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PawSox Consultants Overestimated URI Ryan Center Attendance by Millions

Friday, April 17, 2015

 

The URI Ryan Center

The consulting group hired by the new ownership group of the Pawtucket Red Sox was the same one retained by the state to conduct the business plan for the University of Rhode Island's Ryan Center in 2000 -- and furnished attendance projections for the Center which proved to be overinflated by nearly 30% over the course of its first ten years.

According to the business plan report obtained by GoLocalProv, attendance projections for the first decade of the Ryan Center by consultants Brailsford and Dunlavey (B&D) were more than a million attendees over what the school saw for actual numbers during that time frame - and subsequently more moving forward.  

In 2000, B&D deemed in their economic impact report that for the first ten years of the Ryan Center's operations (2002 - 2012) that attendance for URI basketball, as well as other college athletics, concerts, and community events at the venue, would exceed three million visitors.

The Ryan Center's management firm, Global Spectrum Ventures, touted in a report for the first decade that the Ryan Center welcomed over two million visitors -- a number confirmed by school officials.  

A spokesperson for URI said that in recent years, total annual attendance for the center totaled just over 250,000 visitors -- not the 314,000 annual number predicted in the 2000 B&D report that they said would be reached annually by 2004 following initial years of attendance numbers of 271,000 and 285,000 in 2002 and 2003.

"The Ryan Center hosts on average more than 80 full arena events each year. In addition to the full arena events, more than 100 meetings, receptions and banquets are held for local businesses, schools, other outside entities and numerous University departments," said URI spokeswoman Linda Acciardo.  "In total, over 250,000 people walk through the Ryan Center doors annually."

Holy Cross economics professor Victor Matheson, who specializes in sports economics, offered his perspective on the role of consultants' projections. 

"In general, consultant reports tend to be wildly optimistic -- especially in cases when you have a report done by the team themselves," said Matheson. "They have no reason to provide worst case scenarios.  Always take them with a grain of salt."

Numbers in Question

The comparison of projections comes following the economic analysis report unveiled by B&D this week for the purported economic impact of moving the Pawtucket Red Sox to Providence.

In 2000, B&D had been retained by the state -- for a cost of $100,000 - to provide a business plan for a multi-use facility on the URI campus, to host home basketball games, as well as other sporting, scholastic, and community events

The 7,500+ seat Ryan Center was constructed in 2002 along with the adjacent Boss Ice Arena, for a $54 million project. According to URI, it currently supports its own operations. 

"The Ryan Center is an auxiliary enterprise, which means it must support its own operating, utilities and debt service without state dollars.  Revenue consists of Student Fees, Event Revenue, Advertising & Sponsorships," said Acciardo.  "The Athletics Department budget pays its related expenses for ticketing and other out of pocket as incurred."

The report issued by B&D for moving the Pawtucket Red Sox to Providence calls for subsidies of $4 million annually in tax breaks to the ownership group for the projected $85 million project -- and issues no projections for possible attendance, whether based off of the roughly seventy home game minor league baseball season, or if it takes into account potential concerts, events, or other sporting opportunities broached at the press conference, which included football and lacrosse.

The B&D Providence stadium report does however list a predicted $12.3 million in annual economic impact, and references for numbers a 7,500 seat ball field that can accommodate up to 10,000 spectators and has the capacity with auxiliary seating to host up to 12,500 seats in the event of football. (The report shows the recent decline in attendance at McCoy stadium in recent years, from an average game attendance of 9,561 in 2005, to 7,367 in 2014).

Matheson was not optimistic on the possibility of football, given the past -- and recent -- history of mixed-use stadiums.

"I would say that most of these studies are wildly optimistic about the use of non-baseball events," said Matheson.  "A baseball stadium is pretty much designed to do one thing well, and doesn't do most of the others nearly as well.  These are particularly bad places to play these things. There are reasons that football teams who have played in a baseball stadium try not to do so. The new MLS team in New York is playing at Yankee stadium, which is fine -- but not at all ideal for them.  It's a terrible idea because you put the 'best' seats in the corner of the soccer field, or the football field.  That's why baseball has all but moved out of multi-use stadiums."

Projections, Reality

While any projected attendance numbers for the Providence stadium remain unclear, a further look at the URI numbers show that there might be additional redundancies in counting attendance as it stands.  

According to B&D's report for the Ryan Center, starting in 2002 and continuing to present, the men’s basketball team was projected to realize average yearly attendance of 86,000 and the women’s team 23,000 per annum.  

For basketball alone, the B&D report was significantly over inflated.  In some years, men’s basketball has been 25% below average and women’s basketball has been been just 75% below the projections. And for some games, the attendance for men’s and women’s double headers were double counted in the URI official attendance reports. 

"It's fairly rare when you hire a consulting firm to look back at past reports," said Matheson. "It's common in academia, however, for us to go back and look at outcomes, such as increases in employment, taxable sales, and to see whether building the stadium did increase economic impact. As a rule of thumb, when economists go back and look at consulting reports -- take whatever the team is telling you in dollars, move the decimal one over to the left, and that's closer to the reality." 

