JETS REGRETS (NY Press)

Subject: JETS REGRETS (NY Press)
Date: 2/1/2005 2:14:19 P.M. Eastern Standard Time
From: kitchen@hellskitchen.net
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JETS REGRETS
http://www.nypress.com/18/5/pagetwo/newshole7.cfm


Hearing consultants and boosters tell us that a new Jets stadium would have
a positive economic impact is like hearing Lucy tell Charlie Brown she'll
hold the football for him. It is a testament to the power of sports that
stadium subsidies, given their appalling track record, still enjoy a
presumption of innocence in the court of public opinion.

There is one very good reason to think that the stadium subsidy won't pay
for itself: Stadium subsidies never pay for themselves. Stadiums are
everywhere touted as urban miracle drugs: they'll boost business, generate
tax revenue, create jobs and revitalize downtrodden neighborhoods. Yet
every time someone tests the hypothesis, the stadium flunks. (Convention
centers, for those about to protest that the development will also host
large meetings, don't fare much better.)

The most convincing argument for subsidizing a stadium is the idea of
"externalities." This argument says that a local team provides social
benefits the team's owners can't charge for. Only a minority of fans
actually goes to games or buys merchandise, but many more enjoy following
the team, talking about it, or basking in civic pride when it does well.
These people pay nothing for their enjoyment, and as a result the social
value of the sport exceeds its market value. Since the social value comes
from the team's having a place to play, it's appropriate for the public
sector to subsidize a stadium.

But this argument is much more convincing for places that don't yet have a
team. The Jets aren't being moved from across the country, but across the
river. They are already covered by New York media and followed by New York
fans. The social benefits of moving them are negligible, so the externality
argument doesn't apply.

Now the magic wands come out. Consultants and boosters, armed with strange
assumptions and dubious multipliers, have determined that the stadium is
just the economic engine the city needs. But there's a contradiction here.
One of the reasons the externality argument is plausible at all—that is,
one of the reasons the social value of sports can exceed its economic
value—is that the economic value is utterly trivial. One of the best-kept
(and most valuable) secrets of professional sports is just how small they are.

Sports loom large in American culture, and some people in sports make a
tremendous amount of money. But professional sports, while a business, are
not big business; the average revenue of an NFL team is $160 million,
classifying them as medium-sized. Professional teams have nowhere near the
size necessary to produce significant economic growth. To put this in
perspective, there's a lot of evidence that the presence of a major
university can boost a city's economy. Few would argue that Stanford isn't
a huge asset to Silicon Valley. But in 1997 (not an atypical year) Stanford
generated $1.5 billion. Compared to that, the economic contributions of a
single pro team just don't add up to much.

Why not? For starters, most stadiums are empty most of the time. Even if
you grant the project some wildly optimistic projections (35 conventions of
three days each, 10 football games, and assorted concerts and big ticket
events) the Westside stadium will still sit unused almost eight months of
the year. And the majority of the stadium's economic output is payroll, the
majority going to athletes who are unlikely to live in New York full-time.
Likewise, most revenue from concessions and merchandise goes to the
companies that make them, which tend to be located in the South and
Midwest. Money for t-shirts and hot dogs is economic development for
Virginia and Pennsylvania, not New York.

As for creating jobs, a few neighborhood people might pick up part-time,
low-wage work selling concessions or taking tickets, but the influx of fans
(or convention-goers) just isn't frequent enough to sustain new businesses.
The 1994 baseball strike offered stark evidence of this: sociologist John
Zipp studied the impacts of cancelled games on retail stores and found that
strike had no significant effect on them. In fact, in 17 of the 24 cities
studied, retail sales increased.

Maybe Mayor Bloomberg and Dan Doctoroff should take a trip down to
Indianapolis, which staked the entire redevelopment of its urban core on
professional sports. Over a 20-year period, Indianapolis built two pro
sports stadiums, a track and field stadium, a world-class pool, a tennis
stadium, a bike-racing stadium and the National Institute for Fitness and
Sports. It spent $2.7 billion in its downtown, about 40 percent of which
was public. It hosted the NCAA Final Four three times. But in the end, as
political scientist Mark Rosentraub found, sports still accounted for 0.32
percent of the city's economy. And the downtown lost jobs overall.

Sports don't create jobs. They aren't engines of economic growth. They
aren't anchors of community redevelopment. They are games that make a few
people very rich and a lot of people very happy. There's nothing wrong with
that, but it's a truth that gets too easily lost in deceptive cost-benefit
analyses. Even if the Jets subsidy did pay for itself, that doesn't
automatically make it a good use of public funds. The appropriate measure
of a subsidy isn't cost-benefit at all, but opportunity cost. We need to
look at the Westside, and at the $600 million, and ask: Is there anything
more productive we could do with this land, and this money?

Nobody honest could say no.

—Michael Manville

Volume 18, Issue 5