Economists Off Base on Ballfield Benefits

The deal is done. The announcement is in. The Expos are coming. It seems like it’s over, but the debate over the new D.C. stadium plan has just begun, and critics have wasted no time jumping into the fray.

This will be the first of two columns looking at the issue of the D.C. stadium proposal. This column will focus on the economic realities of the situation. The second will look at ideas to make the development a profitable one for the District.

Since this is Washington, D.C., I suppose I shouldn’t be surprised that just about everyone with a voice has a different opinion. While the Washington Post has editorialized in favor of bringing the Expos to D.C., columnist Sally Jenkins penned a column last week fretting about the negative aspects of the relocation, using the reports of economists and think tanks such as the D.C. Fiscal Policy Institute (FPI) to support her argument. But it seems that the economic picture for a publicly financed stadium might not be as bleak as Ms. Jenkins and the FPI paint it.

After examining the FPI’s argument, it seems that the negative aspects of the stadium are either being inaccurately portrayed, or those issuing this report aren’t looking at the whole picture.

In their advisory statement, the FPI sites that a study of 25 stadiums built between 1978 and 1992 concluded that none of them generated a net increase in tax revenue for the city, including Camden Yards in Baltimore. Interestingly, there have only been two baseball stadiums constructed in that time: Camden Yards and the hideous Metrodome in Minnesota. I’m not really sure what kind of stadiums that study included, but they certainly weren’t baseball facilities. If the stadiums were football stadiums, where teams play as few as eight times a year, it would skew that net tax revenue figure heavily.

I’ve never been to the Metrodome, but Camden Yards has been the centerpiece of Baltimore’s reclamation project in the Inner Harbor. And while the report states that Camden has been a net loser, it seems to go against common logic in that the park is frequently packed, as are the waterfront restaurants. Not to mention the simple fact that vacant warehouses are now occupied by revenue generating businesses.

The park’s failure to yield a tax gain may be attributed more to Baltimore’s declining population. From 1990-2000, the city’s population dropped from 736,000 to 651,000. That certainly must have impacted tax revenue.

Another argument is the stadium would not produce good jobs for D.C. residents. The FPI estimates that a stadium would create no more than 380 jobs for D.C. residents and that many jobs would be low-paying, part-time, day-of-game concessions type jobs. That may be true, but the stadium is the focal point of a renewal project in Southeast, with restaurants and bars and various family entertainment centers surrounding it. Those new employees as well. When you look at the larger picture, the stadium project will generate more jobs than the FPI accounts for in their statement.

Of course the FPI also refutes the notion that a new stadium will spark commercial growth around the site. They site that there's no concrete proof that MCI center sparked the rapid growth in Penn Quarter. What?

So, the construction of MCI Center just ahppened to coincide with the building boom in the area? And all of those Caps Jersey-clad patrons streaming into nearby restaurants prior to games have nothing to do with it? Call me crazy, but i would say 20,000 people milling about a two block radius qualifies as a high traffic areas. And I think, just maybe, high traffic areas are good places to put consumer businesses. But yeah, there's really nothing to suggest that MCI Center had any impact.

But the mainstay of any economist's argument against a puclicly financed stadium is based on theory that people have a fixed amount of disposable income set aside for entertainment and that should they spend more money at the ballpark, it will come at the expense of other entertainment industries, thus negating any net gain in tax revenue. But this argument doesn't hold for the District and economists have recently admitted that the ballpark could even be a financial success.

in a Washington Post >/i>article, several economists stated that the fixed entertainment spending theory may not hold for D.C> Since the ballpark will attract families and other fans outside the District, luring those tax dollars away from Northern Virginia and Maryland. Thus, instead of mere shift of tax revenue from within D.C. a stadium would bring an influx of money District business would otherwise not have seen. Baltimore's Inner Harbor draws 13-15 million visitors a year. A similar set up on the waterfront in D.C. could draw an even larger number, with a sizable chunk drawn from outside the District.

There are many critical points open for debate. Would the money be better off spent on schools? If it would, why hasn't it been spent before now? Would the District be better of with a privately financed stadium? Absolutely. However that was never an option given Major League Baseball's pre-conditions for moving the Expos.

The publicly financed proposal is not an ideal situation for the city. But, given the circumstances, and the larger picture of developing a low tax-revenue generating portion of the city. Mayor Williams proposal seems to be a good decision for the District.

Mike Hume may be emailed at mhume@fcnp.com