 

Related Slideshow: The Ten Biggest Questions Facing the PawSox Coming to Providence

If the new ownership of the Pawtucket Red Sox want to build a new stadium in Providence, a number of questions need to be answered.  The potential for a major contruction project in the state's capitial city touches upon a number of issues, from money, to politics, to jobs, and development.  

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Owner interests?

What are the owners looking for from the state?

It's been one week since the new ownership group of the Pawtucket Red Sox was announced -- and their intention to look at Providence as a potential new location for the Red Sox AAA affiliate.  How long this has been their plan is unclear but what is more certain is the new owners are considering the pursuit of some public funding to be on the table.  What will they be seeking from the city and state, and how much?  As the state still reels from the failed 38 Studios deal, look to see what might be proposed -- and how the public reacts.  

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Public funding?

How much is the city -- and state -- willing to give?

While the new ownership has indicated that Providence is tops on their list for a new location for the PawSox, there are other cities and towns that could vie for attention. "I said to Mr. Skeffington, if Pawtucket could pull it out, would they be interested, but he said basically if it's not Providence, it would be a broader catch area," said City Council President Louis Aponte, of his conversation with the new ownership.  As the state and its capital city deliberate the best use of downtown real estate -- and the news 195 land -- how much will they be willing to make the new owners happy, especially if they starting pitting Providence against other locales?

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Economic impact?

What is the potential economic impact on Providence?

If Providence is the new home of the PawSox, it gets a ball club that has seen attendance at McCoy top 500,000 for 16 straight years -- only Louisville, Columbus, Buffalo, and Indianapolis have longer streaks.  "Anytime you can draw in on average 7500 people for games, it brings brings value to the state," John Gibbons, Executive Director of the Rhode Island Sports Commission, told GoLocal in January.  "That type of business doesn't necessarily draw in hotel use, but I know those facilities nearby do well when the PawSox play, and I know they bring in tax dollars every night with the sales at the park."  Jobs aside, watch to see who conducts economic impact studies -- and what that means in terms of any negotiations between owners and the city. 

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Jobs retained?

How many jobs will be retained?

Pawtucket's loss is Providence's gain, and the questions is does that go for jobs as well as economic impact.  How many of the existing PawSox job holders will see an opportunity in Providence?  Will the new ownership bring in new vendors, new office staff, new grounds crew? Will there be any downsizing in an attempt to streamline operations?   

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Jobs created?

How many jobs will be created?

One of the bigger questions is will a new Sox stadium create any new jobs in a state that certainly needs them.  Construction of a new stadium would no doubt provide short-term labor opportunities for the buildings and construction trades, but what about long term opportunities?  The development of the 195 land is beginning to take shape after addressing infrastructure needs, and now the city and state are looking to capitalize on the potential to foster high job growth industries.  Does a new baseball stadium fit that bill?  

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New business?

What will get built around it?

The potential location for a baseball stadium that is currently being discussed is the land just to the north of the South Street Landing project, the mixed-use multi-million dollar project will be a new home to a Rhode Island nursing education Center, Brown University offices and graduate student housing as well as a parking garage.  There are multiple 195 parcels on the land west of the river.  Will addition parking options be needed?  The PawSox play approximately 70 home games a year.  Who will step up as potential new neighbors?

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195 Plan?

How does it fit into 195 development?

Governor Gina Raimondo during her campaign called for the 195 land to be used as a manufacturing hub.  “In order to rebuild our economy, we have to start making things in Rhode Island again,” said Raimondo during the campaign. “My strategy will be to take the good ideas coming out of our universities and colleges and turn them into products we manufacture here. We have a historic opportunity with this I-195 land and we have to get it right." There are over eighteen acres available for development -- and Raimondo shook up the 195 commission last month with her own set of appointees, who have yet to make any major moves - as of yet.  

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Transparency?

What level of transparency will be disclosed?

The announcement of the sale of the PawSox to its new ownership group was followed by a press conference led by new owner James Skeffington.  While Skeffington offered ballpark figures for how much a new stadium might cost -- he cited $60-$70 million for other stadiums of its size -- what's unclear is how much the owners paid for the ball club.  If the ownership (whose personal wealth combined totals over $1 billion) seeks public funding, how much will they be willing -- and required -- to disclose about personal financial interests?

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Big picture?

Should Raimondo focus on larger issues?

Rhode Island's new Governor is entering her third month in office, set to introduce her first budget proposal in two weeks, and is facing tackling a projected $200 million budget deficit.  Having recently announced a working group to overhaul Medicaid, following identification of the state's most pressing fiscal issues, can the Governor afford to spend time brokering a deal for a minor league sports stadium?  Raimondo spoke of a state Innovation Institute being the cornerstone of her 195 vision -- will subsidizing a minor league ballpark be a focus of the administration?  

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Track record?

How have other deals performed – Convention Center, Airport, 38 Studios, Produce Market, Providence Place?

Providence hasn't seen major capital projects since Waterplace Towers changed the city skyline following the completion of the Providence Place Mall and the new Convention Center.  Since then, the failed 38 Studios deal has brought into scrutiny private companies being underwritten with moral obligation bonds -- and tax stabilization agreements in the city have similarly undergone scrutiny by the city council and taxpaying public.   Will a look a past projects play a role in the development of a stadium?

 
 

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