Chad Hermann and Mike Madison, local bloggers both, have teamed up to do an op-ed in today's Post-Gazette. It deals with public financing of the Penguin's new hockey arena. The piece is interesting because the two don't really agree about the issue. Madison has been a skeptic about the public money. Hermann supports the plan. So why did they join forces?
I think the intentions were admirable: They argue that, like it or not, the arena is coming. So let's make the most of it. Fine. Great. We're all in the same boat, etc. The piece is well written, funny, even. So it's a good read.
But apart from that, I think it has little to offer. The main argument is that we should work to turn the Penguins into a tourism draw. That is, we need to go beyond entertainment for hockey fans and make sure the team becomes a tool for economic development. The op-ed even includes a letter to Mario Lemieux.
First, a minor point: Hermann and Madison probably should have addressed the letter to someone else. The stadium deal does include $2 million for marketing. Only Mario is not contributing that money. Any guess who is? From the Post-Gazette's list of the deal's major components: "$10.5 million from the state, including $8.5 million toward construction and $2 million for marketing."
So maybe the letter ought to go to "Pennsylvania taxpayers." Because marketing is our job, apparently.
But more importantly, Hermann and Madison, both of whom I respect a lot, seem completely unaware that "economic impact" is almost ALWAYS a major selling point when it comes to stadium deals. Supporters constantly make these arguments about tourism and spending and hotel rooms. And people have studied these claims. And they almost never come true.
Check out this. And this. And this. Look, I am not pointing you to the usual suspects like the Cato Institute. Of course the Cato Institute blasts the idea of publicly financed stadiums. (OK. I'll give you Cato's take.) But focus on the three I linked to first. I am talking New York City. University professors. Brookings, for heaven's sake. Yes, Brookings. Here's what they had to say about stadiums as economic development. I know it's long. But read the PG op-ed. Then read this:
Proponents claim that sports facilities improve the local economy in four ways. First, building the facility creates construction jobs. Second, people who attend games or work for the team generate new spending in the community, expanding local employment. Third, a team attracts tourists and companies to the host city, further increasing local spending and jobs. Finally, all this new spending has a "multiplier effect" as increased local income causes still more new spending and job creation. ...
Unfortunately, these arguments contain bad economic reasoning that leads to overstatement of the benefits of stadiums. …
In our forthcoming Brookings book, Sports, Jobs, and Taxes, we and 15 collaborators examine the local economic development argument from all angles: case studies of the effect of specific facilities… . In every case, the conclusions are the same. 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..
It doesn't work. Not because people don't cooperate or because naysayers sabotage everything. Not because there is not enough marketing. It doesn't work because it's a bad model. And because the assumptions are wrong.
In the end, I think Madison and Hermann get it backwards. Entertainment for hockey fans is just about the ONLY reason to support this stadium deal. Because using a stadium to provide "economic impact" has been tried in a lot of places. And failed.