artist’s work is a dumb idea. Am I really that unusual?

    Comment by Andrew Geddis — September 12, 2012 @ 3:56 pm

  27. Didn’t you read CFs comments, Tui?
    A library is just like a DVD store so therefore the market can provide!

    Note to self – take the kids to Amalgamated for a couple of hours on the next rainy day.

    Comment by Gregor W — September 12, 2012 @ 3:58 pm

  28. If you have time on the way to/from Wellington Airport pop into the ASB Sports Centre on Evans Bay ( the shiny paua shell next to the roundabout ).

    You are likely to see lots of people participating in different indoor court sports, from schools to oldies.
    I was very impressed, especially having medical x-ray facilities so participants can identify the specific broken bones etc. $47.5 million for a flexible facility that sees a lot of use each time I’ve visited, even on fine days. The health and social benefits should benefit the community .

    I’m one of the weirdos using Wellington Central Library, and have noticed more people in it over the last few years, and a mixture from silver-haired to ankle-biters. Their magazine charges are very reasonable, I haven’t tried their ebook service, but the library is a far better use of ratepayers money than some of the other council activities, such as bailing out Zealandia.

    Comment by Bruce Hamilton — September 12, 2012 @ 5:31 pm

  29. Bennett to re-instate the ‘droit du seigneur’ for the Senior Managers of all beneficiaries claiming a benefit.

    Comment by sheesh — September 12, 2012 @ 9:00 pm

  30. “Do libraries pay royalties to the authors/directors of books/DVDs? Or do they have an exemption under law?”

    Libraries buy stuff outright (except in weird cases like digital media).Sometimes they have to pay more because they’re an organisation and yeah, there’s all that licensing stuff, but that usually only applies to specially made programs and things. Books generally come from specific suppliers, but only for ease of use. Oh, and if a book isn’t published and available in NZ, good luck persuading the library to buy it.

    Is this ‘fair’? : yeah, I’d say so. A) libraries usually have to go through a lot of copies of books especially if they’re popular (and get nicked a lot) and B) it’s the best exposure most authors will ever get. Practically no one buys a book on sight (well, that’s changing in the age of very cheap digital media, but still – very few people will pay up any significant amount for an unknown author). Most people become fans and go buy a bunch of books because they read one of the books elsewhere, such as a library.

    Comment by Flynn — September 13, 2012 @ 12:22 am

  31. It is so simple. Libraries offer space to food and or alcohol sellers and cream off a percentage.

    On this basis they should be privatised, now.

    I am shocked that the National Party have not already introduced long overdue legislation stripping libraries from local bodies and offering them to free trade partners.

    Comment by peterlepaysan — September 14, 2012 @ 9:05 pm


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